Annual Report (ESEF) • Feb 25, 2022
Preview not available for this file type.
Download Source FileHvar PLACESHOTEL by Valamar 3, Hvar island ANNUAL REPORT 2021 ABOUT VALAMAR Valamar is Croatia’s leading tourism company operating hotels, resorts and camping resorts in prime destinations – Istria, the islands of Krk, Rab and Hvar, Makarska, Dubrovnik, and Obertauern in Austria. With around 21,000 keys, Valamar’s 36 hotels and resorts and 15 camping resorts can welcome around 58,000 guests daily and provide perfect holidays and authentic experiences for each guest. The company believes in a growthdriving strategy focused on investments in high added- value products, talents, innovative services and destinations to maintain business continuity. The active promotion and advancement of these interests make Valamar a responsible and desirable employer and one of the top Croatian and regional investors in tourism with over HRK 6.1 billion invested in the last 18 years. Steered by sustainability and social responsibility, Valamar leads the innovative management of leisure tourism and continuously creates new value for all our stakeholders. Valamar’s business success is based on longstanding partnerships and an open communication with its key stakeholders. T h e r e f o r e , w e have established policies at company level that represent our continuing commitment to be the hospitality market leader in Croatia in terms of service quality, guest and user satisfaction, caring for the interests of our employees, company and local community, environmental protection and resource management. Tourism portfolio of Valamar Group 2 ANNUAL REPORT 2021 K E Y M E S S A G E S I n 2 0 2 1 , V a l a m a r G r o u p a c h i e v e d a s i g n i f i c a n t r e c o v e r y o f i t s t o u r i s m b u s i n e s s f u n d a m e n t a l s c o m p a r e d t o t h e c r i s i s y e a r 2 0 2 0 d e s p i t e s i g n i f i c a n t i m p a c t o f C O V I D - 1 9 e f f e c t s o n t r a v e l . V a l a m a r w a s s u c c e s s f u l i n i m p l e m e n t i n g a j o b p r o t e c t i o n p r o g r a m a n d m o t i v a t i n g e m p l o y e e s t h r o u g h v a r i o u s a w a r d s a n d b e n e f i t s p r o g r a m s l a u n c h e d d u r i n g b u s i n e s s r e c o v e r y i n t h e s e c o n d h a l f o f 2 0 2 1 . D u r i n g t h e c r i s i s p e r i o d , V a l a m a r f o c u s e d h e a v i l y o n d e v e l o p i n g new brands, products and services and continue to invest in repositioning t h e p o r t f o l i o , o v e r H R K 8 7 0 m i l l i o n s i n c e 2 0 1 9 . I n 2 0 2 1 , V a l a m a r e m b a r k e d o n a n e w p h a s e o f g r o w t h b y e x p a n d i n g i t s p a r t n e r s h i p s w i t h i n v e s t m e n t p a r t n e r s i n C r o a t i a a n d f u r t h e r i n t e r n a t i o n a l i z i n g its portfolio in Austria. T h e r e a l i s e d o p e r a t i n g p r o f i t ( E B I T D A ) o f H R K 6 4 6 m i l l i o n i n 2 0 2 1 r e a c h e d 84% compared to the pre-crisis year 2019 level, and, in some segments, even surpassed it. Adjusted EBITDA of HRK 674 million is only 11% lower than i n r e c o r d 2 0 1 9 . O p e r a t i n g r e v e n u e s a m o u n t t o H R K 1.6 b i l l i o n , i.e. t h e y a r e at 74% of the 2019 realisation. Overnights recorded the same realisation l e v e l , w h i l e t h e a v e r a g e p r i c e i n c r e a s e d b y 6 % c o m p a r e d t o 2 0 1 9 , f o l l o w i n g a very strong demand for our hotels and resorts in high season. The direct sales channel performance grew to HRK 859 million achieving 64% of the t o t a l b o a r d r e v e n u e s c o m p a r e d t o 4 5 % i n 2019. It further contributed to the profitability of the business. T h e f i r s t h a l f o f 2 0 2 1 w a s s t i l l u n d e r t h e s i g n i f i c a n t impact of the COVID-19 p a n d e m i c a n d t h e r e s p e c t i v e t r a v e l r e s t r i c t i o n s . T h e t h i r d q u a r t e r r e c o r d s a n o r m a l i s a t i o n of the business operations in almost all of Valamar’s d e s t i n a t i o n s . H o w e v e r , t h e f o u r t h q u a r t e r s a w a c e r t a i n s l o w i n g d o w n o f this positive trend. Valamar achieved excellent results in its north-Adriatic destinations, its campsites and in the premium segment, especially in the third quarter. On the other hand, the destination of Dubrovnik and the tourist p r o p e r t i e s i n t h e 2 * a n d 3 * c a t e g o r y d i d n o t s e e a significant recovery of their b u s i n e s s o p e r a t i o n s . I f w e e x c l u d e t h e r e s u l t s o f D u b r o v n i k , t h e G r o u p t h u s r e a l i s e d a 1 2 % h i g h e r E B I T D A v s . 2 0 1 9 . F u r t h e r m o r e , the Premium hotels and resorts segment achieved a 17% higher EBITDA, and campsites 26%. SUCCESSFUL SEASON ACHIEVED. IN SOME SEGMENTS, THE RECORD YEAR 2019 WAS EVEN SURPASSED INITIATED ACTIVITIES WITH THE GOAL OF RETAINING EMPLOYEES IN TOURISM AND EFFICIENT PREPARATION FOR SEASON 2022 T h r o u g h i t s p r o a c t i v e c r i s i s m a n a g e m e n t i n t h e c o n d i t i o n s o f t h e p a n d e m i c , w i t h t h e s u p p o r t o f i t s s o c i a l partners and backed by the government’s s u b s i d i e s , V a l a m a r m a n a g e d t o p r o t e c t a l l j o b s , w h i c h e n a b l e d t h e r e a l i s a t i o n o f a s o l i d 2 0 2 1 t o u r i s t s e a s o n . I n c o o p e r a t i o n with the trade unions, the G r o u p p a i d s u b s t a n t i a l c a s h a w a r d s f o r 2 0 2 1 t o i t s p e r m a n e n t a n d s e a s o n a l e m p l o y e e s o n s e v e r a l o c c a s i o n s . T h e t o t a l a m o u n t o f r e w a r d s w a s H R K 56 million, and the maximum reward per employee reached HRK 11,300. A l s o , 4 0 0 k e y ( u n t i l t h e n s e a s o n a l ) e m p l o y e e s w e r e p e r m a n e n t l y e m p l o y e d , w h i c h w i l l e n a b l e t h e m t o h a v e a s t a b l e i n c o m e a n d a y e a r - r o u n d job in the tourist industry. All of the above was done in order to boost the employee s a t i s f a c t i o n o f t h e V a l a m a r G r o u p e v e n m o r e , w i t h t h e f i n a l g o a l o f k e e p i n g t h e e m p l o y e e s i n t h e t o u r i s t i n d u s t r y a n d making high-quality preparations f o r t h e n e x t t o u r i s t s e a s o n . A c c o r d i n g t o t h e s u r v e y s o f t h e M o j P o s a o p o r t a l , V a l a m a r h a s r e m a i n e d t h e o n l y c o m p a n y f r o m t h e t o u r i s m industry among t o p 2 0 e m p l o y e r s i n C r o a t i a f o r t h e f o u r t h c o n s e c u t i v e y e a r . V a l a m a r c o n t i n u e d d e v e l o p i n g i t s p r o d u c t s , s e r v i c e s a n d h o s p i t a l i t y p o r t f o l i o during the crisis period, with the two-year investment cycle for 2019/21 amounting to almost HRK 870 million. Istra Premium Camping Resort 5 was finished, which is the biggest camping resort development project in Croatia, with the value of investment amounting to HRK 455 million over s e v e r a l y e a r s . T h e i n v e s t m e n t s i n t h e V a l a m a r P a r e n t i n o H o t e l i n P o r e č a n d t h e V a l a m a r M e t e o r H o t e l i n M a k a r s k a , h o t e l s o f f e r i n g f a m i l y v a c a t i o n s a n d services, were also successfully finalised. The lifestyle hotel [PLACES] by Valamar targeting YZ generation was opened o n t h e i s l a n d o f H v a r a n d t h e d e v e l o p m e n t o f a n e w V a l a m a r A m i c o r G r e e n Resort began. This is a fully sustainable eco summer family resort, which r e s p e c t s t h e h i g h e s t s t a n d a r d s i n g r e e n b u i l d i n g , r e n e w a b l e e n e r g y u s e a n d energy efficiency level. 3 ANNUAL REPORT 2021 A d d i t i o n a l l y , i n c o o p e r a t i o n w i t h E.O N S o l a r , p h o t o v o l t a i c p o w e r p l a n t s w e r e i n s t a l l e d a t 2 6 V a l a m a r ’s h o t e l s a n d c a m p s i t e s a l o n g t h e A d r i a t i c c o a s t . T h i s c o v e r s f i v e p e r c e n t o f t h e V a l a m a r ’s t o t a l y e a r l y n e e d f o r e l e c t r i c p o w e r . In order to further increase the quality of the portfolio of its hotels, resorts and campsites as well as to develop green tourist industry and digitalize its business operations, at the end of last year Valamar launched a new investment cycle in the properties under its management for 2021/22, totalling to HRK 525 million. T h e y e a r 2 0 2 1 s a w a n e x p a n s i o n o f t h e s t r a t e g i c c o o p e r a t i o n with pension f u n d s . V a l a m a r R i v i e r a a n d A Z p e n s i o n f u n d s a g r e e d o n t h e s e c o n d p h a s e o f t h e c a p i t a l i n j e c t i o n t o I m p e r i a l R i v i e r a i n t h e t o t a l v a l u e o f H R K 6 9 0 m i l l i o n . The purpose of this capital increase is a further development of the tourist i n d u s t r y p o r t f o l i o i n D u b r o v n i k , M a k a r s k a a n d o n t h e i s l a n d o f R a b . V a l a m a r a n d P B Z C r o a t i a o s i g u r a n j e p e n s i o n f u n d s t a r t e d a n i n v e s t m e n t c y c l e i n S t a r i G r a d o n t h e i s l a n d o f H v a r i n t h e v a l u e o f H R K 3 0 0 m i l l i o n . In cooperation with a private co-investor, one of Austria’s largest Valamar Riviera’s shareholders and the Chairman of the Company’s Supervisory B o a r d , M r . G u s t a v W u r m b ö c k , V a l a m a r a c q u i r e d its second hotel in O b e r t a u e r n , A u s t r i a . The Marietta 4 hotel has 120 keys and is one of t h e b i g g e s t a n d b e s t h o t e l s i n t h i s d e s t i n a t i o n . T h e h o t e l is under lease a g r e e m e n t u n t i l m i d - 2 0 2 3 . A c c o r d i n g l y , it is not currently managed neither branded by Valamar. This acquisition represents a significant move in the f u r t h e r i n t e r n a t i o n a l i s a t i o n o f t h e V a l a m a r ’s b u s i n e s s o p e r a t i o n s , w i t h t h e a i m t o e x p a n d i t s p o r t f o l i o a n d m a n a g e h o t e l s a n d p r o p e r t i e s i n t h e b e s t w i n t e r h o l i d a y d e s t i n a t i o n s i n A u s t r i a a n d I t a l y . POSITIVE F I N A N C I A L RESULTS A C H I E V E D VALAMAR AND STRATEGIC PARTNERS CONTINUE WITH SIGNIFICANT I N V E S T M E N T S I N CROATIAN TOURISM F o l l o w i n g g o o d f i n a n c i a l r e s u l t s , t h e G r o u p ’s n e t d e b t w a s d e c r e a s e d a n d a s a t 3 1 D e c e m b e r 2 0 2 1 a m o u n t e d t o H R K 2.0 b i l l i o n . T h i s i s a 3 1 % d e c r e a s e compared to the debt as at 31 December 2020. For 2021, all financial and o t h e r c o v e n a n t s f r o m l o a n a g r e e m e n t s h a v e b e e n s a t i s f i e d . T h e G r o u p w i l l c o n t i n u e w o r k i n g o n d e c r e a s i n g i t s i n d e b t e d n e s s a n d f u l f i l l i n g i t s c o n t r a c t e d covenants. I n t h e y e a r 2 0 2 2 , V a l a m a r p l a n s t o o p e n a l l o f i t s h o t e l s a n d c a m p s i t e s . H o w e v e r , t h e c o r o n a c r i s i s w i l l s t i l l b e s i g n i f i c a n t l y i m p a c t i n g t h e t o u r i s t industry and the economy in the near future. A normalisation of the tourist i n d u s t r y i s e x p e c t e d d u r i n g t h e y e a r s 2 0 2 2 a n d 2 0 2 3 . O n t h e o t h e r h a n d , a n a d d i t i o n a l i m p u l s e f o r C r o a t i a a s a t o u r i s t d e s t i n a t i o n m a y o c c u r a f t e r t h e entry of Croatia to the Schengen Area, which should happen mid of 2022. A p o s i t i v e i m p a c t c a n a l s o b e e x p e c t e d f r o m t h e i n t r o d u c t i o n o f t h e e u r o , planned for 1 January 2023. 4 ANNUAL REPORT 2021 T A B L E O F C O N T E N T S Significant Business Events 6 Results of the Group 11 Results of the Company 21 Investments 23 The Risks of the Company and the Group 27 Corporate Governance 33 Related-party Transactions and Subsidiaries 36 Valamar Share 38 Additional Information 42 Disclaimer 44 Responsibility for the Annual Financial Statements 46 Financial Statements According to GFI-POD 47 Management Board’s Decision on Establishing the Annual Financial Statements 95 Supervisory Board’s Decision on Approving the Annual Financial Statements 97 Supervisory Board’s Report to the General Assembly of the Company 98 Supervisory Board’s Decision on Allocation of Profit 103 Annual Financial Statements Including the Independent Auditor’s Report 104 5 Ježevac Premium Camping Resort 4, Krk Island ANNUAL REPORT 2021 Significant Business Events Lanterna Premium Camping Resort 5, Poreč CRISIS MANAGEMENT DURING COVID-19 T h e g l o b a l p a n d e m i c t r e n d s a r e s t i l l u n p r e d i c t a b l e , a n d a f u r t h e r s i g n i f i c a n t d i s r u p t i o n o f t h e t r a v e l f l o w s i s p o s s i b l e , w h i c h m a y h a v e a n a d v e r s e i m p a c t to the business results of the Group. The increasing vaccination rates helped the tourist industry as well as the introduction of the EU COVID-19 pass throughout Europe. At this point in time it would still be premature t o m a k e a q u a n t i t a t i v e a s s e s s m e n t a b o u t t h e n e g a t i v e i m p a c t o f C O V I D - 1 9 to the business operations of Valamar in the future. A normalization of the h o s p i t a l i t y i n d u s t r y i s e x p e c t e d t o h a p p e n i n 2 0 2 2 a n d 2 0 2 3 . Istria and the northern Adriatic, where the majority of the Group’s facilities are located, have a great advantage in the fact that they are the traditional drive tourism destination for our major source markets (Italy, Slovenia, A u s t r i a , G e r m a n y , t h e N e t h e r l a n d s , t h e C z e c h R e p u b l i c , H u n g a r y , e t c .). O u r camping resorts play a major role in attracting our guests and they have b e c o m e t h e r e s o r t s o f t h e f i r s t c h o i c e f o r m a n y . T h i s i s d u e t o s h i f t i n g g u e s t p r e f e r e n c e s f a v o u r i n g n a t u r e a n d p r i v a c y , b u t a l s o d u e to the fact that they offer an increased quality of service and facilities thanks to considerable i n v e s t m e n t s o v e r t h e l a s t p e r i o d . The health of our guests and their feeling of being safe in our properties is our utmost priority. In 2020 we introduced some key innovations, such as our V Health & Safety programme of comprehensive health, safety a n d e c o l o g y s t a n d a r d s , a n e n h a n c e d c l e a n i n g s y s t e m ‘C l e a n S p a c e – 1 0 0 % p r i v a c y ’, t h e O n l i n e r e c e p t i o n d e s k , t h e ‘B e d & B r u n c h ’ h o t e l c o n c e p t a n d t h e Valfresco Direkt online shopping and food delivery service. By introducing t h e s e s e r v i c e s , V a l a m a r h a s a l s o s t r e n g t h e n e d t h e m a r k e t p o s i t i o n o f s m a l l manufacturers and local family farms. In 2021 Valamar introduced the V - C a r e G u a r a n t e e c o n c e p t , w h i c h e n a b l e s t h e o r g a n i z a t i o n o f a l l n e c e s s a r y health services during the guest’s stay (and in case of COVID-19 infection as w e l l ) . F o r t h e g u e s t s w h o h a v e m a d e t h e i r r e s e r v a t i o n s d i r e c t l y a t v a l a m a r . com or via the Valamar reservation centre, this includes e.g. free medical c o n s u l t a t i o n b y p h o n e ( p h o n e o r v i d e o c a l l ) 2 4 / 7 , A n t i g e n t e s t i n g a t t h e h o t e l o r c a m p i n g r e s o r t , a n d o r g a n i z i n g P C R t e s t i n g a t d e s i g n a t e d l o c a t i o n s i n a l l V a l a m a r d e s t i n a t i o n s . G u e s t s i n f e c t e d w i t h C O V I D - 1 9 a n d a n y o n e i n c l u d e d i n t h e i r r e s e r v a t i o n w i l l h a v e t h e i r c o s t s c o v e r e d i f t h e y n e e d t o extend their stay up to 14 days. Also, the return trip travel expenses for guests infected NORMALIZATION O F T O U R I S M B U S I N E S S I S E X P E C T E D T O C O N T I N U E D U R I N G 2022 AND 2023 GROUP’S CASH BALANCE AS OF 31 D E C E M B E R 2021 AT HRK 1.1 BILLION w i t h C O V I D - 1 9 w i l l b e r e i m b u r s e d , i f t h e r e t u r n d a t e s a r e d i f f e r e n t than t h o s e o r i g i n a l l y s c h e d u l e d . Since the beginning of the COVID-19 crisis, the Valamar has had a proactive a p p r o a c h t o d e c r e a s i n g a n d c o n t r o l l i n g p o t e n t i a l r i s k s . T h e r e f o r e , V a l a m a r h a s e s t a b l i s h e d a R i s k M a n a g e m e n t C o m m i t t e e a n d a d o p t e d t h e R i s k M a n a g e m e n t R e g u l a t i o n s . T h e t a s k s a n d a u t h o r i z a t i o n s o f t h e R i s k M a n a g e m e n t C o m m i t t e e i n c l u d e assessing risk events and their impact to t h e c o m p a n y ’s b u s i n e s s , g u e s t s a n d e m p l o y e e s . A l s o , t h e C o m m i t t e e d e f i n e s t h e m e a s u r e s f o r t h e p r o t e c t i o n o f g u e s t s , s t a f f a n d p r o p e r t y and defines the o r g a n i z a t i o n of the business processes and operations. Depending on the c i r c u m s t a n c e s a n d t h e i n t e n s i t y o f t h e r i s k e v e n t , t h e C o m m i t t e e m a y d e c i d e o n c h a n g i n g t h e f i n a n c i a l , b u s i n e s s a n d c o n t i n g e n c y p l a n , a n d a c t i v a t i n g e s c a l a t i o n p l a n s t o p r e s e r v e t h e c o m p a n y ’s l i q u i d i t y , s o l v e n c y a n d b u s i n e s s c o n t i n u i t y . T h e C o m m i t t e e m a y a d o p t o t h e r d o c u m e n t s as may be needed a c c o r d i n g t o t h e i r a s s e s s m e n t o f t h e s t a t u s o f b o o k i n g s a n d r e v e n u e s . I n 2 0 2 0 a n d i n t h e f i r s t h a l f o f 2 0 2 1 , V a l a m a r e n s u r e d t h e n e c e s s a r y l i q u i d i t y for the upcoming period through operational savings plans, savings in investments, payments deferral and arrangements with banks by which Valamar deferred most of its loan payments. Valamar also successfully e n s u r e d a d d i t i o n a l m i d - t e r m l i q u i d i t y b y c o n c l u d i n g a l o a n f a c i l i t y a g r e e m e n t with a banking syndicate in the amount of EUR 66 million while, in order to i m p r o v e t h e c o m p a n y ’s l i q u i d i t y , t h e G e n e r a l A s s e m b l y i n 2 0 2 0 r e v o k e d t h e proposal of the Decision to pay out dividend. Upon the expiration of the moratorium in June 2021 the Group continued to regularly service its loan o b l i g a t i o n s . T h e G r o u p ’s c a s h b a l a n c e a s a t e n d o f D e c e m b e r 2 0 2 1 a m o u n t s to a high HRK 1.1 billion. V a l a m a r ’s s o c i a l p a r t n e r s , h e a d e d b y t h e C r o a t i a n T r a d e U n i o n o f T o u r i s m a n d S e r v i c e s a n d t h e T r a d e U n i o n o f I s t r i a , K v a r n e r a n d D a l m a t i a , s u p p o r t e d the continuation of the Valamar job preservation programme ‘Pause, Restart’. This programme is in force until 31 March 2022. The programme e n s u r e s t h e p a y m e n t a m o u n t i n g t o 6 0 % o f t h e r e g u l a r s a l a r y , i.e. a m i n i m u m o f H R K 4,2 5 0 n e t f o r a l l V a l a m a r ’s employees who were furloughed due to the COVID-19 pandemic restrictions. The government’s support measures in last two seasons were of key importance for keeping jobs in the tourist industry. They were a key 7 ANNUAL REPORT 2021 incentive for all tourist companies to successfully face these extraordinary c i r c u m s t a n c e s u n t i l t h e e c o n o m y a n d the tourist industry returns to normal. The most significant measure was the one aimed at preserving the jobs in t h e s e c t o r s m o s t h a r d l y h i t b y t h e c o r o n a v i r u s ( H R K 3,2 5 0 p e r e m p l o y e e f o r t h e s a l a r y i n M a r c h , i.e. HRK 4,000 for the salaries from April to December 2 0 2 0 ) . T h e G o v e r n m e n t o f t h e R e p u b l i c o f C r o a t i a a p p r o v e d t h e s e m e a s u r e s t o p r o t e c t j o b s i n t h e p e r i o d f r o m J a n u a r y – J u l y 2 0 2 1 a s w e l l . VALAMAR AND AZ PENSION FUNDS CONTINUE THEIR JOINT INVESTMENTS IN TOURIST INDUSTRY THROUGH IMPERIAL RIVIERA The first phase of capital investments into Imperial Riviera, member of the Valamar Group, by Valamar Riviera and AZ pension funds, in the amount of HRK 426 million was done in 2019. Investments were aimed at the renovation of the Parentino Hotel in Poreč, Meteor Hotel in Makarska and P r e m i u m C a m p i n g P a d o v a o n t h e i s l a n d o f R a b . The General Assembly of Imperial Riviera, held on 10 September 2021, adopted the decision on the second phase of capital investments by increasing the share capital of the company by a total amount of HRK 690 million. Valamar Riviera participates in this investment by a contribution i n k i n d , i.e. b y i n v e s t i n g i t s r e a l e s t a t e ( l a n d o f 1 4 8 ,9 4 9 m2) worth HRK 353 m i l l i o n i n t o t a l . T h e l a n d i s s i t u a t e d o n t h e B a b i n K u k p e n i n s u l a i n D u b r o v n i k . AZ pension funds invest the total amount of HRK 337 million in cash. This capital increase is aimed at a further development of the tourist portfolio in D u b r o v n i k , M a k a r s k a a n d o n t h e i s l a n d o f R a b . A f t e r i t s c o m p l e t i o n , V a l a m a r R i v i e r a h o l d s 4 6 .2 7 % o f t h e I m p e r i a l R i v i e r a s h a r e s , a n d A Z p e n s i o n f u n d s holds 48.85%. A t t h e b e g i n n i n g o f 2 0 2 2 , t h r e e h o t e l s ( V a l a m a r Lacroma Dubrovnik Hotel, C l u b D u b r o v n i k S u n n y H o t e l b y V a l a m a r a n d T i r e n a S u n n y H o t e l b y V a l a m a r ) in Dubrovnik were transferred from Valamar Riviera to Imperial Riviera. The acquisition value of cited hotels amounts to EUR 95.3 million and the financing for a major part of this transaction is ensured by taking over V a l a m a r R i v i e r a ’s e x i s t i n g l o a n o b l i g a t i o n s b y I m p e r i a l R i v i e r a . T h e s e h o t e l s CAPITAL INCREASE OF IMPERIAL RIVIERA IN THE AMOUNT OF HRK 690 MILLION, BY CONTRIBUTION IN KIND AND IN CASH WITHIN VALAMAR GREEN HOLIDAY CONCEPT THE INVESTMENT INTO THE FIRST SUSTAINABLE ECO RESORT BEGINS i n t h e a r e a o f B a b i n K u k i n D u b r o v n i k , t o g e t h e r w i t h t h e r e a l e s t e t e b e i n g p r e v i o u s l y e n t e r e d i n I m p e r i a l i n t h e p r o c e s s o f i t s s h a r e c a p i t a l i n c r e a s e w i l l r e p r e s e n t s u s t a i n a b l e a n d s t r a t e g i c a l l y i m p o r t a n t t e c h n o l o g i c a l u n i t . I m p e r i a l R i v i e r a i s t h u s b e c o m i n g a m u l t i - d e s t i n a t i o n c o m p a n y p r e s e n t i n I s t r i a , K v a r n e r , D a l m a t i a a n d t h e c i t y o f D u b r o v n i k . B e s i d e s t h e b u s i n e s s e x p a n s i o n a n d g r o w t h o f t h e V a l a m a r G r o u p , t h i s t r a n s a c t i o n w i l l a l s o s t r e n g t h e n t h e b a l a n c e s h e e t o f t h e G r o u p . I m p e r i a l R i v i e r a w i l l r e m a i n a j o i n t v e n t u r e f o r t h e i n v e s t m e n t a n d d e v e l o p m e n t o f t h e t o u r i s t f a c i l i t i e s i n t h e r e g i o n , w h i l e V a l a m a r R i v i e r a w i l l s t i l l b e i n c h a r g e o f m a n a g i n g i t s o p e r a t i o n a l b u s i n e s s . T h i s was one of the goals of the c o o p e r a t i o n e s t a b l i s h e d b e t w e e n V a l a m a r a n d A Z p e n s i o n f u n d s . VALAMAR AND PBZ/CO PENSION FUNDS CONTINUE THEIR JOINT I N V E S T M E N T S O N T H E I S L A N D O F H V A R T H R O U G H H E L I O S F A R O S Valamar Riviera and PBZ Croatia osiguranje pension funds continue with s i g n i f i c a n t p o r t f o l i o i n v e s t m e n t s i n t h e a m o u n t o f H R K 300 million aimed at r e p o s i t i o n i n g p r o p e r t i e s i n S t a r i G r a d o n t h e i s l a n d o f H v a r i n t o 4 a n d 5 - s t a r p r o p e r t i e s . T h e l a r g e s t part of the investments will be directed towards the c o n s t r u c t i o n o f t h e f i r s t V a l a m a r s u s t a i n a b l e e c o - r e s o r t n a m e d V a l a m a r Amicor Green Resort, the completion of investments in Hvar [PLACESHOTEL] b y V a l a m a r , t h e c o n s t r u c t i o n of the Aquamar pool complex and the overall r e c o n s t r u c t i o n o f t h e r e s o r t a r e a . G r e e n H o l i d a y i s a n e w c o n c e p t b y V a l a m a r , w h i c h i m p l i e s a s u s t a i n a b l e e c o r e s o r t p o s i t i o n e d f o r f a m i l y vacation. The resort will be built by maintaining t h e h i g h e s t s t a n d a r d s f o r g r e e n b u i l d i n g , w h i c h i n c l u d e s e c o l o g i c a l l y a c c e p t a b l e m a t e r i a l s w i t h a m i n i m u m e n v i r o n m e n t a l i m p a c t , t h e u s e o f renewable energy sources and a high energy efficiency level. Food will be p r e p a r e d f r o m f r e s h p r o d u c e , m a i n l y l o c a l l y g r o w n , a n d t h e u s e o f o n e - t i m e p l a s t i c a n d p a p e r w i l l b e m a x i m a l l y r e d u c e d . Valamar Amicor Green Resort on the island of Hvar is the first tourism project that will use ecologically prefabricated buildings and modular constructions designed according to Valamar accommodation quality standards. The concept is inspired by nature and sustainable design. The 8 ANNUAL REPORT 2021 r e s o r t ’s a r c h i t e c t u r e a n d b u i l d i n g d e s i g n b l e n d i n t o t h e i s l a n d ’s n a t u r a l e n v i r o n m e n t , w h i l e t h e i n t e r i o r w i l l b e d e s i g n e d b y l o c a l d e s i g n e r s and a r t i s t s with autochthonous tradition and materials in mind. The business development plan of Helios Faros estimates investments in t h e t o t a l a m o u n t o f a r o u n d H R K 8 0 0 m i l l i o n a i m e d a t s u s t a i n a b l e h i g h v a l u e - added tourism that will have a positive impact on the island’s economic growth and development. The reconstruction and construction of three hotels and resorts in the 4 and 5-star category with 700 accommodation units is planned by 2025. Valamar Riviera has a 20% ownership in Helios Faros and manages its hotel- t o u r i s m properties. EXPANDING PORTFOLIO IN AUSTRIA I n c o o p e r a t i o n w i t h a p r i v a t e c o - i n v e s t o r , V a l a m a r a c q u i r e d i t s s e c o n d h o t e l i n O b e r t a u e r n , A u s t r i a . T h e M a r i e t t a H o t e l 4 * h a s 1 2 0 k e y s a n d i s o n e o f t h e b i g g e s t a n d b e s t h o t e l s i n t h i s d e s t i n a t i o n . T h e c o - i n v e s t o r i s o n e o f A u s t r i a ’s l a r g e s t V a l a m a r R i v i e r a ’s s h a r e h o l d e r s a n d t h e C h a i r m a n o f t h e C o m p a n y ’s Supervisory Board, Mr. Gustav Wurmboeck. T h e c o - i n v e s t o r p r o v i d e d a capital injection amounting to EUR 11.1 million to the Austrian company Valamar A GmbH (until then in 100% owned by Valamar Riviera). Valamar A GmbH then used funds from capital injection and additional borrowing to acquire the Marietta Hotel. Following the t r a n s a c t i o n , V a l a m a r R i v i e r a h a s a 2 4 .5 % s t a k e i n V a l a m a r A, w h i l e t h e c o - investor 75.5% T h i s a c q u i s i t i o n i n c o o p e r a t i o n w i t h t h e n e w c o - i n v e s t o r r e p r e s e n t s a n important move for Valamar in terms of a further internationalisation of its business operations. The aim is to expand its portfolio and manage hotels a n d t o u r i s t f a c i l i t i e s i n t h e b e s t w i n t e r h o l i d a y d e s t i n a t i o n s i n A u s t r i a a n d I t a l y . T w o h o t e l s i n A u s t r i a u n d e r V a l a m a r ’s m a n a g e m e n t n o w w i l l b e a b l e t o e m p l o y 1 3 0 V a l a m a r e m p l o y e e s f r o m C r o a t i a d u r i n g t h e w i n t e r . T h i s a c q u i s i t i o n a l s o r e p r e s e n t s a n o t h e r s t e p t o w a r d s a n ‘a s s e t - l i g h t b u s i n e s s model’. IN COOPERATION WITH A PRIVATE CO-INVESTOR S E C O N D HOTEL IN AUSTRIA ACQUIRED VALAMAR RIVIERA’S GENERAL ASSEMBLY The regular General Assembly of the Company was held on April 21, 2021, at which decisions were made according to the decisions proposed by the Management Board and the Supervisory Board of the Company contained in the invitation to the General Assembly and published in its p r e s c r i b e d c o n t e n t o n t h e w e b s i t e o f t h e Z a g r e b S t o c k E x c h a n g e , a s w e l l a s o n t h e C o m p a n y ’s w e b s i t e . T h e f o l l o w i n g d e c i s i o n s w e r e r e a c h e d : d e c i s i o n on coverage of loss, decision on granting discharge to members of the Management Board, decision on granting discharge to members of the Supervisory Board, decision on appointment of auditors and decision on election of members of the Supervisory Board. The Report on Receipts of Members of the Management Board and the Supervisory Board for 2020 was also discussed. The General Assembly elected six members of the S u p e r v i s o r y B o a r d f o r a n e w t e r m o f 4 y e a r s s t a r t i n g o n 1 6 J u n e 2 0 2 1 , n a m e l y Mr. Gustav Wurmböck, Mr. Franz Lanschützer, Mr. Mladen Markoč, Mr. G e o r g E l t z ( f o r m e r m e m b e r s ) , M r . B o r i s G a l i ć a n d M r . D a n i e l G o l d s c h e i d e r ( n e w m e m b e r s ) . O n e S u p e r v i s o r y B o a r d m e m b e r , M r . I v a n E r g o v i ć , w o r k e r s ’ r e p r e s e n t a t i v e , w a s a p p o i n t e d b y t h e W o r k e r s ’ C o u n c i l o n 1 0 M a y 2 0 2 1 . T h e constituent meeting of the Supervisory Board, at which the President, Mr. G u s t a v W u r m b ö c k , a n d t h e D e p u t i e s , M r . F r a n z L a n s c h ü t z e r a n d M r . M l a d e n Markoč, were elected, was held on June 17, 2021. LEADING MARKET POSITION AND RECOGNITIONS In 2021, the Valamar Group succeeded in maintaining its leading market p o s i t i o n a s w e l l a s s t a b i l i s i n g i t s b u s i n e s s o p e r a t i o n s t o a l a r g e e x t e n t . T h i s i s t h e r e s u l t o f a s u c c e s s f u l c r i s i s m a n a g e m e n t d u r i n g t h e C O V I D - 1 9 p a n d e m i c a s w e l l a s o f t h e r e c o g n i s e d a n d s u c c e s s f u l V a l a m a r ’s b u s i n e s s p h i l o s o p h y . I t r e p r e s e n t s V a l a m a r ’s b u s i n e s s s u c c e s s f o r m u l a , c o m p r i s e d o f c o r p o r a t e s o c i a l r e s p o n s i b i l i t y a n d a c o n t i n u o u s i n v e s t m e n t i n f u r t h e r d e v e l o p m e n t . V a l a m a r r e c e i v e d a r e c o g n i t i o n f r o m t h e M i n i s t r y o f E c o n o m y a n d S u s t a i n a b l e Development for 2021 relating to the achievements of the business sector i n e n v i r o n m e n t a l p r o t e c t i o n , i n t h e c a t e g o r y M a n a g e m e n t . T h e a w a r d ceremony was held within the Conference on the Future of Europe, i n i t i a t e d b y t h e E u r o p e a n C o m m i s s i o n , t h e C o u n c i l a n d t h e P a r l i a m e n t . T h i s r e c o g n i t i o n f o r V a l a m a r r e l a t e s t o a n e x c e p t i o n a l o r g a n i z a t i o n w i t h 9 ANNUAL REPORT 2021 a strategic vision and a management system enabling continuous i m p r o v e m e n t s i n e n v i r o n m e n t a l properties. T h e G e r m a n c a m p i n g c l u b D C C (D e u t s c h e r C a m p i n g - C l u b ) g a v e t h e prestigious recognition DCC Europe Platinum for the year 2022 to L a n t e r n a P r e m i u m C a m p i n g R e s o r t . E l e v e n o f V a l a m a r ’s c a m p s i t e s r e c e i v e d t h e C r o a t i a ’s B e s t C a m p s i t e s label for the year 2022, which is given by the Croatian Camping Union. Four Valamar’s campsites are t h e w i n n e r s o f t h e A D A C S u p e r p l a t z 2 0 2 2 r e c o g n i t i o n a w a r d , g i v e n b y ADAC’s camping guides in cooperation with the PiNCAMP specialized c a m p i n g p o r t a l . A d d i t i o n a l l y , f o u r V a l a m a r ’s c a m p s i t e s h a v e r e c e i v e d t h e A N W B T o p C a m p i n g a w a r d , w h i c h i s g i v e n b y t h e r e n o w n e d D u t c h car club ANWB. T h e w o r l d o r g a n i s a t i o n W o r l d L u x u r y H o t e l A w a r d s g a v e a w a r d s t o t h e most luxurious hotels. The Dubrovnik President Valamar Collection Hotel 5 was recognized as the best Croatian Luxury Beach Resort, the Isabella Valamar Collection Island Resort 4/5 received the best European Luxury Island Resort award, and the Marea Valamar C o l l e c t i o n S u i t e s 5 * w o n t h e b e s t E u r o p e a n L u x u r y F a m i l y H o t e l a w a r d . A s m a n y a s t h r e e V a l a m a r ’s h o t e l s r e c e i v e d t h e m o s t p r e s t i g i o u s t o u r i s t i n d u s t r y a w a r d o n t h e w o r l d – W o r l d T r a v e l A w a r d . T h e V a l a m a r R i v i e r a H o t e l & R e s i d e n c e 4 * i n P o r e č r e c e i v e d t h e a w a r d f o r t h e b e s t C r o a t i a n boutique hotel, while the Valamar Collection Girandella Resort 4/5 i n R a b a c w a s a g a i n r e c o g n i z e d a s t h e l e a d i n g C r o a t i a n r e s o r t . T h e t i t l e o f t h e l e a d i n g h o t e l i n C r o a t i a w a s g r a n t e d t o t h e D u b r o v n i k P r e s i d e n t V a l a m a r C o l l e c t i o n H o t e l 5 * . IN 2021, VALAMAR WAS AWARDED NUMEROUS PRIZES AND RECOGNITIONS 10 Dubrovnik President Valamar Collection Hotel 5, Dubrovnik ANNUAL REPORT 2021 Results of the Group Isabella Valamar Collection Island Resort 4/5, Poreč ANNUAL AUDITED FINANCIAL STATEMENTS The Management Board of the Company presents the audited annual financial statements for the business operations in the year 2021. The Group’s profit and loss account for the period considered consolidates the data from the following companies (only for the period when they were subsidiaries of Valamar Riviera d.d.): Imperial Riviera d.d. (a subsidiary 46.27% owned by Valamar Riviera d.d.), Valamar A GmbH (until 29 November 2021, 100% owned, and from 29 November 2021, 24.54% owned), Valamar Obertauern GmbH (10% directly owned and, until 29 November, 90% indirectly owned by Valamar Riviera d.d. (90% of the shareholding owned by Valamar A GmbH), and from 29 November 2021, 22.08% indirectly owned by Valamar Riviera d.d.), Palme Turizam d.o.o. (until 7 May 2021, when it was merged to Valamar Riviera d.d., 100% owned), Magične stijene d.o.o. (100% owned), and Bugenvilia d.o.o. (100% owned). The Group’s balance sheet as at 31 December 2021 consolidates the d a t a f o r t h e f o l l o w i n g c o m p a n i e s : Valamar Riviera d.d. (Parent Company), Imperial Riviera d.d., Magične stijene d.o.o. and Bugenvilia d.o.o. The investment in the company Helios Faros d.d. is reported according to the equity method since Valamar Riviera d.d. does not exercise control but a significant influence over Helios Faros d.d. The Management Board presents the annual audited financial statements for the 2021 12 Krk Premium Camping Resort 4, Krk island ANNUAL REPORT 2021 Adjusted ROCE 9 -6.5% 3.1% 9.6pp Net debt / Adjusted EBITDA 22.6 2.9 -87.0% Adjusted EBITDA margin 6 18.7% 41.0% 22.3pp Adjusted EBIT 6 -371,522,315 164,519,987 - Adjusted EBITDA 6 126,431,628 673,525,640 432.7% KEY FINANCIAL INDICATORS 1 2020 2021 2021/2020 Total revenues 696,901,773 1,679,909,675 141.1% Operating income 675,610,635 1,644,008,023 143.3% Sales revenues 642,478,457 1,605,127,860 149.8% Board revenues (accommodation and board revenues) 2 531,636,818 1,344,778,046 153.0% Operating costs 3 530,527,177 938,294,335 76.9% EBITDA 4 103,189,578 645,980,279 526.0% Extraordinary operations result and one-off items 5 -23,242,050 -27,545,361 18.5% EBIT -394,764,365 136,974,626 - EBT -501,048,580 101,475,233 - Net profit -358,805,791 108,707,246 - EBT margin -74.2% 6.2% 80.3pp EBITDA margin 15.3% 39.3% 24.0pp 31/12/2020 31/12/2021 2021/2020 Net debt 7 2,851,116,054 1,973,103,640 -30.8% Cash and cash equivalents 665,932,900 1,115,257,824 67.5% C a p i t a l i n v e s t m e n t s ( d e t a i l s i n c h a p t e r “2 0 2 0 I n v e s t m e n t s ”) 595,870,921 115,355,120 -80.6% ROE 8 -11.5% 3.2% 14.7pp Market capitalization 10 3,750,579,650 4,158,908,886 10.9% EV 11 7,303,506,632 7,175,077,019 -1.8% EPS 12 -2.70 0.86 - DPS 13 0 0 - K E Y B U S I N E S S I N D I C A T O R S 1 4 2020 2021 2021/2020 Number of accommodation units (capacity) 21,247 21,328 0.4% Number of beds 58,492 58,747 0.4 % Full occupancy days 47 99 110.6% Annual occupancy (%) 13 27 107.7% Accommodation units sold 999,020 2,100,954 110.3% Overnights 2,279,215 5,004,639 119.6% ARR 15 (in HRK) 532 640 20.3% RevPAR 16 (in HRK) 25,021 63,052 152.0% 1 Classified according to the Annual Financial Statement (GFI POD-RDG). EBIT, EBITDA and their adjusted values and respective margins are r e c o r d e d o n t h e b a s i s o f o p e r a t i n g i n c o m e . 2 I n c o m p l i a n c e w i t h t h e c l a s s i f i c a t i o n u n d e r t h e U S A L I i n t e r n a t i o n a l s t a n d a r d f o r r e p o r t i n g i n h o t e l i n d u s t r y ( U n i f o r m S y s t e m o f A c c o u n t s f o r the Lodging Industry). 3 O p e r a t i n g c o s t s i n c l u d e m a t e r i a l c o s t s , s t a f f c o s t s , o t h e r c o s t s , a n d o t h e r o p e r a t i n g c o s t s r e d u c e d b y e x t r a o r d i n a r y e x p e n s e s a n d o n e - o f f i t e m s . 4 EBITDA (eng. earnings before interest, taxes, depreciation and a m o r t i z a t i o n ) i s c a l c u l a t e d a s : o p e r a t i n g i n c o m e - t o t a l o p e r a t i n g c o s t s + d e p r e c i a t i o n a n d a m o r t i s a t i o n + v a l u e a d j u s t m e n t s . 5 A d j u s t m e n t s w e r e m a d e f o r (i) e x t r a o r d i n a r y i n c o m e ( i n t h e a m o u n t o f HRK 30.2 million in 2021, and HRK 20.3 million in 2020), (ii) extraordinary expenses (in the amount of HRK 55.8 million in 2021, and HRK 42.3 m i l l i o n i n 2 0 2 0 ) , a n d ( i i i ) t e r m i n a t i o n b e n e f i t c o s t s ( i n t h e a m o u n t o f H R K 1.8 million in 2021, and HRK 1.2 million in 2029). 6 A d j u s t e d b y t h e r e s u l t o f e x t r a o r d i n a r y o p e r a t i o n s a n d o n e - o f f i t e m s . 7 N e t d e b t : n o n - c u r r e n t a n d c u r r e n t l i a b i l i t i e s t o b a n k s a n d o t h e r f i n a n c i a l i n s t i t u t i o n s + l i a b i l i t i e s f o r l o a n s , d e p o s i t s a n d o t h e r + o t h e r l i a b i l i t i e s according to IFRS 16 (leases) – cash and cash equivalents – long-term a n d s h o r t - t e r m i n v e s t m e n t s i n s e c u r i t i e s – c u r r e n t l o a n s g i v e n , d e p o s i t s , etc. 8 R O E r e f e r s t o r e t u r n o n e q u i t y ; c a l c u l a t e d a s : p r o f i t f o r t h e p e r i o d / (capital and reserves). 9 Adjusted ROCE refers to return on capital employed; calculated as: adjusted E B I T / ( c a p i t a l a n d r e s e r v e s a t t h e e n d o f t h e p e r i o d + n o n c u r r e n t a n d c u r r e n t l i a b i l i t i e s t o b a n k s a n d o t h e r f i n a n c i a l i n s t i t u t i o n s + o t h e r l i a b i l i t i e s according to IFRS 16 (leases) - cash and cash equivalents - long-term and s h o r t - t e r m i n v e s t m e n t s i n s e c u r i t i e s - l o a n s g i v e n , d e p o s i t s , e t c .). 10 M a r k e t c a p i t a l i z a t i o n i s c a l c u l a t e d a s t h e t o t a l n u m b e r o f s h a r e s m u l t i p l i e d b y t h e l a s t s h a r e p r i c e o n 3 1 / 1 2 o f a p a r t i c u l a r y e a r . 11 EV refers to enterprise value; calculated as market capitalization + net debt + minority interest. 12 E P S r e f e r s t o e a r n i n g s p e r s h a r e c a l c u l a t e d o n t h e b a s i s o f n e t p r o f i t a t t r i b u t a b l e t o t h e o w n e r s o f t h e p a r e n t c o m p a n y . W e i g h t e d a v e r a g e number of shares in 2021: 121,887,907. Weighted average number of shares in 2020: 121,887,907. 13 DPS refers to dividends per share. 14 D a t a f o r H e l i o s F a r o s a r e n o t i n c l u d e d . 15 A v e r a g e r a t e i s r e c o r d e d o n t h e b a s i s o f c u m u l a t i v e b o a r d r e v e n u e s (accommodation and board’s food and beverage revenues). 16 R e v e n u e p e r a c c o m m o d a t i o n u n i t i s r e c o r d e d o n t h e b a s i s o f c u m u l a t i v e b o a r d r e v e n u e s ( a c c o m m o d a t i o n a n d b o a r d ’s f o o d a n d b e v e r a g e revenues). 13 ANNUAL REPORT 2021 Overnights and ARR R e v e n u e s a n d a c c o m m o d a t i o n units sold Overnights 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 5,004,639 ARR ( i n H R K ) 750 500 450 300 150 Revenues (in 000 HRK) 1,500,000 1,200,000 900,000 600,000 300,000 1,679,910 2,100,954 Accomodation units 2,000,000 1,600,000 1,200,000 800,000 400,000 0 O v e r n i g h t s 0 ARR 0 T o t a l r e v e n u e s 0 Sales revenues A c c o m m o d a t i o n u n i t s s o l d 2020. 2021. 2020. 2021. In 2021, Valamar Group realized 5.0 million overnights, which is still a decrease of 26% compared to 2019 and an increase of 120% compared to 2020. In the first quarter of 2021, the number of overnights was very low with only one open hotel -Valamar Diamant Hotel & Residence. Valamar Diamant Hotel & Residence shifted from the regional to the Croatian market, with s p e c i a l f o c u s o n w e e k e n d s t a y s , professional national and foreign sports groups without indoor training bans and regional cyclists groups. Valamar Obertauern Hotel in Austria was closed for the entire 2020/21 ski season. In the same period, two camping resort were opened year-round with a special “extended stay” offer (14 and 30 days), focusing on families and individuals who were able to work/study remotely. In the second quarter, n e g a t i v e t r e n d w a s r e v e r s e d a n d a n o t i c e a b l e increase in the number of overnights was achieved, although measures related to the 14 640 532 2,279,215 1,605,128 999,020 696,902 642,478 Valamar Padova Hotel 4, Rab island ANNUAL REPORT 2021 C O V I D - 1 9 p a n d e m i c i n E u r o p e w e r e s t i l l i n f o r c e . T h i s i s p r i m a r i l y d u e t o t h e g r e a t d e s i r e t o t r a v e l a f t e r a l o n g p e r i o d o f restrictions and a somewhat less r e s t r i c t i v e p o l i c y of crossing state borders. Our northern destinations were t h e m o s t v i s i t e d : P o r e č , R a b a c a n d t h e i s l a n d s o f K r k a n d R a b , w h i l e s o u t h e r n destinations Makarska, Hvar and Dubrovnik reported lower occupancy rates due to the lack of flights and a slightly greater distance from source markets. As explained earlier, the third quarter was marked by an almost complete recovery in tourist traffic at a large number of our properties, although the real main tourist season began only in mid-July. However, in the fourth quarter, this powerful trend slowed down somewhat, primarily d u e t o l o w e r r e a l i z a t i o n i n t h e g r o u p s a l e s a n d M I C E s e g m e n t . REVENUES In 2021, total revenues amounted to HRK 1,679,9 million, which is an increase of 141.1% (HRK 983.0 million). The realized total revenues were influenced by: a) i n c r e a s e i n s a l e s r e v e n u e s b y 1 4 9 .8 % ( H R K 9 6 2 .6 m i l l i o n ) t o t h e a m o u n t of HRK 1,605.1 million, which consists primarily of board revenues (HRK 1,344.8 million) after a significant improvement in tourist flows as previously explained. There has been a slight change in the revenue structure; domestic sales revenues amount to HRK 173.6 million with a share of 10.8% in total sales revenues (12.9% in 2020) and are HRK 90.9 million higher than in 2020. With a share of 89.2% in total sales revenues (87.1% in 2020), sales revenues on foreign markets amount to HRK 1,431.5 million and are higher by HRK 871.7 million b) an increase in other operating revenues of 18.0% to HRK 38.6 million compared to 2020, mainly due to higher revenues from the cancelation of provisions for litigation c) f i n a n c i a l i n c o m e a m o u n t s t o H R K 3 5 .4 m i l l i o n a n d i s h i g h e r b y 6 6 .0 % than those realized in 2020 as a result of the increase in net positive exchange rate differences on long-term loans as well due to income from t h e d i s c o n t i n u a t i o n o f c o n t r o l o v e r s u b s i d i a r i e s V a l a m a r A a n d V a l a m a r Obertauern. 15 Valamar Argosy Hotel 4, Dubrovnik ANNUAL REPORT 2021 TOTAL OPERATING EXPENSES OF VALAMAR GROUP 17 (in HRK) 2020 2021 2021/2020 Operating costs 18 530,527,177 938,294,335 76.9% Total operating expenses 1,070,375,000 1,507,033,397 40.8% Material costs 254,642,998 458,262,170 80.0% Staff cost 189,951,093 353,175,910 85.9% Depreciation and amortisation 496,444,044 507,335,969 2.2% Other costs 89,097,655 134,450,892 50.9% Provisions and value adjustments 30,223,911 41,982,841 38.9% Other operating expenses 10,015,299 11,825,615 18.1% T O T A L O P E R A T I N G E X P E N S E S Total operating expenses in 2021 amounted to HRK 1,5 0 7 .0 m i l l i o n , w h i c h i s 4 0 .8 % m o r e t h a n i n t h e l a s t y e a r . D e v e l o p m e n t o f o p e r a t i n g e x p e n s e s : a) m a t e r i a l c o s t s a m o u n t t o H R K 4 5 8 .3 m i l l i o n a n d a r e h i g h e r b y 8 0 .0 % a s a r e s u l t o f i n c r e a s e d c o s t s of raw m a t e r i a l s , c o s t s o f p r o m o t i o n a l a c t i v i t i e s a n d o t h e r d i r e c t c o s t s i n a c c o r d a n c e w i t h t h e i n c r e a s e d b u s i n e s s v o l u m e b) staff costs increased by 85.9% and amount to HRK 3 5 3 .2 m i l l i o n , a l s o a f t e r t h e i n c r e a s e d b u s i n e s s v o l u m e and the need for workforce. Total COVID grants related t o e m p l o y e e c o s t s u b s i d i e s a r e i n c l u d e d i n t h e a m o u n t o f HRK 102.1 million for the Group (2020: HRK 164.4 million) a n d H R K 8 4 .6 m i l l i o n f o r t h e C o m p a n y ( 2 0 2 0 : H R K 1 4 1 .3 million) c) depreciation amounts to HRK 507.3 million, which represents an increase of 2.2% d) other expenses increased by 50.9% to HRK 134.4 million. T h e i n c r e a s e i s d u e t o i n c r e a s e d e m p l o y e e t r a n s p o r t a t i o n f e e s a n d e m p l o y e e r e w a r d s , as well as higher expenses for student workers e) provisions and value adjustments amount to HRK 42 million and are higher by 38.9% as a result of provisions f o r t h e c o s t s f o r t o u r i s t l a n d lease f) o t h e r o p e r a t i n g e x p e n s e s a m o u n t t o H R K 1 1 .8 m i l l i o n , which is an increase of 18.1%. 17 Classified according to Annual Financial Statements standard (GFI POD-RDG). 18 O p e r a t i n g c o s t s i n c l u d e m a t e r i a l c o s t s , s t a f f c o s t s , other costs, and other operating costs reduced by extraordinary expenses and one-off items. 16 ANNUAL REPORT 2021 EBITDA AND EBT A d j u s t e d E B I T D A a m o u n t s t o H R K 6 7 3 .5 m i l l i o n , w h i c h i s a n i m p r o v e m e n t o f H R K 5 4 7 .1 m i l l i o n c o m p a r e d to adjusted EBITDA realized in 2020 in the amount of HRK 126.4 million. The main reasons for this are very s t r o n g d e m a n d f o r m o s t o f o u r p r o p e r t i e s i n the high s e a s o n , w h i c h h a s l e d t o a s i g n i f i c a n t i n c r e a s e i n t h e n u m b e r o f o v e r n i g h t s t a y s a n d a s i g n i f i c a n t i n c r e a s e i n a v e r a g e p r i c e s . I n a d d i t i o n , t h e G r o u p r e c o r d e d a f a v o u r a b l e d e v e l o p m e n t o f a l l m a j o r c o s t c a t e g o r i e s in the pre-season after adjusting to pandemic working c o n d i t i o n s , w h i c h i n c l u d e s t h e g e n e r a l r a t i o n a l i z a t i o n o f o p e r a t i o n s a n d i n t e r n a l s a v i n g s m e a s u r e s a s w e l l a s t h e i m p l e m e n t a t i o n o f “P a u s e , r e s t a r t p r o g r a m ”. Furthermore, the use of support measures by the G o v e r n m e n t o f t h e R e p u b l i c o f C r o a t i a , e n a b l e d t h e G r o u p t o p r e s e r v e j o b s a n d t o b e a b l e t o prepare 2021 t o u r i s t s e a s o n e f f i c i e n t l y . After the above-described increase in EBITDA and better net financial result in 2021 related to exchange rate movements (explained in more detail in the next section), a significant improvement in profit before tax (EBT) was achieved in the amount of HRK 600.0 million. Thus, EBT in 2021 amounted to HRK 99.0 million after a negative EBT of HRK -501.0 million in 2020. 17 Valamar Carolina Hotel & Villas 4,Krk Island ANNUAL REPORT 2021 2,851.1 -486.8 -172.4 -218.8 1,973.1 -878.0 RESULT FROM FINANCIAL ACTIVITIES In 2021, net financial result amounts to HRK -35.9 million (HRK -104.6 million in 2020). The main reason for HRK 68.7 million better financial result compared to 2020 is primarily the increase in net foreign exchange gains (mostly unrealized on long-term loans) by HRK 52.7 million, given that in 2021 kuna recorded a small increase against the euro, while in 2020 a stronger depreciation of kuna against the euro was recorded. F i n a n c i a l i n c o m e and expenses ( i n H R K ) 100,000,000 80,000,000 60,000,000 125,931,773 Also, unrealized income from financial assets in the amount of HRK 4.5 million was recorded, while in 2020, unrealized expenses from financial assets in the amount of HRK 17.8 million was recognized. In addition, interest on long-term and short-term loans increased by HRK 3.2 million due to the provision of new sources of liquidity. 40,000,000 20,000,000 0 Financial income Financial expenses 2020. 2021. Net debt 19 ( i n HRK ‘000,000) 3,000.0 2,500.0 2,000.0 1,500.0 1,000.0 N e t d e b t a s a t 31 December 2020 Increase of cash and cash e q u i v a l e n t s a n d s i m i l a r D e c r e a s e o f c u r r e n t l i a b i l i t i e s t o w a r d s b a n k s a n d o t h e r f i n a n c i a l i n s t i t u t i o n s a n d similar D e c r e a s e o f l o n g - t e r m l i a b i l i t i e s t o w a r d s b a n k s a n d o t h e r f i n a n c i a l i n s t i t u t i o n s a n d s i m i l a r N e t d e b t a s a t 31 December 2021 19 N e t d e b t : n o n - c u r r e n t a n d c u r r e n t l i a b i l i t i e s t o b a n k s a n d o t h e r f i n a n c i a l i n s t i t u t i o n s + l i a b i l i t i e s f o r l o a n s , d e p o s i t s a n d o t h e r + o t h e r l i a b i l i t i e s a c c o r d i n g t o I F R S 1 6 (leases) – cash and cash e q u i v a l e n t s – l o n g - t e r m a n d s h o r t - t e r m i n v e s t m e n t s i n s e c u r i t i e s – c u r r e n t l o a n s given, deposits, etc. 18 71,256,632 35,353,682 21,291,138 ANNUAL REPORT 2021 A S S E T S A N D L I A B I L I T I E S On 31 December 2021, total value of Group’s assets amount to HRK 6,911.1 million, which is 0.5% increase compared to 31 December 2020. Total share capital and reserves amount to HRK 3,308.6 million and are higher by 15.5% as a result of the realized profit in 2021 as well as increase in minority interests following the capital increase in Imperial Riviera. Total long-term and short-term liabilities to banks and other financial institutions as at 31 December 2021 amount to HRK 3,112.6 million and are lower by 11.2% compared to 31 December 2020 as a result of repayment of short-term and long-term loans. A large part of the loan portfolio (89%) consists of long-term loans with contracted fixed interest rate and loans protected by derivative instruments (IRS) for the purpose of hedging against interest rate risk. In 2020, the Group deferred the payment of a total of HRK 349 million of principal to commercial banks and the Croatian Bank for Reconstruction and Development, of which HRK 272 million represents deferred principal payment for 2020, HRK 49 million for the first quarter of 2021 and HRK 27 million kuna for the second quarter of 2021. In addition, the payment of interest in the total a m o u n t o f around HRK 47 million was postponed. On 30 June 2021., after the expiration of the moratorium period with commercial banks, the Group began regular repayment of credit liabilities. Assets and liabilities Amount ( i n H R K ‘0 0 0 ) 7,000,000 6,400,000 5,800,000 5,200,000 4,600,000 4,000,000 3,400,000 2,800,000 2,200,000 31/12/2020 31/12/2021 Total LT asset Total ST asset P r e p a y m e n t s a n d a c c r u e d i n c o m e Capital and reserves Provisions LT liabilities ST liabilities Accrued expenses and d e f e r r e d i n c o m e On 31 December 2021 the Group’s cash balance amounted to HRK 1,115.3 million (an increase of 67.5% compared to 31 December 2020), which together with i) the agreed credit lines, ii) valuable tourist assets and iii) a strong operating business model make Group’s stable balance sheet. 19 Valamar Collection Girandella Resort 4/5, Rabac 6.880 billion 6.914 billion 55,359 72,821 23,768 87,858 737,066 934,437 733,967 1,217,958 2,614,508 6,087,158 2,867,349 5,671,820 166,155 141,118 2,863,857 3,311,057 ANNUAL REPORT 2021 H O T E L A N D C A M P I N G R E S O R T S O V E R V I E W 20 HOTELS AND RESORTS OVERVIEW LOCATION KEYS CAMPING RESORTS OVERVIEW LOCATION KEYS Camping Resorts CAMPING ADRIATIC BY VALAMAR - PREMIUM 11.557 RESORTS 5.352 Istra Premium Camping Resort by Valamar 5 Poreč 874 Lanterna Premium Camping Resort by Valamar 4 Poreč 2.930 Krk Premium Camping Resort by Valamar 5 Krk Island 500 Ježevac Premium Camping Resort by Valamar 4 Krk Island 632 Padova Premium Camping Resort by Valamar 4 Rab Island 416 CAMPING ADRIATIC BY VALAMAR - RESORTS 4.555 Orsera Camping Resort by Valamar 3 Poreč 592 Solaris Camping Resort by Valamar 3 Poreč 1.824 Marina Camping Resort by Valamar 4 Rabac 329 Baška Beach Camping Resort by Valamar 4 Krk Island 593 Bunculuka Camping Resort by Valamar 4 Krk Island 408 San Marino Camping Resort by Valamar 4 Rab Island 809 CAMPING ADRIATIC BY VALAMAR - SUNNY 1.650 Brioni Sunny Camping by Valamar 2 Pula 734 Tunarica Sunny Camping by Valamar 2 Rabac 160 Škrila Sunny Camping by Valamar 3 Krk Island 342 Solitudo Sunny Camping by Valamar 3 Dubrovnik 414 20 H o t e l M a r i e t t a i n O b e r t a u e r n , A u s t r i a , a c q u i r e d b y V a l a m a r A G m b H i n D e c e m b e r 2 0 2 1 . I t i s n o t m a n a g e d b y V a l a m a r R i v i e r a a n d i s n o t b r a n d e d b y V a l a m a r R i v i e r a . L e a s e d t o a t h i r d p a r t y u n t i l 20 ANNUAL REPORT 2021 mid-2023. Hotels and Resorts 9.292 VALAMAR COLLECTION 1.261 Marea Valamar Collection Suites 5 Poreč 108 Imperial Valamar Collection Hotel 4 Rab Island 136 Dubrovnik President Valamar Collection Hotel 5 Dubrovnik 292 Isabella Valamar Collection Island Resort 4 / 5 Poreč 334 Girandella Valamar Collection Resort 4 / 5 Rabac 391 Pinea Valamar Collection Resort 5 Poreč 0 VALAMAR HOTELS & RESORTS 3.964 Valamar Riviera Hotel & Residence 4 Poreč 132 Valamar Tamaris Resort 4 Poreč 507 Valamar Parentino Hotel 4 Poreč 329 Valamar Bellevue Resort 4 Rabac 372 Valamar Diamant Hotel & Residence 3/4 Poreč 372 Valamar Pinia Hotel 3 Poreč 170 Valamar Sanfior Hotel & Casa 4 Rabac 242 Valamar Atrium & Villa Adria 4 / 5 Krk Island 92 Valamar Carolina Hotel & Villas 4 Rab Island 176 Valamar Padova Hotel 4 Rab Island 175 Valamar Meteor Hotel 4 Makarska 268 Valamar Argosy Hotel 4 Dubrovnik 308 Valamar Lacroma Dubrovnik Hotel 4 Dubrovnik 401 Valamar Club Dubrovnik Hotel 3 Dubrovnik 338 Valamar Obertauern Hotel 4 Austria 82 [PLACES] by Valamar 179 Hvar [PLACESHOTEL] by Valamar 3 Hvar Islan. 179 SUNNY BY VALAMAR 3.888 Lanterna Sunny Resort by Valamar 2 Poreč 606 Allegro Sunny Hotel & Residence by Valamar 3 Rabac 180 Corinthia Baška Sunny Hotel by Valamar 3 Krk Island 431 San Marino Sunny Resort by Valamar 3 Rab Island 457 Eva Sunny Hotel & Residence 2 Rab Island 284 Dalmacija Sunny Hotel by Valamar 3 Makarska 190 Rivijera Sunny Resort by Valamar 2 Makarska 258 Tirena Sunny Hotel by Valamar 3 Dubrovnik 208 Trim & Helios Sunny Apartments by Valamar 2 Hvar Islan. 85 Crystal Sunny Hotel by Valamar 4 Poreč 223 Rubin Sunny Hotel by Valamar 3 Poreč 253 Miramar Sunny Hotel & Residence by Valamar 3 Rabac 178 Zvonimir Sunny Hotel by Valamar 4 Krk Island 85 Koralj Sunny Hotel by Valamar 3 Krk Island 194 Arkada Sunny Hotel by Valamar 2 Hvar Islan. 256 Family Life Bellevue Resort 4, Rabac Results of the Company In 2021, total revenues increased by 185.8% to the amount of HRK 1,691.4 million. Sales revenues amount to HRK 1,360.9 million with a 80.7% share in total revenues. Compared to the last year, they are higher by 148.8% as a result of increased business volume. Domestic sales revenues amount to HRK 181.2 million with a share of 13.3% in total sales revenues (12.4% in 2020) and are higher by HRK 113.4 million compared to the previous year. Revenues from sales on foreign markets amount to HRK 1,179.8 million with a share of 86.7% in total revenues (87.6% in 2020). Compared to the previous comparable period, they are higher by HRK 700.6 million. Material costs amount to HRK 396.1 million with a growth of 76.9% after increased business volume. Staff costs amount to HRK 301.3 million and are 85.1% higher than in the same period last year, also due to the increased volume of business and the need for workforce. Depreciation amounts to HRK 397.6 million and is higher by 1.4% compared to the same period last year. Value adjustments and provisions amount to HRK 38.3 million, which is an increase of 41.9% compared to 2020. This is mainly the results of provisions for the costs for tourist land lease. In 2021, net financial result amounts to HRK -43.9 million (HRK -95.1 million in 2020). The main reason for HRK 51.2 million better financial result compared to the previous year is primarily the increase in net foreign exchange gains (primarily unrealized on long-term loans) by HRK 48.6 million, given that in 2021 kuna recorded a small increase against the euro, while in 2020 a stronger depreciation of kuna against the euro was recorded. E B I T D A a m o u n t e d t o H R K 8 1 4 .3 million, which is an improvement of HRK 739.3 million compared to EBITDA realized in 2020 at the level of HRK 74.9 million. The main reasons for this are very strong demand for most of our properties in the high season, which has led to a significant increase in the number of overnight stays and a significant increase in average prices. In IMPROVEMENT OF E B I T D A C O M P A R E D TO 2020 STRONG CASH POSITION OF THE COMPANY AS AT 31 DECEMBER 2021 OF HRK 582 MILLION a d d i t i o n , t h e C o m p a n y recorded a favourable development of all major cost categories in the pre-season after adjusting to pandemic working conditions, which includes general business rationalization and internal savings measures taken as well as the implementation of “Pause, restart program”. Furthermore, the use of support measures by the Government of the Republic of Croatia, enabled the Company to preserve jobs and to b e a b l e t o p r e p a r e 2 0 2 1 t o u r i s t season efficiently. An additional reason can be found in the realized net profits of HRK 281.0 million, which are recorded under Other operating income with undertakings within the group. The profits were generated from the entry of the Company’s real estate (land) in the area of Babin Kuk in Dubrovnik into the share capital of Imperial Riviera within capital increase procedure. That had no impact on the Valamar Group’s financial statements. Total assets of the Company on 31 December 2021 amounted to HRK 5,830.0 million and were lower by 2.1% compared to 31 December 2020. Total share capital and reserves amount to HRK 2,619.3 million and are higher by 9.8% as a result of the realized profit in 2021. On 31 December 2021 the Company’s cash balance amounts to HRK 582.1 million, which is an increase of 11.3% compared to 31 December 2020. 22 ANNUAL REPORT 2021 Hvar PLACESHOTEL by Valamar 3, Hvar Island Investments V a l a m a r ’s s t r a t e g y f o r t h e d e v e l o p m e n t o f t o u r i s m p r o d u c t s a n d h i g h a d d e d - v a l u e a m e n i t i e s i s o n e o f t h e m a i n d r i v e r s o f g r o w t h a n d s u s t a i n a b l e b u s i n e s s c o n t i n u i t y . T h e s t r a t e g y is steered by sustainability and social responsibility while i n v e s t i n g i n p r o d u c t s , e m p l o y e e s and tourist destinations. F u r t h e r m o r e , V a l a m a r ’s s e r v i c e c o n c e p t s a r e c o n t i n u o u s l y being developed to align the offer with current market requirements, primarily guests’ trends and expectations. With a timely and thorough approach to mitigating and c o n t r o l l i n g the adverse effects caused by the COVID-19 p a n d e m i c , a c u s t o m i z e d b u s i n e s s p l a n w a s i n t r o d u c e d i n a l l b u s i n e s s s e g m e n t s , i n c l u d i n g i n v e s t m e n t s . T h e p l a n n e d p o r t f o l i o r e p o s i t i o n i n g a n d d e v e l o p m e n t o f h i g h a d d e d - v a l u e p r o d u c t s a n d s e r v i c e s , w i t h e m p h a s i s o n t h e p r e m i u m s e g m e n t o f r e s o r t s a n d c a m p i n g r e s o r t s , h a s b e e n a d j u s t e d b y r e d u c i n g i n v e s t m e n t i n t e n s i t y a l l w h i l e p r e p a r i n g n e w g r o w t h a n d d e v e l o p m e n t p r o j e c t s w h e n t h e c o n d i t i o n s a r e m e t . I n o r d e r t o a l i g n t h e h o s p i t a l i t y p o r t f o l i o p l a n a n d d e v e l o p m e n t w i t h t h e c u r r e n t t o u r i s m f l o w s a n d t h e p r o a c t i v e a p p r o a c h t o c a s h f l o w m a n a g e m e n t a n d f i n a n c i n g , t h e i n v e s t m e n t s i n 2 0 2 1 w i l l m o s t l y b e f o c u s e d o n t h e c o m p l e t i o n o f p r o j e c t s a n d r a i s i n g s e r v i c e q u a l i t y a n d g u e s t s a t i s f a c t i o n . C o n s i d e r i n g t h e r e d u c e d i n v e s t m e n t i n t e n s i t y , t h e t o t a l approved investments of the Valamar Group in the 2 0 2 0 / 2 0 2 1 i n v e s t m e n t c y c l e a m o u n t e d t o H R K 1 6 4 m i l l i o n i n 2 0 2 1 . A s l a s t y e a r , t h e V a l a m a r G r o u p w i l l c o n t i n u e t o a d a p t i t s p r o d u c t s a n d d e v e l o p d i g i t i z a t i o n d i g i t a l i z a t i o n projects t o f u r t h e r e n h a n c e s e r v i c e q u a l i t y a n d g u e s t s a f e t y i n t h e u p c o m i n g t o u r i s t s e a s o n . A t t h e G r o u p l e v e l , a t o t a l o f H R K 1 6 m i l l i o n h a s b e e n p r o v i d e d f o r h e a l t h a n d s a f e t y , a s w e l l a s d i g i t a l i z a t i o n a n d i n n o v a t i o n p r o j e c t s . I n v e s t m e n t s i n t h i s s e g m e n t i n c l u d e t h e c o n t i n u a t i o n o f p r o j e c t s f r o m 2 0 2 0 , a n d r e l a t e t o t h e a u t o m a t i o n o f p r o c e s s e s a n d s y s t e m s s u c h a s i m p r o v i n g t h e O n l i n e R e c e p t i o n a n d “s e l f c h e c k - i n ” s y s t e m , a u t o m a t i n g g a t e b a r r i e r s , i m p r o v i n g V a l f r e s c o D i r e k t o n l i n e 24 Valamar Parentino Hotel 4, Poreč ANNUAL REPORT 2021 s t o r e s e r v i c e s a n d o t h e r s i m i l a r p r o j e c t s a i m e d a t e n h a n c i n g o u r g u e s t ’s health and safety services for our guests. HRK 17 million h a s b e e n p r o v i d e d f o r s m a l l e r i n v e s t m e n t s a n d t h e p u r c h a s e o f n e w e q u i p m e n t a n d f u r n i t u r e , w h i l e t h e r e m a i n i n g a m o u n t h a s b e e n d i r e c t e d t o w a r d s t h e c o m p l e t i o n o f i n i t i a t e d i n v e s t m e n t s i n c o n s t r u c t i o n w o r k s a n d t h e p r e p a r a t i o n o f f u t u r e i n v e s t m e n t s . A l l i n v e s t m e n t s w e r e c o m p l e t e d w i t h i n t h e p l a n n e d d e a d l i n e s . I n 2 0 2 1 , i n v e s t m e n t s w o r t h H R K 1 1 5 m i l l i o n w e r e c a p i t a l i z e d i n t h e p o r t f o l i o o f f i x e d t a n g i b l e a n d i n t a n g i b l e a s s e t s . V A L A M A R R I V I E R A V a l a m a r R i v i e r a p r o v i d e d H R K 1 2 3 m i l l i o n f o r t h e 2 0 2 0 / 2 0 2 1 i n v e s t m e n t c y c l e , a n d i n a d d i t i o n t o i n v e s t m e n t s a i m e d a t e n h a n c i n g a n d i m p l e m e n t i n g t h e p r o g r a m f o r g u e s t s ’ h e a l t h a n d s a f e t y , t h e c o m p a n y f o c u s e d o n i n v e s t m e n t s i n I s t r a P r e m i u m C a m p i n g R e s o r t 5 * . C o n s i d e r i n g t h e c u r r e n t c o n s u m e r t r e n d s a n d p r e f e r e n c e s , t h i s i s a p a r t i c u l a r l y a t t r a c t i v e a c c o m m o d a t i o n c a t e g o r y , w h i c h r e p r e s e n t s a s p e c i f i c p r o d u c t o f h i g h g u e s t loyalty, especially due t o t h e p e r c e p t i o n o f r e d u c e d h e a l t h r i s k s . G i v e n t h e h i g h o c c u p a n c y r a t e o f I s t r a P r e m i u m C a m p i n g Resort 5 in 2020 despite the u n f a v o r a b l e c i r c u m s t a n c e s , t h e a m o u n t o f H R K 1 0 m i l l i o n h a s been invested in enhancing service quality in 2021, mostly in the G l a m p i n g z o n e a n d f o o d a n d b e v e r a g e s f a c i l i t i e s . S e r v i c e quality IN YEAR 2021 INVESTMENTS WERE FOCUSED ON COMPLETION OF STARTED PROJECTS A L L I N V E S T M E N T S W E R E C O M P L E T E D WITHIN THE PLANNED DEADLINES has also been enhanced through targeted investments in three Valamar hotels. These include improvements of the exterior and interior of the Champagne Breakfast & Brunch restaurant and S p i n n a k e r r e s t a u r a n t a t t h e V a l a m a r R i v i e r a H o t e l , s i t u a t e d at the old town waterfront in of Poreč, which will enhance the new Old Town Holiday label within the Valamar Hotels & Resorts brand. Investments in this category include the promotion of the Sunny b y V a l a m a r e c o n o m y b r a n d . A s p a r t o f i t s r e b r a n d i n g , t h e M i r a m a r S u n n y H o t e l h a s i m p r o v e d B r e a k f a s t & L u n c h s e r v i c e s , i n t r o d u c e d the Valfresco 24/7 service with a rich menuavailable to guests, a d i g i t a l l i b r a r y a n d t h e C h i l l & P l a y Z o n e , w h i c h m a k e s d i g i t a l b o o k s and fun games available to our guests. In addition to the above, t h e i n v e s t m e n t i n c l u d e s a self-service laundry and 30 rearranged accommodation units. Investments in the Rubin Sunny Hotel are f o c u s e d o n r e n o v a t i n g i t s i n t e r i o r p u b l i c s p a c e s . Valamar launched a new lifestyle brand called [PLACES] by Valamar, i n t e n d e d f o r g u e s t s s e e k i n g f r e e d o m o f c h o i c e , m o d e r n d e s i g n a n d a u t h e n t i c d e s t i n a t i o n e x p e r i e n c e w i t h f u l l r e s p e c t f o r n a t u r e a n d t h e e n v i r o n m e n t . L i f e s t y l e h o t e l s h a v e b e c o m e a t r e n d i n t h e g l o b a l h o t e l i n d u s t r y r e c e n t l y b e c a u s e t h e y g o b e y o n d t h e l i m i t s o f t h e t r a d i t i o n a l h o s p i t a l i t y i n d u s t r y . T h e y a r e f o c u s e d o n c r e a t i n g u n i q u e e x p e r i e n c e s a n d o f f e r i n g a u t h e n t i c s e r v i c e s , i.e. o n p r e s e n t i n g t h e m o s t v a l u a b l e t h i n g s i n a d e s t i n a t i o n . T h u s t h e y a r e a b l e t o a t t r a c t m o d e r n a n d y o u n g t r a v e l l e r s , e s p e c i a l l y M i l l e n n i a l s Istra Premium Camping Resort 5, Poreč 25 ANNUAL REPORT 2021 Valamar Meteor Hotel 4, Makarska who particularly enjoy such type of travelling, including encounters with l i k e - m i n d e d p e o p l e , t a s t i n g n a t u r a l foods and dishes and who care about environmental sustainability. The first Valamar’s hotel under this new b r a n d i s H V A R [ P L A C E S H O T E L ] b y V a l a m a r i n S t a r i G r a d o n t h e i s l a n d o f H v a r ( t h e e x L a v a n d a h o t e l ) . V a l a m a r invested close to HRK 53 million in i t s r e f u r b i s h m e n t , a n d i t w a s o p e n e d mid of May 2021. The hotel has 179 r o o m s , w h i c h a r e a b l e n d o f t h e M e d i t e r r a n e a n t r a d i t i o n and of the modern design. C o n s i d e r i n g t h e a f o r e m e n t i o n e d o p t i m i z e d i n v e s t m e n t p l a n i n a c c o r d a n c e w i t h t h e c u r r e n t c i r c u m s t a n c e s , s u f f i c i e n t f u n d s h a v e b e e n p r o v i d e d i n t h i s i n v e s t m e n t c y c l e f o r t h e c o m p l e t i o n o f t h e f i r s t p h a s e o f i n v e s t m e n t i n V a l a m a r P i n e a C o l l e c t i o n R e s o r t , w h i l e t h e a c c o m m o d a t i o n f o r e m p l o y e e s i n D u b r o v n i k h a s b e e n c o m p l e t e d . V a l a m a r R i v i e r a ’s S u p e r v i s o r y B o a r d a p p r o v e d 2022 investments in the amount of HRK 180 million. The approved investments mostly relate to investments in the renovation and rebranding of the Corinthia Hotel in B a š k a t o t h e l e v e l o f t h e S u n n y P l u s b r a n d , c e r t a i n u p g r a d e s o f t h e V a l a m a r Bellevue Hotel 4 in Rabac, and continued investment in Istra Premium Camping Resort and Lanterna Premium Camping Resort. These investments a l s o r e l a t e t o s o m e o t h e r i n v e s t m e n t p r o j e c t s a s w e l l a s t h e m a i n t e n a n c e o f p r o p e r t i e s a n d f a c i l i t i e s f o r g u e s t s i n a l l d e s t i n a t i o n s , c o n t i n u e d i n v e s t m e n t s i n s e a s o n a l e m p l o y e e a c c o m m o d a t i o n a s w e l l a s c o n t i n u e d i n v e s t m e n t s i n e n e r g y e f f i c i e n c y p r o j e c t s a n d d i g i t a l i z a t i o n p r o j e c t s . I M P E R I A L R I V I E R A P l a n n e d i n v e s t m e n t s i n t h e 2 0 2 0 / 2 0 2 1 c y c l e a t t h e l e v e l o f I m p e r i a l R i v i e r a a m o u n t e d t o H R K 4 1 m i l l i o n a n d m o s t l y w e r e r e l a t e d t o t h e f i n a l p h a s e s o f i n v e s t m e n t p r o j e c t s i n t h e V a l a m a r M e t e o r H o t e l a n d t h e V a l a m a r Parentino Hotel, which were postponed due to the previously mentioned extraordinary circumstances caused by the COVID-19 pandemic. B y i n v e s t i n g i n t h e V a l a m a r P a r e n t i n o H o t e l , f i n a l i z e d p r o j e c t s i n c l u d e t h e r e n o v a t i o n o f 4 0 a c c o m m o d a t i o n u n i t s , a c h i l d r e n ’s p l a y g r o u n d , a p o o l b a r , p a r k i n g l o t a n d l a n d s c a p e d e s i g n . The investment in the Valamar Meteor H o t e l w a s w o r t h H R K 8 5 m i l l i o n i n t o t a l , e n a b l i n g t h e h o t e l t o h a v e a s e r i e s o f n e w a m e n i t i e s a n d o f f e r h i g h e r q u a l i t y a c c o m m o d a t i o n . T h e o f f e r o f t h e V a l a m a r M e t e o r H o t e l i s o r i e n t e d p r i m a r i l y t o w a r d s f a m i l i e s w i t h c h i l d r e n , t o w a r d s g u e s t s s e e k i n g a n a c t i v e v a c a t i o n a n d a t h l e t e s o f a l l p r o f i l e s . T h e investment into the Valamar Meteor Hotel included the construction of a n e w o u t d o o r p o o l a n d a n e x p a n s i o n o f t h e c u r r e n t o n e w i t h n e w a m e n i t i e s a n d a t t r a c t i o n s f o r f a m i l y v a c a t i o n . I t s i n d o o r p o o l w i t h wellness was also r e n o v a t e d a c c o r d i n g t o t h e V a l a m a r S u n & S p a c o n c e p t . 1 1 1 h o t e l r o o m s were refurbished in the first investment phase, while the remaining 160 r o o m s w e r e r e f u r b i s h e d i n t h e s e c o n d p h a s e . I m p e r i a l R i v i e r a d.d. p l a n s i n v e s t m e n t s i n t h e amount of HRK 125 million f o r i t s 2 0 2 2 i n v e s t m e n t c y c l e . T h e m o s t i m p o r t a n t i n v e s t m e n t s r e l a t e t o t h e r e n o v a t i o n o f t h e D a l m a c i j a S u n n y H o t e l b y V a l a m a r a n d t h e r e c o n s t r u c t i o n of the restaurant on the beach below this hotel. They also include the construction of the Padova I beach with the restaurant and sanitary facilities in the destination of Rab. The biggest investment amounting to H R K 6 7 m i l l i o n i s p l a n n e d f o r t h e e x i s t i n g D a l m a c i j a S u n n y H o t e l b y V a l a m a r i n M a k a r s k a , w h i c h w i l l b e r e p o s i t i o n e d a s D a l m a c i j a [ P L A C E S H O T E L ] b y V a l a m a r . T h i s i n v e s t m e n t i n c l u d e s the reconstruction of the existing and the construction of a new swimming pool, the arrangement of sundecks a n d a n e w p o o l b a r , t h e r e n o v a t i o n o f 1 9 0 a c c o m m o d a t i o n u n i t s a n d o t h e r s p a c e s a t t h e l e v e l o f l i f e s t y l e d e s i g n w i t h a n e m p h a s i s o n d i g i t a l i z a t i o n a n d quality. 26 ANNUAL REPORT 2021 The Risks of the Company and the Group Bunculuka Camping Resort 4, Krk island 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 r i s k . T h e C o m p a n y a n d G r o u p c o n s i d e r r i s k m a n a g e m e n t t o b e a key factor of differentiation among competitors. Risk management aims at creating sustainable value, thus offering reliability and security to numerous stakeholders. 5 K E Y S T E P S I N R I S K MANAGEMENT PROCESS T h e r e a r e f i v e k e y s t e p s i n a r i s k m a n a g e m e n t p r o c e s s : 1) Identifying potential risks; 2) Assessing identified risks; 3) Determining actions and responsibilities for efficient risk management; 4) M o n i t o r i n g and overseeing preventive actions; 5) Exchanging information on risk management results conducted by the Management board. The different types of risks facing Valamar can be classified into the following groups: • F i n a n c i a l r i s k s - r e l a t e d t o f i n a n c i a l v a r i a b l e s , c a n h a v e a negative impact on meeting liabilities for the company and the Group, liquidity, debt management etc.; • Business risks - related to the way company business is conducted in terms of supply and demand, competition, adapting to market trends, investments, growth etc.; • Operational risks - can arise from inadequate use of information, errors in business operations, non-compliance with internal procedures, human error, IT system, financial reporting and related risks, etc.; • G l o b a l r i s k s - c a n a r i s e f r o m n a t u r a l d i s a s t e r s , p a n d e m i c s , f o o d s h o r t a g e , social unrest, wars and other force majeure events beyond Valamar’s control; • Compliance risks - can arise from failure to comply with state laws and local regulations; risks related to changes in tax and other regulations. 28 ANNUAL REPORT 2021 FINANCIAL RISKS In their day-to-day business activities, the Company and Group face a n u m b e r of financial threats, especially: 1) Foreign exchange risk; 2) Interest rate risk; 3) C r e d i t r i s k ; 4) Price risk; 5) Liquidity risk; 6) Share-related risks; 7) R i s k o f i n f l a t i o n a n d i n c r e a s e in prices of purchased goods. The Company and Group have a proactive approach in mitigating interest r a t e a n d f o r e i g n e x c h a n g e r i s k s , b y e m p l o y i n g 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. 1) Foreign exchange risk The Company and Group conduct their business operations across national borders and are exposed to foreign exchange risks. They mainly r e s u l t f r o m c h a n g e s i n t h e e u r o / k u n a e x c h a n g e r a t e . F o r e i g n e x c h a n g e r i s k a r i s e s f r o m f u t u r e c o m m e r c i a l t r a n s a c t i o n s a n d r e c o g n i z e d a s s e t s and liabilities. Historically, most of our foreign revenue has been in euros, t h e c u r r e n c y i n w h i c h t h e m a j o r i t y o f o u r l o n g - t e r m d e b t i s d e n o m i n a t e d . H e n c e , f o r t h e m o s t part the Company and Group are naturally hedged f r o m e x c h a n g e r a t e r i s k s . S i n c e s o m e l i a b i l i t i e s a r e c o n t r a c t e d i n k u n a s , t h e C o m p a n y a n d G r o u p a c t i v e l y m a n a g e r i s k s b y u s i n g d e r i v a t i v e i n s t r u m e n t s a v a i l a b l e o n t h e f i n a n c i a l m a r k e t . The instruments are used according t o o p e r a t i n g a s s e s s m e n t s and expected market trends. In this way the cash flows are protected from the risk impact. Due to the emergence of exceptional circumstances caused by the COVID-19 pandemic in the first quarter of 2020, potentially strong depreciation pressures against the kuna/ e u r o c u r r e n c y p a i r a f f e c t t h e v a l u e o f e u r o - d e n o m i n a t e d long-term debt and contractual forward transactions whose potential negative effects are sought to be controlled by the proactive management of agreed derivative f i n a n c i a l i n s t r u m e n t s . I n t h e e v e n t o f a d r a s t i c decrease of euro inflows, the Company and the Group will use existing euro liquidity reserves to s e r v i c e the long term debt repayments and make adequate use of financial protection instruments, in accordance with the current state and future a s s e s s m e n t o f t h e C o m p a n y ’s a n d t h e Group’s foreign exchange position, expectations of movements in the value of the kuna/euro currency pair as well as other intercurrent relationships among world currencies. 2) Interest rate risk Variable rate loans expose the Company and Group to cash flow interest r a t e r i s k . A c t i v e l y , 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, a major part of the loan portfolio (over 80%) is comprised of long-term fixed interest loans or, respectively, loans hedged by a derivative instruments (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. The Company and the Group expect a limited impact from the increased interest rate volatility consequent to the recent coronavirus pandemic, since a large portion of the Group’s loan portfolio (89%) is made up of long-term fixed-rate loans, i.e. l o a n s p r o t e c t e d b y d e r i v a t i v e i n s t r u m e n t s ( I R S ) . 3) C r e d i t risk C r e d i t r i s k a r i s e s f r o m c a s h a s s e t s , t i m e d e p o s i t s a n d r e c e i v a b l e s . A c c o r d i n g t o t h e C o m p a n y a n d G r o u p s a l e s p o l i c y , b u s i n e s s t r a n s a c t i o n s a r e c o n d u c t e d o n l y w i t h c u s t o m e r s with suitable credit history, i.e. by agreeing advances, bank securities and (for individual customers) payments made through major credit card companies. In order to reduce credit risk, the Company and the Group continuously monitor their exposure to the business parties and their creditworthiness, obtain instruments for securing receivables (bills of exchange, debentures and guarantees), thus reducing the risks of uncollectability of their receivables for the services provided. In view of the negative effects of COVID-19 on the customers of the Company and t h e G r o u p , e s p e c i a l l y tour operators and travel agencies, the impact of the c u r r e n t l y u n f a v o r a b l e c i r c u m s t a n c e s on the related parties is being closely monitored, while actively reviewing the credit ratings and their potential to overcome current challenges. 29 ANNUAL REPORT 2021 4) Price risk The Company and Group hold equity securities and are exposed to equity p r i c e r i s k d u e t o security price volatility. Valamar is not an active participant in the market trade in terms of trading in equity and debt securities. However, with investments in buying Imperial Riviera and Helios Faros shares, the company is exposed to the said risk to a certain extent. 5) Liquidity risk T h e C o m p a n y a n d G r o u p h a v e a s o u n d l i q u i d i t y r i s k m a n a g e m e n t . S u f f i c i e n t 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 for 2020 and 2021 have been contracted with reputable financial institutions, while credit repayments in general are in line with the period of significant cash inflows from operating activities. 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. COVID-19 pandemic, as an external stressor to the operations of the Company and the Group, will create uncertain pressures on operating cash flow. In accordance with prudent management of the now increased liquidity risk, escalation plans for minimizing costs, maintaining liquidity, solvency of the company and maintaining business continuity were developed and activated, together with applications for support measures and assistance to the economy and the tourism sector, including temporary deferral of payment of overdue principal on long-term loans in accordance with the given opportunity of a moratorium on the repayment of credit obligations. 6) Share-related risks 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 c o n s o l i d a t i o n s , m e r g e r s , 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 c a s e a n y n e g a t i v e i m p l i c a t i o n s h a p p e n 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. 7) R i s k o f i n f l a t i o n a n d i n c r e a s e in prices of purchased goods As the Omicron COVID-19 variant spreads, countries have reimposed mobility restrictions. Rising energy prices and supply disruptions have resulted in higher and more broad-based global inflation than generally anticipated. Inflationary pressures my remain high, as some supply- demand mismatches and labour shortages could last throughout 2022. Rising geopolitical uncertainties in Europe (particularly surrounding the Russia-Ukraine conflict) and elsewhere are a main downside risk, adding pressure on energy prices. Inflation and rising prices of purchased goods may have an effect on the purchasing power of foreign and domestic guests, as well as on the level of our selling prices. The Company and the Group have also been exposed to the impact of the changes in the purchase prices for energy products (especially electrical energy) as well as prices for food and beverages and consumables. The Company and the Group have been continually making considerable investments in energy efficiency and renewables in order to mitigate the impact of a possible increase in energy prices as well as to decrease their dependence on suppliers. For a certain part of our assortment of food, beverages and consumables we have multi-annual fixed price contracts in place. T h e C o m p a n y a n d t h e G r o u p h a v e a v e r y h i g h s h a r e o f d i r e c t c h a n n e l s a n d other online channels in total sales, and sales prices are largely formed 30 ANNUAL REPORT 2021 dynamically, during the year. Accordingly, the Company and the Group h a v e t h e f l e x i b i l i t y to manage price levels in 2022. B U S I N E S S R I S K The Company and Group are constantly exposed to risks threatening its competitiveness and future stability. Since the Company and Group own significant number of real estates, 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’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 t o e x c h a n g e r a t e s a n d t h e p r i c e o f g o o d s a n d s e r v i c e s b e c a u s e t h e y d i r e c t l y a f f e c t t h e g u e s t s ’ p u r c h a s i n g p o w e r . H o w e v e r s m a l l , t h e s h a r e o f domestic g u e s t s 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 l a r g e E u r o p e a n m a r k e t , while safety risks decreased after joining the NATO. 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. 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 h i g h l e v e l o f w o r k e r s ’ r i g h t s i n t e r m s o f c o m p e t i t i v e salaries, reward systems, career development, employees’ wellbeing and cooperation with training institutions from all parts of Croatia. O P E R A T I O N A L R I S K S 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 o r g a n i z a t i o n . The benefits of the system include i) defining and identifying the Company and Group risk profile in relation to the operating risk ii) identifying a n d m a n a g i n g t h e k n o w n r i s k o c c u r r e n c e s in order to decrease the Company a n d G r o u p c o s t s a n d i i i ) d a t a a n a l y s i s w h i c h i n d i c a t e s t h e b u s i n e s s 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 i m p l e m e n t n e w t e c h n o l o g i e s i n e v e r y d a y b u s i n e s s o p e r a t i o n s . A s p e c i a l focus is given to providing sufficient resources for the development and i m p l e m e n t a t i o n of new technologies related to ICT, data protection, and upgrade of the current business systems and implementation of new ones. 31 ANNUAL REPORT 2021 G L O B A L R I S K S D e s p i t e i m p r o v e d s e c u r i t y a n d p o l i t i c a l c o n d i t i o n s , which have encouraged to a certain extent investments into tourism and hospitality, there are challenges that the Croatian tourism has to face, such as: • Periods of global financial crisis which reduce the purchasing power of the travelling-prone population; • Security and political issues related to globally escalating terrorism threats; • Security and political instability in the immediate environment of the neighbouring countries. E n v i r o n m e n t a l r i s k s c a n a l s o h a v e a n a d v e r s e e f f e c t o n t h e C o m p a n y a n d 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 t h e g u e s t s ’ l e n g t h o f s t a y i n t h e h o t e l s a n d c a m p s i t e s a s w e l l a s i n c r e a s i n g 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 plant and animal invasive species should also be taken into consideration. Likewise, disease outbreaks and pandemics can adversely affect Valamar’s business results. In order to minimize their impact, Valamar is actively tracking pandemic and health risk levels worldwide, especially on its source markets, and taking proactive steps in their management. The COVID-19 pandemic is a recent example of the operational and financial disruption to the global economy, e s p e c i a l l y t o u r i s m f l o w s , s i n c e a l m o s t a l l g l o b a l d e s t i n a t i o n s were blocked b y t r a v e l r e s t r i c t i o n s . T h e e m e r g e n c e of exceptional circumstances in the Republic of Croatia and the introduction of extraordinary measures to prohibit gatherings, movements and the operation of restaurants and shops, all with the primary objective of protecting the population from the risk of contagion, resulted in the expected consequential and immediate disruption of the Company’s and the Group’s operations, cancellation of accommodation and other contracted services by partner agencies and guests. R E G U L A T O R Y R I S K S 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 and their competitiveness : • 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 b y a 1 3 % V A T r a t e a p p l i c a b l e t o t h e t o u r i s m a n d h o s p i t a l i t y i n d u s t r y (January 2014), while in January 2017 a new 25% VAT rate was introduced for F&B (a la carte) services; • In May 2012 the health insurance employer contribution rate fell from 15% to 13% and then in April 2014 it grew back to 15%; • F r e q u e n t i n c r e a s e s i n v a r i o u s f e e s a n d c h a r g e s r e g a r d i n g w a t e r d i s t r i b u t i o n , waste disposal and the like; • T o u r i s t t a x i n c r e a s e i n 2 0 1 8 r a n g i n g b e t w e e n H R K 2.5 a n d H R K 8.0 p e r person per overnight, depending on the class of the destination and utilization period; • In January 2020 the VAT rate for a la carte food services was reduced from 25% to 13%. S u c h f r e q u e n t c h a n g e s in laws regulating taxes and parafiscal charges often t a k e 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 C o m p a n y a n d G r o u p a r e a l s o t h r e a t e n e d b y c h a n g e s i n r e g u l a t i o n s g o v e r n i n g 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. 32 ANNUAL REPORT 2021 Corporate G o v e r n a n c e Valamar Collection Imperial Hotel 4, Rab island The Company and the Group continuously strive to develop and operate a c c o r d i n g t o g o o d p r a c t i c e s o f c o r p o r a t e g o v e r n a n c e . T h e b u s i n e s s s t r a t e g y , c o r p o r a t e p o l i c y , k e y c o r p o r a t e r e g u l a t i o n s a n d b u s i n e s s p r a c t i c e h a v e s e t a h i g h s t a n d a r d o f c o r p o r a t e g o v e r n a n c e a n d a r e a l l g e a r e d t o w a r d s c r e a t i n g a t r a n s p a r e n t a n d e f f i c i e n t b u s i n e s s o p e r a t i o n w h i l e f o r g i n g s o l i d b o n d s w i t h t h e l o c a l c o m m u n i t y . T h e M a n a g e m e n t B o a r d f u l l y c o m p l i e s w i t h t h e p r o v i s i o n s o f t h e a d o p t e d C o r p o r a t e G o v e r n a n c e A c t . A f t e r the company was listed on t h e r e g u l a t e d m a r k e t o f t h e Z a g r e b S t o c k E x c h a n g e , t h e C o m p a n y h a s a l s o c o m p l i e d w i t h t h e Z a g r e b S t o c k E x c h a n g e G o v e r n a n c e C o d e . T h e C o m p a n y r e s p e c t s a n d i m p l e m e n t s t h e p r e s c r i b e d corporate governance measures (as reported in detail in the prescribed annual questionnaire and published a s p r e s c r i b e d o n t h e Z a g r e b S t o c k E x c h a n g e a n d V a l a m a r R i v i e r a w e b s i t e s ) . T h e C o m p a n y h a s h a r m o n i z e d i t s g e n e r a l c o r p o r a t e g o v e r n a n c e a c t s w i t h t h e C o r p o r a t e G o v e r n a n c e C o d e t o t h e a p p l i c a b l e e x t e n t . S i n c e t h e b e g i n n i n g o f t h e C O V I D - 1 9 p a n d e m i c , V a l a m a r R i v i e r a h a s a c t i v e l y e n g a g e d i n m i t i g a t i n g a n d c o n t r o l l i n g p o t e n t i a l r i s k s . O n 2 M a r c h 2 0 2 0 i t f o r m e d t h e R i s k M a n a g e m e n t C o m m i t t e e a n d a d o p t e d t h e R i s k M a n a g e m e n t R u l e s . T h e C o m m i t t e e , t a s k e d w i t h a s s e s s i n g r i s k e v e n t s a n d i m p a c t s o n o p e r a t i o n s , g u e s t s a n d e m p l o y e e s , d e t e r m i n e s t h e m e a s u r e s n e c e s s a r y t o p r o t e c t g u e s t s , e m p l o y e e s a n d a s s e t s a n d o r g a n i z e b u s i n e s s p r o c e s s e s a n d o p e r a t i o n s . Depending on circumstances and risk intensity, the Committee decides o n : a d j u s t i n g t h e f i n a n c i a l , business and contingency plan, the activation of e s c a l a t i o n p l a n s t o s a f e g u a r d c o m p a n y l i q u i d i t y and solvency and maintain b u s i n e s s c o n t i n u i t y , a n d o n o t h e r m e a s u r e s a c c o r d i n g t o b o o k i n g a n d r e v e n u e e s t i m a t e s . T h e S u p e r v i s o r y B o a r d P r e s i d i u m r e c e i v e s t h e C o m m i t t e e ’s r e p o r t s on the current state, activities and estimated risk impact on the Company’s operations at least once a month or more often as circumstances dictate. T h e R i s k M a n a g e m e n t C o m m i t t e e c o n s i s t s o f t h e M a n a g e m e n t B o a r d (Ž e l j k o Kukurin, President and Marko Čižmek, Member), Division Vice Presidents (Alen B e n k o v i ć , D a v o r B r e n k o , I v a n a B u d i n A r h a n i ć a n d D a v i d P o r o p a t ), H u m a n R e s o u r c e s D i r e c t o r ( I n e s D a m j a n i ć Š t u r m a n ) a n d L e g a l A f f a i r s H e a d ( V e s n a Tomić). T h e m a j o r d i r e c t V a l a m a r Riviera’s shareholders according to the Central Depository and Clearing Company data and the shareholders whom are V a l a m a r R i v i e r a ’s M a n a g e m e n t B o a r d a n d S u p e r v i s o r y B o a r d m e m b e r s a r e a s f o l l o w s : t h e C h a i r m a n o f t h e S u p e r v i s o r y B o a r d , M r . G u s t a v W u r m b o e c k , holds a 100% stake in Wurmböck Beteiligungs GmbH, which holds 25,017,698 R I V P - R - A s h a r e s ; t h e D e p u t y C h a i r m a n o f t h e S u p e r v i s o r y B o a r d , M r . F r a n z THE GROUP HAS ESTABLISHED H I G H S T A N D A R D S OF CORPORATE GOVERNANCE IN ORDER TO OPERATE TRANSPARENTLY AND EFFICIENTLY L a n s c h u e t z e r , h o l d s 4,4 3 7 ,7 8 8 R I V P - R - A s h a r e s ; t h e D e p u t y C h a i r m a n o f t h e S u p e r v i s o r y B o a r d , M r . M l a d e n M a r k o č , h o l d s 3 0 ,6 1 8 R I V P - R - A s h a r e s ; t h e Member of the Supervisory Board Mr. Georg Eltz holds a total of 6,545,367 R I V P - R - A s h a r e s , o f w h i c h d i r e c t l y 2 0 ,4 6 3 R I V P - R - A s h a r e s , a n d i n d i r e c t l y through a 100% stake in company Satis d.o.o. 6,524,904 RIVP-R-A shares; the P r e s i d e n t o f t h e M a n a g e m e n t B o a r d , M r . Ž e l j k o K u k u r i n , h o l d s 1 2 6 ,3 6 0 R I V P - R-A shares; and the Member of the Management Board Mr. Marko Čižmek holds 53,128 RIVP-R-A shares. The Company defined the process of preparing a n d d i s c l o s i n g f i n a n c i a l r e p o r t s i n a d e t a i l e d i n t e r n a l d o c u m e n t . W i t h t h i s , t h e financial reporting procedure is set within a system of internal review and risk management. Moreover, in order to monitor and mitigate the financial r e p o r t i n g r i s k , t h e C o m p a n y u s e s t h e m e a s u r e s d e s c r i b e d i n “T h e R i s k s o f t h e Company and the Group“. T h e C o m p a n i e s A c t a n d t h e C o m p a n y S t a t u t e d e f i n e t h e G e n e r a l A s s e m b l y ’s authority and prescribe how it meets and works. The meeting invitation, proposals and the adopted resolutions are made public according to the p r o v i s i o n s o f t h e C o m p a n i e s Act, Capital Market Act and the Zagreb Stock E x c h a n g e R u l e s . T h e r e i s a t i m e l i m i t r e l a t e d t o t h e v o t i n g r i g h t a t t h e G e n e r a l Assembly: according to the provisions of the Croatian Companies Act, s h a r e h o l d e r s a r e r e q u i r e d t o r e g i s t e r t h e i r p a r t i c i p a t i o n w i t h i n t h e p r e s c r i b e d t i m e l i m i t i n o r d e r t o a t t e n d t h e G e n e r a l Assembly. Under no circumstances can the financial right arising from securities be separated from holding the s e c u r i t i e s . T h e r e a r e n o s e c u r i t i e s w i t h s p e c i a l c o n t r o l r i g h t s n o r a r e t h e r e a n y l i m i t a t i o n s t o v o t i n g r i g h t s a t t h e C o m p a n y ( o n e s h a r e , o n e v o t e ) . The Company Statute complies with the Croatian Companies Act and the p r o v i s i o n s o f t h e P r o c e d u r e o f a p p o i n t m e n t , i.e. t h e e l e c t i o n a n d p r o f i l e o f t h e M a n a g e m e n t B o a r d a n d t h e S u p e r v i s o r y B o a r d a n d d e f i n e s t h e p r o c e d u r e o f a p p o i n t i n g a n d r e c a l l i n g m e m b e r s o f t h e M a n a g e m e n t B o a r d a n d S u p e r v i s o r y B o a r d . T h e r e a r e n o l i m i t a t i o n s b a s e d o n g e n d e r , a g e , e d u c a t i o n , p r o f e s s i o n o r s i m i l a r . T h e C o m p a n i e s A c t d e t e r m i n e s a n y a m e n d m e n t s t o t h e C o m p a n y S t a t u t e , w i t h o u t a n y a d d i t i o n a l l i m i t a t i o n s . T h e M a n a g e m e n t B o a r d m e m b e r s ’ a u t h o r i t y f u l l y c o m p l i e s w i t h t h e r e g u l a t i o n s p r e s c r i b e d b y t h e C o m p a n i e s A c t . T h e C o m p a n y a c q u i r e s t r e a s u r y s h a r e s b a s e d o n a n d i n a c c o r d a n c e w i t h t h e c o n d i t i o n s d e t e r m i n e d b y t h e G e n e r a l A s s e m b l y ’s d e c i s i o n o n a c q u i s i t i o n o f t r e a s u r y s h a r e s d a t e d o n 9 M a y 2 0 1 9 w h i c h i s i n f o r c e a s o f 1 7 N o v e m b e r 2 0 1 9 . T h e C o m p a n y d o e s n o t h a v e a s h a r e - b u y b a c k p r o g r a m o r a n e m p l o y e e s h a r e o w n e r s h i p p l a n . T h e C o m p a n y h o l d s a n d a c q u i r e s t r e a s u r y s h a r e s a s a f o r m o f 34 ANNUAL REPORT 2021 r e w a r d i n g t h e M a n a g e m e n t a n d k e y m a n a g e r s p u r s u a n t t o t h e C o m p a n y a c t s o n t h e l o n g - t e r m r e w a r d p l a n a n d f o r t h e p u r p o s e o f d i v i d e n d p a y o u t i n r i g h t s - Company share to the equity holders. During 2021 the Company wasn’t i n v o l v e d i n t r e a s u r y s h a r e s a c q u i s i t i o n n e i t h e r d i s p o s a l o f i t s o w n s h a r e s . T H E C O M P A N Y ’S C O R P O R A T E B O D I E S A R E : M a n a g e m e n t B o a r d : M r . Ž e l j k o K u k u r i n , P r e s i d e n t o f t h e M a n a g e m e n t B o a r d , a n d M r . M a r k o Č i ž m e k , M e m b e r o f t h e M a n a g e m e n t B o a r d . Pursuant to the provisions of the Capital Market Act and Regulation (EU) n o . 5 9 6 / 2 0 1 4 , t h e C o m p a n y h a s d e t e r m i n e d i t s k e y m a n a g e m e n t : f o u r v i c e p r e s i d e n t s : A l e n B e n k o v i ć , D a v o r B r e n k o , I v a n a B u d i n A r h a n i ć a n d D a v i d P o r o p a t ; a n d 2 3 s e c t o r d i r e c t o r s and managers: Ines Damjanić Šturman, Tomislav Dumančić, Ljubica Grbac, Flavio Gregorović, Marin Gulan, Vlastimir Ivančić, Željko Jurcan, Ivan Karlić, Dario Kinkela, Mauro Teković, Mile Pavlica, T o m i s l a v P o l j u h a , M i r e l l a P r e m e r u , B r u n o R a d o š , S a n d i S i n o ž i ć , M a r t i n a Š o l i ć , A n d r e a Š t i f a n i ć , M a u r o T e k o v i ć , D r a g a n V l a h o v i ć , I v i c a V r k i ć , M a r i o Skopljaković, Marko Vusić and Vesna Tomić. O n 3 D e c e m b e r 2 0 2 1 , t h e S u p e r v i s o r y B o a r d a p p o i n t e d M r . Ž e l j k o K u k u r i n a s the CEO, and Mr. Marko Čižmek and Ms. Ivana Budin Arhanić as Management B o a r d m e m b e r s f o r a n e w f o u r - y e a r t e r m o f o f f i c e , w i t h e f f e c t f r o m 1 J a n u a r y 2 0 2 2 . A l s o , w i t h e f f e c t f r o m 1 J a n u a r y 2 0 2 2 , t h e C o m p a n y a p p o i n t e d s e n i o r e x e c u t i v e s a s i n a c c o r d a n c e w i t h p r o v i s i o n s o f t h e C a p i t a l M a r k e t s A c t a n d o f t h e R e g u l a t i o n N o . 5 9 6 / 2 0 1 4 o f t h e E U . T h e f o l l o w i n g s e n i o r e x e c u t i v e s w e r e appointed: 3 Senior Vice Presidents: Alen Benković, Davor Brenko and David Poropat, 2 Vice Presidents: Sebastian Palma and Ines Damjanić Šturman, and 2 1 S e c t o r D i r e c t o r s a n d H e a d s : T o m i s l a v D u m a n č i ć , L j u b i c a G r b a c , F l a v i o G r e g o r o v i ć , M a r i n G u l a n , V l a s t i m i r I v a n č i ć , Ž e l j k o J u r c a n , I v a n K a r l i ć , D a r i o K i n k e l a , M a u r o T e k o v i ć , M i l e P a v l i c a , T o m i s l a v P o l j u h a , M i r e l l a P r e m e r u , Bruno Radoš, Sandi Sinožić, Martina Šolić, Andrea Štifanić, Dragan Vlahović, Ivica Vrkić, Mario Skopljaković, Marko Vusić and Vlatka Kocijan. Supervisory Board: Mr. Gustav Wurmböck - Chairman, Mr. Franz Lanschützer - D e p u t y C h a i r m a n , M r . M l a d e n M a r k o č - D e p u t y C h a i r m a n , a n d m e m b e r s : Mr. Georg Eltz, Mr. Daniel Goldscheider, Mr. Boris Galić and Mr. Ivan Ergović (employee representative). I n o r d e r t o p e r f o r m e f f i c i e n t l y i t s f u n c t i o n a n d d u t i e s a s p r e s c r i b e d b y t h e A u d i t A c t a n d t h e C o r p o r a t e G o v e r n a n c e A c t , t h e S u p e r v i s o r y B o a r d h a s f o r m e d t h e f o l l o w i n g b o d i e s : Presidium: Mr. Gustav Wurmböck - Chairman, and members: Mr. Franz L a n s c h ü t z e r a n d M r . M l a d e n M a r k o č . A u d i t C o m m i t t e e : M r . G e o r g E l t z - C h a i r m a n , a n d m e m b e r s : M r . M l a d e n M a r k o č , and Mr. Boris Galić I n v e s t m e n t C o m m i t t e e : M r . F r a n z L a n s c h ü t z e r - C h a i r m a n a n d m e m b e r s : M r . Georg Eltz and Mr. Gustav Wurmböck. C o m m i t t e e o n D i g i t i z a t i o n a n d S u s t a i n a b i l i t y : M r D a n i e l G o l d s c h e i d e r , C h a i r m a n a n d m e m b e r s : M r F r a n z L a n s c h ü t z e r a n d M r G u s t a v W u r m b ö c k C o m p l i a n t t o e f f e c t i v e r e g u l a t i o n s a n d C o m p a n y b y l a w s , t h e M a n a g e m e n t a n d S u p e r v i s o r y B o a r d p r i m a r i l y a c t t h r o u g h m e e t i n g s a n d b y c o r r e s p o n d e n c e in their decision-making. T h e C o m p a n y h a s c o n c l u d e d E m p l o y m e n t contracts with the President and a member of the Management Board for the duration of the term for which they were appointed, and a member of the Supervisory Board, employee r e p r e s e n t a t i v e , h a s a n e m p l o y m e n t c o n t r a c t f o r a n i n d e f i n i t e p e r i o d . 35 Valamar Collection Isabella Resort 4/5, Poreč ANNUAL REPORT 2021 Valamar Amicor Green Resort, Hvar Island Related-party T r a n s a c t i o n s & B r a n c h O f f i c e s R E L A T E D - P A R T Y T R A N S A C T I O N S BRANCH OFFICES OF THE COMPANY Related party transactions among the Group companies are carried out according to usual commercial terms and conditions and deadlines and under market prices. In the period considered, the Company realised HRK 321.5 million revenues from related party transactions, which includes HRK 280 million difference between the book and market value for the real estate, which was part of the share capital increase of Imperial Riviera d.d. as in accordance with the decision of the Imperial Riviera’s General Assembly from 10 September 2021. This is compared to the amount of HRK 8.7 million, which the Company realised from related party transactions in the same period of 2020. Revenues from related party transactions for the Group amounted to HRK 8.6 million (vs. HRK 1.9 million in the same period of 2020). Expenses for the Company amounted to HRK 4.5 million (vs. HRK 1.4 million in the same period of 2020), and to HRK 720 thousand for the Group (vs. HRK 235 thousand in the same period in 2020). Receivables and liabilities in connection with related parties as at 31 December 2021 amount as follows: the Company’s receivables amount to HRK 27.1 million (vs. HRK 546 thousand at the end of 2020), and the Group’s receivables amount to HRK 7.3 million (vs. HRK 331 thousand at the end of 2020). The Company’s liabilities amount to HRK 131 thousand (vs. HRK 220 thousand at the end of 2020), and the Group’s liabilities amount to HRK 63 thousand (vs. HRK 84 thousand at the end of 2020). On 14 February 2022, the Management Board compiled the Related Party Transactions Report as in accordance with the provision referred to in Article 497 of the Companies Act. In accordance with paragraph 3 of Article 497, the Management Board declares that, according to the circumstances known at the time when a particular legal transaction or an activity with a related party was undertaken, the Company received an appropriate counter-performance, without any damages for the Company. TRANSACTIONS WITH RELATED PARTIES UNDER USUAL COMMERCIAL TERMS AND CONDITIONS The following subsidiaries 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, Vatroslava Lisinskog 15a. 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. T h e s u b s i d i a r i e s 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 on Rab island, in Makarska and in Stari Grad on the Hvar island to increase the efficiency and streamline the management of operations as determined by the provisions of the concluded Hotel management contracts with Imperial Riviera d.d. and Helios Faros d.d. 37 ANNUAL REPORT 2021 V a l a m a r S h a r e Istra Premium Camping Resort by Valamar 5, Poreč Performance of Valamar Riviera’s share and Zagreb Stock Exchange and travel and leisure indices in 2021 130% 125% 120% 115% 110% 105% 100% 95% 90% 85% 80% RIVP CROBEX CROBEX 10 Dow Jones U.S. Travel & Leisure Titans 30 STOXX Europe 600 Travel & Leisure FTSE 350 Travel & Leisure During 2021, the highest achieved share price in regular trading on the regulated market was HRK 33.20, and the lowest HRK 26.50. On 31 December 2021 the price was HRK 33.00 which represents a increase of 11.5% compared to the last price in 2020. With a total turnover of HRK 182,0 million 21 , Valamar Riviera share was the third share on the Zagreb Stock Exchange in terms of turnover during 2021. In addition to the Zagreb Stock Exchange index, the joint stock index of the Zagreb and Ljubljana stock exchanges ADRIAprime, the stock is also a component of the Vienna Stock Exchange index (CROX 22 and SETX 23 ) and the Warsaw Stock Exchange (CEEplus 24 ) as well as the SEE Link regional platform index (SEELinX and SEELinX EWI) 25 . Zagrebačka banka d.d. and Interkapital vrijednosni papiri d.o.o. perform the activities of market makers with ordinary shares of Valamar Riviera listed on the Leading Market of the Zagreb Stock Exchange d.d. The Company did not acquire or dispose of its own shares in the period from 1 January 2021 to 31 December 2021. As of 31 December 2021 the Company holds 4,139,635 treasury shares, which is 3.28% of the share capital. Valamar Riviera actively holds meetings and conference calls with domestic and foreign investors, as well as presentations for investors, providing support for the highest possible level of transparency, creating 21 B l o c k t r a n s a c t i o n s a r e e x c l u d e d f r o m t h e c a l c u l a t i o n . 22 Croatian Traded Index (CROX) is a capitalization- w e i g h t e d p r i c e i n d e x a n d i s m a d e u p o f 1 2 m o s t liquid and highest capitalized shares of Zagreb Stock Exchange. 23 South-East Europe Traded Index (SETX) is a c a p i t a l i z a t i o n - w e i g h t e d p r i c e i n d e x c o n s i s t i n g o f b l u e c h i p s t o c k s t r a d e d o n s t o c k e x c h a n g e s i n t h e r e g i o n o f South-eastern Europe (shares listed in Bucharest, Ljubljana, Sofia, Belgrade and Zagreb). 24 CEEplus is a stock index that comprise the most liquid stocks listed on stock exchanges in the Visegrad Group countries (Poland, Czech Republic, Slovakia, Hungary) and Croatia, Romania and Slovenia. 25 SEE Link is a regional platform for securities trading. I t w a s f o u n d e d b y B u l g a r i a n , M a c e d o n i a n , a n d Z a g r e b S t o c k E x c h a n g e . S E E L i n X a n d S E E L i n X E W I a r e t w o “b l u e c h i p ” r e g i o n a l i n d i c e s c o m p o s e d o f t e n m o s t l i q u i d r e g i o n a l c o m p a n i e s l i s t e d o n t h r e e S t o c k E x c h a n g e s : f i v e f r o m C r o a t i a , t h r e e f r o m B u l g a r i a , a n d t w o f r o m M a c e d o n i a . 39 ANNUAL REPORT 2021 additional liquidity, increasing share value and involving potential investors. By continuing to actively represent Valamar Riviera, we will strive to contribute to further growth in value for all stakeholders with the intention of recognizing the Company’s share as one of the leaders on the Croatian capital market and one of the leaders in the CEE region. Analytical coverage of Valamar Riviera is provided by: 1) ERSTE bank d.d., Zagreb; 2) Interkapital vrijednosni papiri d.o.o., Zagreb; 3) Raiffeisenbank Austria d.d., Zagreb; 4) Zagrebačka banka d.d., Zagreb. 3 rd MOST ACTIVELY TRADED SHARE ON THE ZAGREB STOCK EXCHANGE IN 2021 In October, at a conference of the Zagreb Stock Exchange and Croatian pension investment fund industry, Valamar Riviera was ranked third in the Investor Relations Award in Croatia in 2021. V a l a m a r O b e r t a u e r n Hotel 4, Obertauern 40 ANNUAL REPORT 2021 O V E R V I E W O F M A J O R S H A R E H O L D E R S A S A T 3 1 D E C E M B E R 2 0 2 1 : Other small shareholders - 47,596,119 - 37.77% Goldscheider Keramik Gesellschaft M.B.H., Plosslgasse 8,1040 Vienna, Republic of Austria - 25,017,698 - 19.85% P B Z d.d./ S t a t e s t r e e t c l i e n t a c c o u n t / C u s t o d i a n , Radnička cesta 50, 10000 Zagreb - 1,331,424 - 1.06% HPB d.d./Kapitalni fond d.d./Custodian, Jurišićeva 4, 1 0 0 0 0 Z a g r e b - 1,419,657 - 1.13% OTP Banka d.d./Erste plavi MPF B category/Custodian, Domovinskog rata 61, 21000 Split - 1,566,042 - 1.24% C E R P , I v a n a L u č i ć a 6, 1 0 0 0 0 Z a g r e b - 2,2 1 0 ,4 0 8 - 1.7 5 % Wurmböck Beteiligungs GmbH, Plosslgasse 8, Enitor d.o.o., Miramarska cesta 24, 10000 Zagreb - 2,720,950 - 2.16% OTP Banka d.d./AZ MPF B category/Custodian, Domovinskog rata 61, 2 1 0 0 0 S p l i t - 2,895,219 - 2.30% Valamar Riviera d.d. (treasury shares) - 4,139,635 - 3.28% 1040 Vienna, Republic of Austria - 25,017,698 - 19.85% Raiffeisenbank Austria d.d./Joint custody account – for SF/Custodian, SR Njemačke 2 I 8, 10000 Zagreb - 5,587,788 - 4.43% Satis d.o.o., Miramarska 24, 10000 Zagreb - 6,524,904 - 5.18% 41 ANNUAL REPORT 2021 Additional Information Padova Premium Camping Resort 4, Rab island ADDITIONAL INFORMATION On 20 April 2021 Integrated Annual Report and Corporate Social Responsibility for 2020 was published, which also includes a non-financial report. The main goal of the report, prepared in accordance with the Standards of the Global Reporting Initiative (GRI), is to further present the strategic and long-term insight into the company’s operations to all key stakeholders, including shareholders, employees, partners, guests and the wider community with special focus on sustainable business as a basis for further development of the company. The report also includes environmental, social and management factors in line with the ESG components of responsible investment. The report is available on the websites of the Zagreb Stock Exchange and Valamar Riviera: www.valamar-riviera. com. As one of the largest employers in Croatia (as of 31 December 2021, the Group employed a t o t a l of 3,031 employees, of which 2,236 permanent, and the Company 2,436 employees, of which 1,842 permanent), the Company and the Group systematically and continuously invest in the development of their human resources through a comprehensive strategic approach to their management that includes a transparent recruitment process, clear goals, measuring employee performance and investing in employee development, as well as their careers, and encouraging two-way communication. 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. I n t h e c o u r s e o f 2 0 2 1 , t h e C o m p a n y ’s M a n a g e m e n t B o a r d p e r f o r m e d t h e a c t i o n s provided by law and the Articles of Association and regarding the management and representation of the Company and planned a business policy that was implemented with prudent care. T h e C o m p a n y ’s M a n a g e m e n t B o a r d w i l l c o n t i n u e t o u n d e r t a k e a l l t h e n e c e s s a r y m e a s u r e s i n o r d e r t o e n s u r e s u s t a i n a b i l i t y a n d b u s i n e s s g r o w t h . T h e M a n a g e m e n t B o a r d a d o p t e d t h e a u d i t e d a n n u a l f i n a n c i a l r e p o r t f o r 2 0 2 1 o n 1 6 F e b r u a r y 2 0 2 2 . 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 43 Marea Valamar Collection Suites 5, Poreč ANNUAL REPORT 2021 Željko Kukurin M a r k o Čižmek Ivana Budin Arhanić M a n a g e m e n t Board M a n a g e m e n t Board M a n a g e m e n t Board President Member Member Disclaimer Valamar Collection Girandella Resort 4/5, Rabac This report contains certain outlook based on currently available facts, findings and circumstances and estimates in this regard. Our outlook is based including, but no limited on a) results achieved in 2021; b) operating results achieved by 21 February 2022; c) current booking status; d) 2022 year end business results forecast; e) temporary business suspension (Pause, restart); f) currently adopted set of support measures by the Croatian government, Croatian National Bank, Croatian Bank for Reconstruction and Development, competent ministries as well as state and local authorities; g) the absence of further significant negative effects of the risks to which the Company and the Group are exposed. Outlook statements are based on currently available information, current assumptions, forward-looking expectations and projections. This outlook is not a guarantee of future results and is subject to future events, risks, and uncertainties, many of which are beyond the control of, or currently unknown to Valamar Riviera, as well as potentially incorrect assumptions that could cause the actual results to materially differ from the said expectations and forecasts. Risks and uncertainties include, but are not limited to those described in the chapter “Risks of the Company and the Group”. Materially significant deviations from the outlook may arise from changes in circumstances, assumptions not being realized, as well as other risks, uncertainties, and factors, including, but no limited to: • Recall of aid measures adopted by the Croatian government, Croatian National Bank, Croatian Bank for Reconstruction and Development, competent ministries as well as state and local authorities to help the economy and mitigate the extraordinary circumstances caused by the COVID-19 pandemic; • Macro-economic trends in the Republic of Croatia and in the source markets, including currency exchange rates fluctuations and prices of goods and services, deflation and inflation, unemployment, trends in the gross domestic product and industrial production, as well as other trends having a direct or indirect impact on the purchasing power of Valamar Riviera’s guests; • Economic conditions, security and political conditions, trends and events in the capital markets of the Republic of Croatia and Valamar Riviera’s source markets; • Spending and disposable income of guests, as well as guests’ preferences, trust in and satisfaction with Valamar Riviera’s products and services; • Trends in the number of overnights, bookings, and average daily rates of accommodation at Valamar Riviera’s properties; • Trends in the Croatian Kuna exchange rate in relation to world currencies (primarily the Euro), change in market interest rates and the price of equity securities, and other financial risks to which Valamar Riviera is exposed; • Labor force availability and costs, transport, energy, and utilities costs, selling prices of fuel and other goods and services, as well as supply chain disruptions; • Changes in accounting policies and findings of financial report audits, as well as findings of tax and other business audits; • O u t c o m e s a n d costs of judicial proceedings to which Valamar Riviera is a party; • Loss of competitive strength and reduced demand for products and services of Croatian tourism and Valamar Riviera under the impact of weather conditions and seasonal movements; • Reliability of IT business solutions and cyber security of Valamar Riviera’s business operations, as well as related costs; • Changes of tax and other regulations and laws, trade restrictions, and rates of customs duty; • Adverse climatic events, environmental risks, disease outbreaks and pandemics. Should materially significant changes to the stated outlook occur, Valamar Riviera shall immediately inform the public thereof, in compliance with Article 459 of the Capital Market Act. The given outlook statements are not an outright recommendation to buy, hold or sell Valamar Riviera’s shares. 45 ANNUAL REPORT 2021 Ljubica Grbac M a r k o Čižmek R E S P O N S I B I L I T Y FOR T H E ANNUAL FINANCIAL STATEMENTS In Poreč, 25 February 2022 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 S T A T E M E N T According to our best knowledge: - the annual consolidated and unconsolidated financial statements for 2021, are prepared in accordance with applicable standards of financial reporting and give true and fair view of the assets and liabilities, profit and loss, financial position and operations of the Company and the companies included in consolidation (Group); - Report of the Company’s Management board for the period from 1 January to 31 December 2021 contains the true presentation of development, results and position of the Company and companies included in the consolidation, with description of significant risks and uncertainties which the Company and companies included in consolidation are exposed. Management Board Member Director of Department of Finance and Accounting / Procurator 46 ANNUAL REPORT 2021 47 ANNUAL REPORT 2021 Reporting period: from 01.01.2021 to 31.12.2021 Annual financial statement Registration number (MB): 3474771 I s s u e r ' s H o m e M e m b e r s t a t e c o d e : HR E n t i t y ’s r e g i s t r a t i o n n u m b e r ( M B S ) : 40020883 Personal identification number (OIB): 36201212847 LEI: 529900DUWS1DGNEK4C68 Institution code: 30577 Name of the issuer: Valamar Riviera d.d. Postcode and town: 52440 Poreč Street and house number: Stancija Kaligari 1 E-mail address: [email protected] Web address: www.valamar-riviera.com Number of employees N a m e s o f s u b s i d i a r i e s Bookkeeping firm: No Contact person: Sopta Anka ( o n l y n a m e a n d s u r n a m e o f t h e c o n t a c t p e r s o n ) Telephone: 052 408 188 E-mail address: [email protected] Audit firm: Ernst & Young d.o.o., UHY Rudan d.o.o. (name of the audit firm) Certified auditor: Berislav Horvat, Vedrana Miletić ( n a m e a n d s u r n a m e ) (authorized representative’s signature) L.S. (end of the reporting period): 2.989 Consolidated report: KD ( K N - n o n c o n s o l i d a t e d / K D - c o n s o l i d a t e d ) Audited: RD (RN-non audited/RD-audited) (according to IFRS): Registered office: MB: Valamar Obertauern GmbH Obertauern 195893 D Valamar A GmbH Tamsweg/Vienna 486431 S Palme Turizam d.o.o. Dubrovnik 2006103 Magične stijene d.o.o. Dubrovnik 2315211 Bugenvilia d.o.o. Dubrovnik 2006120 Imperial Riviera d.d. Rab 3044572 48 ANNUAL REPORT 2021 BALANCE SHEET (as at 31.12.2021) Submitter: Valamar Riviera d.d. in HRK ADP L a s t d a y o f t h e p r e c e d i n g b u s i n e s s A t t h e reporting date of the current Item code year period 1 2 3 4 A) RECEIVABLES FOR SUBSCRIBED CAPITAL UNPAID 001 B) FIXED ASSETS (ADP 003+010+020+031+036) 002 6.087.157.859 5.671.819.566 I. INTANGIBLE ASSETS (ADP 004 to 009) 003 46.400.186 39.086.495 1 Research and Development 004 2 C o n c e s s i o n s , p a t e n t s , l i c e n c e s , t r a d e m a r k s , s o f t w a r e a n d o t h e r r i g h t s 005 37.551.928 30.356.827 3 Goodwill 006 6.567.609 6.567.609 4 Advance payments for purchase of intangible assets 007 5 Intangible assets in preparation 008 2.280.649 2.162.059 6 Other intangible assets 009 II. TANGIBLE ASSETS (ADP 011 to 019) 010 5.662.917.241 5.221.568.500 1 Land 011 976.429.207 980.924.514 2 B u i l d i n g s 012 3.560.463.801 3.363.126.345 3 Plants and equipment 013 488.743.200 432.241.488 4 Tools, working inventory and transportation assets 014 116.542.756 100.025.874 5 Biological asset 015 6 Advance payments for purchase of tangible assets 016 988.061 42.528 7 Tangible assets in preparation 017 443.016.063 288.533.889 8 Other tangible assets 018 72.791.725 53.493.881 9 Investments property 019 3.942.428 3.179.981 III. FIXED FINANCIAL ASSETS (ADP 021 to 030) 020 46.430.294 82.071.741 1 Investments in holdings (shares) of undertakings within the group 021 2 Investments in other securities of undertakings within the group 022 3 Loans, deposits etc given to undertakings in a group 023 4 I n v e s t m e n t s i n h o l d i n g s ( s h a r e s ) o f c o m p a n i e s l i n k e d b y v i r t u e o f p a r t i c i p a t i n g i n t e r e s t 024 46.054.207 76.533.067 5 I n v e s t m e n t i n o t h e r s e c u r i t i e s o f c o m p a n i e s l i n k e d b y v i r t u e o f p a r t i c i p a t i n g i n t e r e s t 025 6 Loans, deposits etc. given to companies linked by virtue of participating interest 026 7 Investments in securities 027 147.054 220.812 8 Loans, deposits, etc. given 028 89.033 5.177.862 9 Other investments accounted for using the equity method 029 10 Other fixed financial assets 030 140.000 140.000 IV. RECEIVABLES (ADP 032 to 035) 031 1 Receivables from undertakings within the group 032 2 Receivables from companies linked by virtue of participating interests 033 3 C u s t o m e r receivables 034 4 Other receivables 035 V. DEFERRED TAX ASSETS 036 331.410.138 329.092.830 C) CURENT ASSETS (ADP 038+046+053+063) 037 737.066.269 1.217.957.755 I. INVENTORIES (ADP 039 to 045) 038 30.335.208 26.310.071 1 R a w m a t e r i a l s 039 29.329.354 25.050.909 2 W o r k in progress 040 3 F i n i s h e d goods 041 4 Merchandise 042 973.867 1.230.618 5 Advance payments for inventories 043 31.987 28.544 6 Fixed assets held for sale 044 7 Biological asset 045 II. RECEIVABLES (ADP 047 to 052) 046 40.184.920 38.388.235 1 Receivables from undertakings within the group 047 2 R e c e i v a b l e s f r o m companies linked by virtue of participating interest 048 1.598.603 7.293.712 3 C u s t o m e r receivables 049 23.776.150 17.995.662 4 Receivables from employees and members of the undertaking 050 297.549 738.835 5 Receivables from government and other institutions 051 10.162.443 9.116.616 6 Other receivables 052 4.350.175 3.243.410 III. SHORT-TERM FINANCIAL ASSETS (ADP 054 to 062) 053 613.241 38.001.625 1 Investments in holdings (shares) of undertakings within the group 054 2 Investments in other securities of undertakings within the group 055 3 Loans, deposits, etc. to undertakings within the group 056 4 I n v e s t m e n t s i n h o l d i n g s ( s h a r e s ) o f c o m p a n i e s l i n k e d b y v i r t u e o f p a r t i c i p a t i n g i n t e r e s t 057 5 I n v e s t m e n t i n o t h e r s e c u r i t i e s o f c o m p a n i e s l i n k e d b y v i r t u e o f p a r t i c i p a t i n g i n t e r e s t 058 6 Loans, deposits etc. given to companies linked by virtue of participating interest 059 7 Investments in securities 060 8 Loans, deposits, etc. given 061 613.241 38.001.625 9 Other financial assets 062 IV. CASH AT BANK AND IN HAND 063 665.932.900 1.115.257.824 D) PREPAID EXPENSES AND ACCRUED INCOME 064 55.358.952 23.768.145 E) TOTAL ASSETS (ADP 001+002+037+064) 065 6.879.583.080 6.913.545.466 F) OFF-BALANCE SHEET ITEMS 066 54.261.380 54.173.148 49 ANNUAL REPORT 2021 BALANCE SHEET (as at 31.12.2021) (continued) Submitter: Valamar Riviera d.d. in HRK ADP L a s t d a y o f t h e p r e c e d i n g b u s i n e s s A t t h e reporting date of the current Item code year period 1 2 3 4 LIABILITIES A) CAPITAL AND RESERVES (ADP 068 to 070+076+077+083+086+089) 067 2.863.857.326 3.311.057.807 I. INITIAL (SUBSCRIBED) CAPITAL 068 1.672.021.210 1.672.021.210 II. CAPITAL RESERVES 069 5.223.432 5.223.432 III. RESERVES FROM PROFIT (ADP 071+072-073+074+075) 070 98.511.512 98.247.550 1 Legal reserves 071 83.601.061 83.601.061 2 Reserves for treasury share 072 136.815.284 136.815.284 3 Treasury shares and holdings (deductible item) 073 -124.418.267 -124.418.267 4 Statutory reserves 074 5 Other reserves 075 2.513.434 2.249.472 IV. REVALUATION RESERVES 076 V. FAIR VALUE RESERVES AND OTHER (ADP 078 to 082) 077 872 81.109 1 F i n a n c i a l a s s e t s a t f a i r v a l u e t h r o u g h o t h e r c o m p r e h e n s i v e i n c o m e ( i .e. a v a i l a b l e f o r s a l e ) 078 872 81.109 2 C a s h f l o w hedge - effective portion 079 3 Hedge of a net investment in a foreign operation - effective portion 080 4 O t h e r f a i r v a l u e r e s e r v e s 081 5 E x c h a n g e d i f f e r e n c e s a r i s i n g f r o m t h e t r a n s l a t i o n o f f o r e i g n o p e r a t i o n s ( c o n s o l i d a t i o n ) 082 VI. RETAINED PROFIT OR LOSS BROUGHT FORWARD (ADP 084-085) 083 715.882.878 388.045.406 1 Retained profit 084 715.882.878 388.045.406 2 Loss brought forward 085 VII. PROFIT OR LOSS FOR THE BUSINESS YEAR (ADP 087-088) 086 -329.593.506 104.374.607 1 Profit for the business year 087 104.374.607 2 Loss for the business year 088 329.593.506 VIII. MINORITY (NON-CONTROLLING) INTEREST 089 701.810.928 1.043.064.493 B) PROVISIONS (ADP 091 to 096) 090 141.118.430 166.154.627 1 Provisions for pensions, termination benefits and similar obligations 091 26.089.854 29.827.505 2 P r o v i s i o n s for tax liabilities 092 3 Provisions for ongoing legal cases 093 57.420.166 50.117.237 4 Provisions for renewal of natural resources 094 5 Provision for warranty obligations 095 6 Other provisions 096 57.608.410 86.209.885 C) LONG-TERM LIABILITIES (ADP 098 to 108) 097 2.867.349.347 2.614.508.279 1 Liabilities towards undertakings within the group 098 2 Liabilities for loans, deposits, etc. to companies within the group 099 3 Liabilities towards companies linked by virtue of participating interest 100 4 L i a b i l i t i e s f o r l o a n s , d e p o s i t s e t c . o f c o m p a n i e s l i n k e d b y v i r t u e o f p a r t i c i p a t i n g i n t e r e s t 101 5 Liabilities for loans, deposits etc. 102 6 Liabilities towards banks and other financial institutions 103 2.770.275.555 2.547.107.295 7 Liabilities for advance payments 104 8 Liabilities towards suppliers 105 9 Liabilities for securities 106 10 Other long-term liabilities 107 38.781.433 15.636.060 11 Deferred tax liability 108 58.292.359 51.764.924 D) SHORT-TERM LIABILITIES (ADP 110 to 123) 109 934.437.190 733.966.582 1 Liabilities towards undertakings within the group 110 2 Liabilities for loans, deposits, etc. to companies within the group 111 3 Liabilities towards companies linked by virtue of participating interest 112 39.205 4 L i a b i l i t i e s f o r l o a n s , d e p o s i t s e t c . o f c o m p a n i e s l i n k e d b y v i r t u e o f p a r t i c i p a t i n g i n t e r e s t 113 5 Liabilities for loans, deposits etc. 114 5.304.000 6 Liabilities towards banks and other financial institutions 115 733.061.607 565.523.996 7 Liabilities for advance payments 116 69.608.737 40.344.672 8 Liabilities towards suppliers 117 61.808.783 67.470.609 9 Liabilities for securities 118 6.625.196 1 0 L i a b i l i t i e s t o w a r d s e m p l o y e e s 119 19.186.775 28.794.007 11 Taxes, contributions and similar liabilities 120 6.130.006 16.508.477 12 Liabilities arising from the share in the result 121 389.276 379.676 13 Liabilities arising from fixed assets held for sale 122 14 Other short-term liabilities 123 32.322.810 14.905.940 E ) A C C R U A L S A N D D E F E R R E D INCOME 124 72.820.787 87.858.171 F) TOTAL – LIABILITIES (ADP 067+090+097+109+124) 125 6.879.583.080 6.913.545.466 G) OFF-BALANCE SHEET ITEMS 126 54.261.380 54.173.148 50 ANNUAL REPORT 2021 STATEMENT OF PROFIT OR LOSS (for 01.01.2021 to 31.12.2021) Submitter: Valamar Riviera d.d. in HRK Item ADP code S a m e p e r i o d o f t h e p r e v i o u s y e a r Current period 1 2 3 4 I. OPERATING INCOME (ADP 002 to 006) 001 675.610.635 1.644.008.023 1 Income from sales with undertakings within the group 002 2 Income from sales (outside group) 003 642.478.457 1.605.127.860 3 Income from the use of own products, goods and services 004 460.699 325.986 4 Other operating income with undertakings within the group 005 5 Other operating income (outside the group) 006 32.671.479 38.554.177 II. OPERATING EXPENSES (ADP 008+009+013+017+018+019+022+029 ) 007 1.070.375.000 1.507.033.397 1 Changes in inventories of work in progress and finished goods 008 2 Material costs (ADP 010 to 011) 009 254.642.998 458.262.170 a) Costs of raw material 010 136.855.464 252.132.447 b) Costs of goods sold 011 4.306.456 10.440.758 c) Other external costs 012 113.481.078 195.688.965 3 Staff costs (ADP 014 to 016) 013 189.951.093 353.175.910 a) Net salaries and wages 014 122.043.480 218.086.856 b) Tax and contributions from salaries expenses 015 46.270.696 88.789.363 c) Contributions on salaries 016 21.636.917 46.299.691 4 Depreciation 017 496.444.044 507.335.969 5. Other expenses 018 89.097.655 134.450.892 6. Value adjustments (ADP 020+021) 019 1.509.899 1.669.684 a) fixed assets other than financial assets 020 b) current assets other than financial assets 021 1.509.899 1.669.684 7 Provisions (ADP 023 to 028) 022 28.714.012 40.313.157 a) Provisions for pensions, termination benefits and similar obligations 023 19.091.188 9.404.520 b) Provisions for tax liabilities 024 c) Provisions for ongoing legal cases 025 9.622.824 2.744.361 d) Provisions for renewal of natural resources 026 e) Provisions for warranty obligations 027 f) Other provisions 028 28.164.276 8 Other operating expenses 029 10.015.299 11.825.615 III. FINANCIAL INCOME (ADP 031 to 040) 030 21.291.138 35.353.682 1 Income from investments in holdings (shares) of undertakings within the group 031 2 Income from investments in holdings (shares) of companies linked by virtue of participating interest 3 Income from other long-term financial investment and loans granted to undertakings within the group 032 033 4 Other interest income from operations with undertakings within the group 034 5 Exchange rate differences and other financial income from operations with undertakings within the group 035 undertakings within the group 6 Income from other long-term financial investments and loans 036 7 Other interest income 037 674.539 307.295 8 Exchange rate differences and other financial income 038 889.846 11.680.384 9 Unrealised gains (income) from financial assets 039 4.503.563 10 Other financial income 040 19.726.753 18.862.440 IV. FINANCIAL EXPENDITURE (ADP 042 to 048) 041 125.931.773 71.256.632 1 Interest expenses and similar expenses with undertakings within the group 2 Exchange rate differences and other expenses from operations with 3 I n t e r e s t e x p e n s e s and similar expenses 042 043 044 63.062.608 66.258.463 4 E x c h a n g e r a t e differences and other expenses 045 41.917.880 5 Unrealised losses (expenses) from financial assets 046 17.843.787 6 V a l u e a d j u s t m e n t s of financial assets (net) 047 7 Other financial expenses 048 3.107.498 4.998.169 V. SHARE IN PROFIT FROM COMPANIES LINKED BY VIRTUE OF PARTICIPATING INTEREST 049 547.970 VI. SHARE IN PROFIT FROM JOINT VENTURES 050 VII. SHARE IN LOSS OF COMPANIES LINKED BY VIRTUE OF PARTICIPATING INTEREST 051 1.643.580 144.413 VIII. SHARE IN LOSS OF JOINT VENTURES 052 IX. TOTAL INCOME (ADP 001+030+049 +050 ) 053 696.901.773 1.679.909.675 X. TOTAL EXPENDITURE (ADP 007+041+051+052 ) 054 1.197.950.353 1.578.434.442 XI. PRE-TAX PROFIT OR LOSS (ADP 053-054 ) 055 -501.048.580 101.475.233 1 Pre-tax profit (ADP 053-054) 056 101.475.233 2 Pre-tax loss (ADP 054-053) 057 -501.048.580 XII. INCOME TAX 058 -142.242.789 -7.232.013 XIII. PROFIT OR LOSS FOR THE PERIOD (ADP 055-059) 059 -358.805.791 108.707.246 1 Profit for the period (ADP 055-059) 060 108.707.246 2 Loss for the period (ADP 059-055) 061 -358.805.791 51 ANNUAL REPORT 2021 STATEMENT OF PROFIT OR LOSS (for 01.01.2021 to 31.12.2021) (continued) Submitter: Valamar Riviera d.d. in HRK Item ADP S a code m e period of the p r e v i o u s y e a r Current period 1 2 3 4 DISCONTINUED OPERATIONS (to be filled in by undertakings subject to IFRS only with discontinued operations) XIV. PRE-TAX PROFIT OR LOSS OF DISCONTINUED OPERATIONS (ADP 063-064) 062 1 Pre-tax profit from discontinued operations 063 2 Pre-tax loss on discontinued operations 064 XV. INCOME TAX OF DISCONTINUED OPERATIONS 065 1 Discontinued operations profit for the period (ADP 062-065) 066 2 Discontinued operations loss for the period (ADP 065-062) 067 TOTAL OPERATIONS (to be filled in only by undertakings subject to IFRS with discontinued operations) XVI. PRE-TAX PROFIT OR LOSS (ADP 055+062) 068 1 Pre-tax profit (ADP 068) 069 2 Pre-tax loss (ADP 068) 070 XVII. INCOME TAX (ADP 058+065) 071 XVIII. PROFIT OR LOSS FOR THE PERIOD (ADP 068-071) 072 1 Profit for the period (ADP 068-071) 073 2 Loss for the period (ADP 071-068) 074 APPENDIX to the P&L (to be filled in by undertakings that draw up consolidated annual financial statements) XIX. PROFIT OR LOSS FOR THE PERIOD (ADP 076+077) 075 -358.805.791 108.707.246 1 Attributable to owners of the parent 076 -329.593.506 104.374.607 2 Attributable to minority (non-controlling) interest 077 -29.212.285 4.332.639 STATEMENT OF OTHER COMPRHENSIVE INCOME (to be filled in by undertakings subject to IFRS) I. PROFIT OR LOSS FOR THE PERIOD 078 -358.805.791 108.707.246 II. OTHER COMPREHENSIVE INCOME/LOSS BEFORE TAX (ADP 080 to 087) 079 -73.904 97.850 III. ITEMS THAT WILL NOT BE RECLASSIFIED TO PROFIT OR LOSS (ADP 081 to 085) 080 -73.904 97.850 1 Changes in revaluation reserves of fixed tangible and intangible assets 081 2 Gains or losses from subsequent measurement of equity instruments at fair value through other comprehensive income 3 Fair value changes of financial liabilities at fair value through statement of profit or loss, attributable to changes in their credit risk 082 083 -73.904 97.850 4 Actuarial gains/losses on the defined benefit obligation 084 5 Other items that will not be reclassified 085 6 Income tax relating to items that will not be reclassified 086 -13.302 17.613 I V . ITEMS THAT MAY BE RECLASSIFIED TO PROFIT OR LOSS (ADP 088 to 095) 087 1 Exchange rate differences from translation of foreign operations 088 2 Gains or losses from subsequent measurement of debt securities at fair value through other comprehensive income 089 3 Profit or loss arising from effective cash flow hedging 090 4 Profit or loss arising from effective hedge of a net investment in a foreign operation 5 Share in other comprehensive income/loss of companies linked by virtue of participating interests 091 092 6 Changes in fair value of the time value of option 093 7 Changes in fair value of forward elements of forward contracts 094 8 Other items that may be reclassified to profit or loss 095 9 Income tax relating to items that may be reclassified to profit or loss 096 V. NET OTHER COMPREHENSIVE INCOME OR LOSS (ADP 080+087-086-096) 097 -60.602 80.237 VI. COMPREHENSIVE INCOME OR LOSS FOR THE PERIOD (ADP 078+097) 098 -358.866.393 108.787.483 A P P E N D I X t o t h e S t a t e m e n t o n c o m p r e h e n s i v e i n c o m e ( t o b e f i l l e d i n b y e n t r e p r e n e u r s w h o d r a w u p c o n s o l i d a t e d s t a t e m e n t s ) VII. COMPREHENSIVE INCOME OR LOSS FOR THE PERIOD (ADP 100+101) 099 -358.866.393 108.787.483 1 Attributable to owners of the parent 100 -329.654.108 104.454.844 2 Attributable to minority (non-controlling) interest 101 -29.212.285 4.332.639 52 ANNUAL REPORT 2021 STATEMENT OF CASH FLOWS - indirect method (for the period 01.01.2021 to 31.12.2021) Submitter: Valamar Riviera d.d. in HRK Item ADP S a m e p e r i o d o f t h e code p r e v i o u s y e a r Current period 1 2 3 4 CASH FLOW FROM OPERATING ACTIVITIES 1 Pre-tax profit 001 -501.048.580 101.475.233 2 Adjustments (ADP 003 to 010) 002 627.709.571 577.223.786 a) Depreciation 003 496.444.044 507.335.969 b ) G a i n s a n d l o s s e s f r o m s a l e a n d v a l u e a d j u s t m e n t o f f i x e d t a n g i b l e a n d i n t a n g i b l e a s s e t s 004 -3.245.751 2.071.836 c) Gains and losses from sale and unrealised gains and losses and value adjustment of financial assets 005 -13.315.806 d) Interest and dividend income 006 -513.802 -86.145 e) Interest expenses 007 68.613.120 71.256.632 f) Provisions 008 22.152.112 25.063.623 g) Exchange rate differences (unrealised) 009 41.917.849 -8.096.392 h) Other adjustments for non-cash transactions and unrealised gains and losses 010 2.341.999 -7.005.931 I. Cash flow increase or decrease before changes in the working capital (ADP 001+002) 011 126.660.991 678.699.019 II. Cash from operations (ADP 011+012) 017 -6.678.360 679.976.588 4 Interest paid 018 -34.290.832 -70.643.388 5 Income tax paid 019 3.491.984 705.192 A) NET CASH FLOW FROM OPERATING ACTIVITIES (ADP 017 to 019) 020 -37.477.208 610.038.392 CASH FLOW FROM INVESTMENT ACTIVITIES 1 Cash receipts from sales of fixed tangible and intangible assets 021 9.326.474 3.783.014 2 Cash receipts from sales of financial instruments 022 3 Interest received 023 495.675 98.094 4 Dividends received 024 3.709 5 Cash receipts from repayment of loans and deposit 025 324.339 224.099 6 Other cash receipts from investment activities 026 III. Total cash receipts from investment activities (ADP 021 to 026) 027 10.146.488 4.108.916 1 Cash payments for the purchase of fixed tangible and intangible assets 028 -595.870.921 -115.355.120 2 Cash payments for the acquisition of financial instruments 029 3 Cash payments for loans and deposits for the period 030 -225.514 -42.722.870 4 Acquisition of a subsidiary, net of cash acquired 031 5 Other cash payments from investment activities 032 -3.203.421 IV. Total cash payments from investment activities (ADP 028 to 032) 033 -596.096.435 -161.281.411 B) NET CASH FLOW FROM INVESTMENT ACTIVITIES (ADP 027+033) 034 -585.949.947 -157.172.495 CASH FLOW FROM FINANCING ACTIVITIES 1 Cash receipts from the increase of initial (subscribed) capital 035 2 Cash receipts from the issue of equity financial instruments and debt financial instruments 3 Cash receipts from credit principals, loans and other borrowings 036 037 785.615.083 379.850.628 4 Other cash receipts from financing activities 038 3.389.998 338.676.960 V. Total cash receipts from financing activities (ADP 035 to 038) 039 789.005.081 718.527.588 1 Cash payments for the repayment of credit principals, loans and other borrowings and debt financial instruments 040 -46.038.888 -718.135.038 3 Changes in the working capital (ADP 013 to 016) 012 -133.339.351 1.277.569 a) Increase or decrease in short-term liabilities 013 -82.313.496 -22.602.337 b) Increase or decrease in short-term receivables 014 -46.515.658 20.098.142 c) Increase or decrease in inventories 015 -4.510.197 3.781.764 d) Other increase or decrease in the working capital 016 2 Dividends paid 041 3 Cash payments for finance lease 042 -72.300 -76.794 4 Cash payments for the redemption of treasury shares and decrease of initial 043 ( s u b s c r i b e d ) capital 5 Other cash payments from financing activities 044 -3.676.476 -3.856.729 VI. Total cash payments from financing activities (ADP 040 to 044) 045 -49.787.664 -722.068.561 C) NET CASH FLOW FROM FINANCIAL ACTIVITIES (ADP 039+045) 046 739.217.417 -3.540.973 1 Unrealised exchange rate differences in cash and cash equivalents 047 D) NET INCREASE OR DECREASE OF CASH FLOWS (ADP 020+034+046+047) 048 115.790.262 449.324.924 E) CASH AND CASH EQUIVALENTS AT THE BEGINNING OF PERIOD 049 550.142.638 665.932.900 F) CASH AND CASH EQUIVALENTS AT THE END OF PERIOD (ADP 048+049) 050 665.932.900 1.115.257.824 + 8 do 17) STATEMENT OF CHANGES IN EQUITY (for the period 01.01.2021 to 31.12.2021) Submitter: Valamar Riviera d.d. in HRK Distributable to majority owners Item ADP code Initial (subscribed) capital Capital reserves Legal reserves Reserves for treasury shares Treasury shares and holdings (deductible item) Statutory r e s e r v e s Other reserves Revaluation reserves Fair value of financial assets through other comprehen- sive income ( a v a i l a b l e f o r sale) Cash flow hedge - effective portion Hedge o f a net i n v e s t m e n t i n a f o r e i g n operation - e f f e c t i v e portion Other f a i r v a l u e reserves Exchange rate differences from translation of foreign operations Retained p r o f i t / l o s s brought forward Profit/loss for the business year Total attributable to owners of the parent Minority (non- controlling) interest T o t a l c a p i t a l and reserves 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 (3 do 6 - 7 19 20 (18+19) Previous period 1. Balance on the first day of the previous business year 01 1.672.021.210 5.223.432 83.601.061 136.815.284 124.418.267 61.474 430.206.412 284.535.940 2.488.046.546 731.023.213 3.219.069.759 2 Changes in accounting policies 02 3 Correction of errors 03 4 Balance on the first day of the previous business year (restated) (ADP 01 to 03) 04 1.672.021.210 5.223.432 83.601.061 136.815.284 124.418.267 61.474 430.206.412 284.535.940 2.488.046.546 731.023.213 3.219.069.759 5 P r o f i t / l o s s of the period 05 -329.593.506 -329.593.506 -29.212.285 -358.805.791 6 Exchange rate differences from translation of foreign operations 06 263.962 263.962 263.962 7 Changes in revaluation reserves of fixed tangible and intangible assets 07 8 Gains or losses from subsequent measurement of financial assets at fair value through other comprehensive income (available for sale) 9 Gains or losses on efficient cash flow hedging 10 G a i n s o r l o s s e s a r i s i n g f r o m e f f e c t i v e h e d g e o f a n e t i n v e s t m e n t i n a f o r e i g n o p e r a t i o n 11 Share in other comprehensive income/loss of companies linked by virtue of participating interest 12 Actuarial gains/losses on defined benefit plans 13 Other changes in equity unrelated to owners 14 Tax on transactions recognised directly in equity 15 Increase/decrease in initial (subscribed) capital (other than from reinvesting profit and other than arising from the pre-bankruptcy settlement procedure) 16 Decrease in initial (subscribed) capital arising from the pre-bankruptcy settlement procedure 17 Decrease in initial (subscribed) capital arising from the reinvestment of profit 17 18 Redemption of treasury shares/holdings 18 19 Payment of share in profit/dividend 19 20 Other distribution to owners 20 21 Other distributions and payments to members/shareholders 21 2.249.472 1.140.526 3.389.998 3.389.998 22 Transfer to reserves according to the annual schedule 22 284.535.940 -284.535.940 23 Increase in reserves arising from the pre-bankruptcy settlement procedure 23 2 4 B a l a n c e o n t h e l a s t d a y o f t h e p r e v i o u s b u s i n e s s y e a r r e p o r t i n g p e r i o d (ADP 04 to 23) 24 1.672.021.210 5.223.432 83.601.061 136.815.284 124.418.267 2.513.434 872 715.882.878 -329.593.506 2.162.046.398 701.810.928 2.863.857.326 (ADP 06 to 14) DIRECTLY IN EQUITY (ADP 15 to 23) 1. Balance on the first day of the previous business year 28 1.672.021.210 5.223.432 83.601.061 136.815.284 124.418.267 2.513.434 872 715.882.878 -329.593.506 2.162.046.398 701.810.928 2.863.857.326 2 Changes in accounting policies 29 3 Correction of errors 30 4 B a l a n c e o n t h e f i r s t d a y o f t h e c u r r e n t b u s i n e s s y e a r ( r e s t a t e d ) (ADP 28 to 30) 31 1.672.021.210 5.223.432 83.601.061 136.815.284 124.418.267 2.513.434 872 715.882.878 -329.593.506 2.162.046.398 701.810.928 2.863.857.326 5 P r o f i t / l o s s of the period 32 104.374.607 104.374.607 4.332.639 108.707.246 6 Exchange rate differences from translation of foreign operations 33 -263.962 -263.962 -263.962 7 Changes in revaluation reserves of fixed tangible and intangible assets 34 through other comprehensive income (available for sale) participating interest pre-bankruptcy settlement procedure or from the reinvestment of profit) settlement procedure settlement procedure (ADP 33 to 41) ANNUAL REPORT 2021 53 18 Redemption of treasury shares/holdings 45 19 Payments from members/shareholders 46 336.920.926 336.920.926 20 Payment of share in profit/dividend 47 21 Other distributions and payments to members/shareholders 48 1.756.034 1.756.034 1.756.034 22 Carryforward per annual plan 49 -329.593.506 329.593.506 23 Increase in reserves arising from the pre-bankruptcy settlement procedure 50 24 Balance on the last day of the current business year reporting period (ADP 31 to 40) 51 1.672.021.210 5.223.432 83.601.061 136.815.284 124.418.267 2.249.472 81.109 388.045.406 104.374.607 2.267.993.314 1.043.064.493 3.311.057.807 II. COMPREHENSIVE INCOME OR LOSS FOR THE CURRENT PERIOD (ADP 32 + 52) 53 -263.962 80.237 104.374.607 104.190.882 4.332.639 108.523.521 III. TRANSACTIONS WITH OWNERS IN THE CURRENT PERIOD RECOGNISED 54 -327.837.472 329.593.506 1.756.034 336.920.926 338.676.960 35 97.850 97.850 97.850 36 37 38 39 40 41 -17.613 -17.613 -17.613 42 43 44 08 -73.904 -73.904 -73.904 09 10 11 12 13 14 13.302 13.302 13.302 15 16 APPENDIX TO THE STATEMENT OF CHANGES IN EQUITY (to be filled in by undertakings that draw up financial statements in accordance with the IFRS) I. OTHER COMPREHENSIVE INCOME OF THE PREVIOUS PERIOD, NET OF TAX 25 I I . COMPREHENSIVE INCOME OR LOSS FOR THE PREVIOUS PERIOD (ADP 05+25) 26 I I I . TRANSACTIONS WITH OWNERS IN THE PREVIOUS PERIOD RECOGNISED 27 Current period 8 Gains or losses from subsequent measurement of financial assets at fair value 9 Gains or losses on efficient cash flow hedging 1 0 G a i n s o r l o s s e s a r i s i n g f r o m e f f e c t i v e h e d g e o f a n e t i n v e s t m e n t i n a f o r e i g n o p e r a t i o n 1 1 Share in other comprehensive income/loss of companies linked by virtue of 1 2 Actuarial gains/losses on defined benefit plans 13 Other changes in equity unrelated to owners 14 Tax on transactions recognised directly in equity 263.962 263.962 2.249.472 -60.602 -60.602 285.676.466 -329.593.506 -284.535.940 203.360 -329.390.146 3.389.998 -29.212.285 203.360 -358.602.431 3.389.998 15 Decrease in initial (subscribed) capital (other than arising from the 16 Decrease in initial (subscribed) capital arising from the pre-bankruptcy 17 Increase of initial (subscribed) capital arising from the pre-bankruptcy APPENDIX TO THE STATEMENT OF CHANGES IN EQUITY (to be filled in by undertakings that draw up financial statements in accordance with the IFRS) I. OTHER COMPREHENSIVE INCOME FOR THE CURRENT PERIOD, NET OF TAX 52 DIRECTLY IN EQUITY (ADP 42 to 50) -263.962 80.237 -183.725 -183.725 54 ANNUAL REPORT 2021 NOTES TO THE ANNUAL FINANCIAL STATEMENTS - GFI Name of the issuer: Valamar Riviera d.d. Personal identification number OIB: 36201212847 Reporting period: 01.01.2021 to 31.12.2021 Notes to the financial statements are to be drawn up in accordance with the International Financial Reporting Standards (hereinafter: IFRS) in such a way that they: a) present information about the basis for the preparation of the financial statements and the specific accounting policies used in accordance with the International Accounting Standard 1 (IAS 1), b) disclose any information required by IFRSs that is not presented elsewhere in the statement of financial position, statement of comprehensive income, statement of cash flows and statement of changes in equity, c) provide additional information that is not presented elsewhere in the statement of financial position, statement of comprehensive income, statement of cash flows and statement of changes in equity, but is relevant for understanding any of them. d) In the notes to the financial statements, in addition to the information stated above, information in respect of the following matters shall be disclosed: 1. issuer’s name, registered office (address), legal form, country of establishment, entity’s registration number and, if applicable, the indication whether the issuer is undergoing liquidation, bankruptcy proceedings, shortened termination proceedings or extraordinary administration 2. adopted accounting policies 3. the total amount of any financial commitments, guarantees or contingencies that are not included in the balance sheet, and an indication of the nature and form of any valuable security which has been provided; any commitments concerning pensions of the issuer within the group or company linked by virtue of participating interest shall be disclosed separately 4. the amount of advances and credits granted to the members of the administrative, managerial and supervisory bodies, with indications of the interest rates, main conditions and any amounts repaid, written-off or revoked, as well as commitments entered into on their behalf by way of guarantees of any kind, with an indication of the total for each category 5. the amount and nature of individual items of income or expenditure which are of exceptional size or incidence 6. amounts owed by the issuer and falling due after more than five years, as well as the total debts of the issuer covered by valuable security furnished by the issuer, specifying the type and form of security 7. average number of employees during the financial year 8. w h e r e , i n a c c o r d a n c e w i t h t h e r e g u l a t i o n s , the issuer capitalised on the cost of salaries in part or in full, information on the amount of the total cost of employees during the year broken down into the amount directly debiting the costs of the period and the amount capitalised on the value of the assets during the period, showing separately the total amount of net salaries and the amount of taxes, contributions from salaries and contributions on salaries 9. the amount of the emoluments granted in respect of the financial year to the members of the administrative, managerial and supervisory bodies by reason of their responsibilities, and any commitments arising or entered into in respect of retirement pensions for former members of those bodies, with an indication of the total for each category 10. the average number of persons employed during the financial year, broken down by categories and, if they are not disclosed separately in the profit and loss account, the staff costs relating to the financial year, broken down between net salaries and wages, tax costs and contributions from salaries, contributions on salaries and other salary costs, excluding cost allowances 11. where a provision for deferred tax is recognised in the balance sheet, the deferred tax balances at the end of the financial year, and the movement in those balances during the financial year 12. the name and registered office of each of the companies in which the issuer, either itself or through a person acting in their own name but on the issuer’s 55 ANNUAL REPORT 2021 NOTES TO THE ANNUAL FINANCIAL STATEMENTS - GFI (continued) behalf, holds a participating interest, showing the proportion of the capital held, the amount of capital and reserves, and the profit or loss for the latest financial year of the company concerned for which financial statements have been adopted; the information concerning capital and reserves and the profit or loss may be omitted where the company concerned does not publish its balance sheet and is not controlled by another company 13. the number and the nominal value or, in the absence of a nominal value, the accounting par value of the shares subscribed during the financial year within the limits of the authorised capital 14. where there is more than one class of shares, the number and the nominal value or, in the absence of a nominal value, the accounting value for each class 15. the existence of any participation certificates, convertible debentures, warrants, options or similar securities or rights, with an indication of their number and the rights they confer 16. the name, registered office and legal form of each of the companies of which the issuer is a member having unlimited liability 17. the name, registered office and legal form of each of the companies of which the issuer is a member having unlimited liability 18. the name and registered office of the company which draws up the consolidated financial statements of the smallest group of companies of which the issuer forms part as a controlled group member and which is also included in the group of companies referred to in point 17. 19. the place where copies of the consolidated financial statements referred to in points 17 and 18 may be obtained, provided that they are available 20. the proposed appropriation of profit or treatment of loss, or where applicable, the appropriation of the profit or treatment of the loss 21. the nature and business purpose of the company’s arrangements that are not included in the balance sheet and the financial impact on the company of those arrangements, provided that the risks or benefits arising from such arrangements are material and in so far as the disclosure of such risks or benefits is necessary for the purposes of assessing the financial position of the company 22. the nature and the financial effect of material events arising after the balance sheet date which are not reflected in the profit and loss account or balance sheet 23. the net income broken down by categories of activity and into geographical markets, in so far as those categories and markets differ substantially from one another, taking account of the manner in which the sale of products and the provision of services are organised 24. the total fees for the financial year charged by each statutory auditor or audit firm for the statutory audit of the annual financial statements, i.e. annual consolidated financial statements, the total fees charged for other assurance services, the total fees charged for tax advisory services and the total fees charged for other non-audit services, total research and development expenditure as the basis for granting state aid. Detailed information on financial statements are available in PDF document „Annual report 2021“ which has been simultaneously published with this document on HANFA (Croatian Financial Services Supervisory Agency), Zagreb Stock Exchange and Issuers web pages. Detailed information on the preparation of financial statements and certain accounting policies are available in PDF document „Annual report 2021“ which has been simultaneously published with this document on HANFA (Croatian Financial Services Supervisory Agency), Zagreb Stock Exchange and Issuers web pages. Group Valamar Riviera below presents comparison tables of items in GFI POD financial statements and audited Notes for 2020 and 2021. 56 ANNUAL REPORT 2021 Summary of adjustments of GFI-POD balance sheet and consolidated balance sheet from Audited report for 2021 / GROUP in thousands of HRK GFI-POD BALANCE SHEET as at 31 December 2021 GFI-POD ADP code AUDITED R E P O R T Note Reclassified G F I - P O D AUDITED REPORT N o t e D i f f e r e n c e E x p l a n a t i o n NON-CURRENT ASSETS (ADP 003+010+020+031+036) 002 14+15+16+ 17+ part of 1 8 + 2 0 + p a r t of 21+ part of 23+ 25+ part of 30 5.671.820 5.671.820 0 I. Intangible assets 003 16 39.087 39.087 0 II. Tangible assets 010 14+ 15+ part of 30 III. Non-current financial assets 020 17+ part of 18+ 20+ part of 21 5.221.568 5.221.568 0 GFI-POD item “Tangible assets” (ADP 010; HRK 5,221,568 thous.) is in Audited report presented under items “Property, plant and equipment” (Note 14 in comparable amount of H R K 5,2 0 1 ,7 4 8 t h o u s .), “I n v e s t m e n t p r o p e r t y ” ( N o t e 1 5 i n c o m p a r a b l e a m o u n t o f H R K 3,1 8 0 thous.), and “Right-of-use assets” (Note 30 in comparable amount of HRK 16,640 thous). 82.072 82.072 0 GFI-POD item “Financial assets” (ADP 020; HRK 82,072 thous.) is in “Investment in associated e n t i t y ” ( N o t e 1 8 i n c o m p a r a b l e a m o u n t o f HRK 76,503 thous. (presented in Audit report as a separate line)), “Financial assets” (Note 20 in comparable amount of HRK 391 thous.) and in the non-current part of item “Loans and deposits” (Note 21 in comparable amount of HRK 5,178 thous.). IV. T r a d e r e c e i v a b l e s 031 Part of 23 0 0 0 V. Deferred tax assets 036 25 329.093 329.093 0 CURRENT ASSETS (ADP 038+046+053+063) 037 Part of 21+ 22+ part of 23+ 26 1.217.958 1.217.958 0 D u e t o a d i f f e r e n t p r e s e n t a t i o n , b u t f o r t h e p u r p o s e o f c o m p a r a b i l i t y o f G F I - P O D a n d Audited report it is necessary to jointly view GFI-POD items “Current assets” (ADP 037; HRK 1,217,958 thous.) and “Prepayments and accrued income” (ADP 064; HRK 23,769 t h o u s .) i n r e l a t i o n t o i t e m “C u r r e n t a s s e t s ” o f A u d i t e d r e p o r t ( H R K 1,2 4 1 ,7 2 7 t h o u s .). I. Inventories 038 22 26.310 26.310 0 II. Receivables 046 Part of 23 38.388 38.388 0 GFI-POD item “Receivables” (ADP 046; HRK 38,388 thous.) is in Audited report presented under items “Trade and other receivables” (Note 23; “Trade receivables – net” HRK 25,289 thous., “VAT receivable” HRK 8,002 thous., “Advances to suppliers” HRK 668 thous., “Receivables from employees” HRK 739 thous., “Receivables from state institutions” HRK 1,113 thous., part of “Other current liabilities” HRK 2,575 thous. and “Income tax III. Current financial assets 053 Part of 21 38.002 38.002 0 receivable” HRK 2 thous.). Comment: The total amount of item “Trade and other receivables” in Audited report (Note 23) is HRK 62,155 thous. and is presented in items “Receivables” (ADP 046; HRK 38,386 thous.) and “Prepayments and accrued income” (ADP 064; HRK 23,769 thous.). GFI-POD item “Financial assets” (ADP 053; HRK 38,002 thous.) is in Audited report presented under item “Loans and deposits” - current part (Note 21 in comparable amount of HRK IV. Cash and cash equivalents 063 26 1.115.258 1.115.258 0 38,002 thous.). GFI-POD item “Cash and cash equivalents” (ADP 063; HRK 1,115,258 thous.) is in Audited r e p o r t p r e s e n t e d u n d e r item “Cash and cash equivalents” (Note 26 in comparable amount of HRK 1,115,258 thous.). PREPAYMENTS AND ACCRUED INCOME 064 Part of 23 23.769 23.769 0 GFI-POD item “Prepayments and accrued income” (ADP 064; HRK 23,769 thous.) is i n A u d i t e d r e p o r t p r e s e n t e d u n d e r i t e m s “T r a d e a n d other receivables” (Note 23; “Accrued income” HRK 3,889 thous., “Interest receivables” HRK 27 thous., “Prepaid expenses” HRK 19,837 thous. and part of “Other current liabilities” HRK 16 thous.). Comment: The total amount of item “Trade and other receivables” in Audited report (Note 23) is HRK 62,155 thous. and is presented in items “Receivables” (ADP 046; HRK 38,386 thous.) and “Prepayments and accrued income” (ADP 064; HRK 23,769 thous.). TOTAL ASSETS 065 6.913.547 6.913.547 0 57 ANNUAL REPORT 2021 Summary of adjustments of GFI-POD balance sheet and consolidated balance sheet from Audited report for 2021 / GROUP (continued) in thousands of HRK GFI-POD BALANCE SHEET as at 31 December 2021 GFI-POD ADP code AUDITED R E P O R T Note Reclassified G F I - P O D AUDITED REPORT N o t e D i f f e r e n c e E x p l a n a t i o n CAPITAL AND RESERVES 067 27+28 3.311.059 3.311.059 0 GFI-POD item “Capital and reserves” (ADP 067; HRK 3,311,059 thous.) is in Audited report presented under item “Share capital” (Notes 27 and 28 in comparable amount of HRK 3,311,059 thous.). PROVISIONS 090 Part of 32+ part of 31 NON-CURRENT LIABILITIES (ADP 103+107+108) 097 Part of 24+ 25+ part of 29+part of 30+ part of 31+ part of 32 166.156 166.156 0 GFI-POD item “Provisions” (ADP 090; HRK 166,156 thous.) is in Audited report presented under non-current liabilities in item “Provisions” (Note 32 part of the item “Severance pay and jubilee awards” in the amount HRK 29,829 thous. with the i t e m “L e g a l D i s p u t e s ” i n a comparable amount HRK 50,117 thous. and “Other” HRK 28,164 thous.) and non-current liabilities under item “Concession fee” (Note 31 in comparable amount of HRK 58,046 thous). 2.614.508 2.614.508 0 Due to a different presentation, but for the purpose of comparability of GFI-POD and Audited report it is necessary to jointly view GFI-POD items “Non-current liabilities” (ADP 097; HRK 2,614,508 thous.) and “Provisions” (ADP 090; HRK 166,156 thous.) in relation to item “Non-current liabilities” of Audited report (HRK 2,780,664 thous.). I. Liabilities to banks and other financial institutions 103 Part of 29 2.547.107 2.547.107 0 GFI-POD item “Liabilities to banks and other financial institutions” (ADP 103; HRK 2,547,107 thous.) is in Audited report presented under non-current part of item “Borrowings” (Note 29 in comparable amount of HRK 2,547,107 thous.). II. Other non-current liabilities 107 Part of 24+ p a r t o f 3 0 + part of 32 15.636 15.636 0 GFI-POD item “Other non-current liabilities” (ADP 107; HRK 15,636 thous.) is in Audited report presented under non-current part of item “Derivative financial instruments” (Note 24 in comparable amount of 4,362 thous.), “Lease liabilities” (Note 30 in comparable amount of HRK 11,273 thous.) and part of long-term liabilities in the item “Provisions” (Note 32 “Severance pay and jubilee awards” HRK 1 thous.). Comment: The total amount of item “Derivative financial instruments” in Audited report (Note 24) is 7,749 thous. and is presented in items “Other non-current liabilities” (ADP 107; HRK 4,362 thous.) and “Other current liabilities” (ADP 123; HRK 3,387 thous.). III. Deferred tax liabilities 108 25 51.765 51.765 0 CURRENT LIABILITIES (ADP 110+112+115+116+117+118+119+120+121 +123) 109 Part of 24+ part of 29+ part of 30+ p a r t o f 3 1 + p a r t o f 3 2 733.966 733.966 0 Due to a different presentation, but for the purpose of comparability of GFI-POD and Audited report it is necessary to jointly view GFI-POD items “Current liabilities” (ADP 109; HRK 733,966 thous.) and “Accrued expenses and deferred income” (ADP 124; HRK 87,858 thous.) in relation to item “Current liabilities” of Audited report (HRK 821,824 thous.). I. Liabilities to banks and other financial institutions 115 Part of 29 565.524 565.524 0 GFI-POD item “Liabilities to banks and other financial institutions” (ADP 115; HRK 565,524 thous.) is in Audited report presented under current part of item “Borrowings” (Note 29; “Bank borrowings” in comparable amount of HRK 565,524 thous.). II. Amounts payable for prepayment 116 Part of 31 40.344 40.344 0 GFI-POD item “Amounts payable for prepayment” (ADP 116; HRK 40,344 thous.) is in Audited report presented under current part of item “Trade and other payables” (Note 31; “Advances received” in comparable amount of HRK 40,344 thous.). Comment: The total current amount of item “Trade and other payables” in Audited r e p o r t ( N o t e 3 1 ) i s H R K 2 2 9 ,3 1 9 t h o u s . a n d i s p r e s e n t e d i n i t e m s “A m o u n t s payable for prepayment” (ADP 116; HRK 40,344 thous.), “Liabilities towards companies linked by virtue o f p a r t i c i p a t i n g i n t e r e s t , L i a b i l i t i e s t o w a r d s s u p p l i e r s ” ( A D P 1 1 2 a n d 1 1 7 ; H R K 6 7 ,5 1 0 thous.), “Liabilities to employees” (ADP 119; HRK 28,794 thous.), “Taxes, contributions and s i m i l a r l i a b i l i t i e s ” ( A D P 1 2 0 ; H R K 1 6 ,5 0 9 t h o u s .), “L i a b i l i t i e s a r i s i n g f r o m s h a r e i n t h e r e s u l t ” (ADP 121; HRK 380 thous.), “Other current liabilities” (ADP 123; HRK 8,839 thous.) and item “Accrued expenses and deferred income” (ADP 124; HRK 66,943 thous.). 58 ANNUAL REPORT 2021 Summary of adjustments of GFI-POD balance sheet and consolidated balance sheet from Audited report for 2021 / GROUP (continued) in thousands of HRK GFI-POD BALANCE SHEET as at 31 December 2021 GFI-POD ADP code AUDITED R E P O R T Note Reclassified G F I - P O D AUDITED REPORT N o t e D i f f e r e n c e E x p l a n a t i o n III. Liabilities towards undertakings within the group, Liabilities towards companies linked by virtue of participating interest, Liabilities towards suppliers 110, 112 and 117 Part of 31 67.510 67.510 0 GFI-POD items “Liabilities towards companies linked by virtue of participating interest” (ADP 112; HRK 39 thous.) and “Trade payables” (ADP 117; HRK 67,471 thous.) is in Audited report presented under current part of item “Trade and other payables” (Note 31; “Trade payables” HRK 67,447 thous., “Trade payables – related parties” HRK 63 thous.). Comment: The total current amount of item “Trade and other payables” in Audited r e p o r t ( N o t e 3 1 ) i s H R K 2 2 9 ,3 1 9 t h o u s . a n d i s p r e s e n t e d i n i t e m s “A m o u n t s payable for prepayment” (ADP 116; HRK 40,344 thous.), “Liabilities towards companies linked by virtue o f p a r t i c i p a t i n g i n t e r e s t , L i a b i l i t i e s t o w a r d s s u p p l i e r s ” ( A D P 1 1 2 a n d 1 1 7 ; H R K 6 7 ,5 1 0 thous.), “Liabilities to employees” (ADP 119; HRK 28,794 thous.), “Taxes, contributions and s i m i l a r l i a b i l i t i e s ” ( A D P 1 2 0 ; H R K 1 6 ,5 0 9 t h o u s .), “L i a b i l i t i e s a r i s i n g f r o m s h a r e i n t h e r e s u l t ” (ADP 121; HRK 380 thous.), “Other current liabilities” (ADP 123; HRK 8,839 thous.) and item “Accrued expenses and deferred income” (ADP 124; HRK 66,943 thous.). IV. Liabilities to employees 119 Part of 31 28.794 28.794 0 GFI-POD items “Liabilities to employees” (ADP 119; HRK 28,794 thous.) is in Audited report presented under current part of item “Trade and other payables” (Note 31; “Liabilities to employees” in comparable amount HRK 28,794 thous.). Comment: The total current amount of item “Trade and other payables” in Audited r e p o r t ( N o t e 3 1 ) i s H R K 2 2 9 ,3 1 9 t h o u s . a n d i s p r e s e n t e d i n i t e m s “A m o u n t s payable for prepayment” (ADP 116; HRK 40,344 thous.), “Liabilities towards companies linked by virtue o f p a r t i c i p a t i n g i n t e r e s t , L i a b i l i t i e s t o w a r d s s u p p l i e r s ” ( A D P 1 1 2 a n d 1 1 7 ; H R K 6 7 ,5 1 0 thous.), “Liabilities to employees” (ADP 119; HRK 28,794 thous.), “Taxes, contributions and s i m i l a r l i a b i l i t i e s ” ( A D P 1 2 0 ; H R K 1 6 ,5 0 9 t h o u s .), “L i a b i l i t i e s a r i s i n g f r o m s h a r e i n t h e r e s u l t ” (ADP 121; HRK 380 thous.), “Other current liabilities” (ADP 123; HRK 8,839 thous.) and item “Accrued expenses and deferred income” (ADP 124; HRK 66,943 thous.). V. Taxes, contributions and similar liabilities 120 Part of 31 16.509 16.509 0 GFI-POD item “Taxes, contributions and similar liabilities” (ADP 120; HRK 16,509 thous.) is in Audited report presented under current part of item “Trade and other payables” (Note 31; “Liabilities for taxes and contributions and similar charges” in comparable amount of HRK 16,509 thous.). Comment: The total current amount of item “Trade and other payables” in Audited r e p o r t ( N o t e 3 1 ) i s H R K 2 2 9 ,3 1 9 t h o u s . a n d i s p r e s e n t e d i n i t e m s “A m o u n t s payable for prepayment” (ADP 116; HRK 40,344 thous.), “Liabilities towards companies linked by virtue o f p a r t i c i p a t i n g i n t e r e s t , L i a b i l i t i e s t o w a r d s s u p p l i e r s ” ( A D P 1 1 2 a n d 1 1 7 ; H R K 6 7 ,5 1 0 thous.), “Liabilities to employees” (ADP 119; HRK 28,794 thous.), “Taxes, contributions and s i m i l a r l i a b i l i t i e s ” ( A D P 1 2 0 ; H R K 1 6 ,5 0 9 t h o u s .), “L i a b i l i t i e s a r i s i n g f r o m s h a r e i n t h e r e s u l t ” (ADP 121; HRK 380 thous.), “Other current liabilities” (ADP 123; HRK 8,839 thous.) and item “Accrued expenses and deferred income” (ADP 124; HRK 66,943 thous.). 59 ANNUAL REPORT 2021 Summary of adjustments of GFI-POD balance sheet and consolidated balance sheet from Audited report for 2021 / GROUP (continued) in thousands of HRK GFI-POD BALANCE SHEET as at 31 December 2021 GFI-POD ADP code AUDITED R E P O R T Note Reclassified G F I - P O D AUDITED REPORT N o t e D i f f e r e n c e E x p l a n a t i o n VI. Liabilities arising from share in the result and other current liabilities 121 and 123 Part of 24+ part of 30+ part of 31 15.286 15.286 0 GFI-POD item “Liabilities arising from share in the result” (ADP 121; HRK 380 thous.) “Other current liabilities” (ADP 123; HRK 14,906 thous.) is in Audited report presented under current part of items “Trade and other payables” (Note 31; “Dividend liability” HRK 380 thous., part of “Other liabilities” HRK 8,839 thous.), “Derivative financial instruments” (Note 24 in comparable amount of HRK 3,387 thous.) and “Lease liabilities” (Note 30 in comparable amount of HRK 2,680 thous.). Comment: The total current amount of item “Trade and other payables” in Audited r e p o r t ( N o t e 3 1 ) i s H R K 2 2 9 ,3 1 9 t h o u s . a n d i s p r e s e n t e d i n i t e m s “A m o u n t s payable for prepayment” (ADP 116; HRK 40,344 thous.), “Liabilities towards companies linked by virtue o f p a r t i c i p a t i n g i n t e r e s t , L i a b i l i t i e s t o w a r d s s u p p l i e r s ” ( A D P 1 1 2 a n d 1 1 7 ; H R K 6 7 ,5 1 0 thous.), “Liabilities to employees” (ADP 119; HRK 28,794 thous.), “Taxes, contributions and s i m i l a r l i a b i l i t i e s ” ( A D P 1 2 0 ; H R K 1 6 ,5 0 9 t h o u s .), “L i a b i l i t i e s a r i s i n g f r o m s h a r e i n t h e r e s u l t ” (ADP 121; HRK 380 thous.), “Other current liabilities” (ADP 123; HRK 8,839 thous.) and item “Accrued expenses and deferred income” (ADP 124; HRK 66,943 thous.). The total amount of item “Derivative financial instruments” in Audited report (Note 24) is 3,387 thous. is presented in items “Other current liabilities” (ADP 123; HRK 3,387 thous.). ACCRUED EXPENSES AND DEFERRED INCOME 124 Part of 31+ part of 32 87.858 87.858 0 GFI-POD item “Accrued expenses and deferred income” (ADP 124; HRK 87,858 thous.) is in Audited report presented under items “Trade and other payables” (Note 31; “Interest payable” HRK 29,168 thous., current part of item “Concession fees payable” HRK 1,920 thous., “Liabilities for calculated vacation and redistribution hours” HRK 10,908 ths., “Accrued VAT liabilities in unrealized income” HRK 483 thous., “Liabilities for calculated costs” HRK 22,605 thous. and part of “Other current liabilities” HRK 1,859 thous.) and current part of items “Provisions” (Note 32; current item “Termination benefits and jubilee awards” HRK 1,164 thous. and “Bonuses” HRK 19,751 thous.). Comment: The total current amount of item “Trade and other payables” in Audited report (Note 31) is HRK 229,319 thous. and is presented in items “Amounts payable for prepayment” (ADP 116; HRK 40,344 thous.), “Liabilities towards companies linked by virtue of participating interest, Liabilities towards suppliers” (ADP 112 and 117; HRK 67,510 thous.), “Liabilities to employees” (ADP 119; HRK 28,794 thous.), “Taxes, contributions and similar liabilities” (ADP 120; HRK 16,509 thous.), “Liabilities arising from share in the result” (ADP 121; HRK 380 thous.), “Other c u r r e n t l i a b i l i t i e s ” ( A D P 1 2 3 ; H R K 8,8 3 9 thous.) and item “Accrued expenses and deferred income” (ADP 124; HRK 66,943 thous.). The total short-term part of the item “Provisions” of the Audited Report (Note 32) in the amount of 20,914 thous. in the item “Deferred payment of expenses and income for the future period” (ADP 124: HRK 20,914 thous.). TOTAL LIABILITIES 125 6.913.547 6.913.547 0 60 ANNUAL REPORT 2021 Summary of adjustments of GFI-POD reclassified income statement and consolidated statement of comprehensive income from Audited report for 2021 / GROUP in thousands of HRK GFI-POD INCOME STATEMENT for the period from GFI-POD AUDITED R E P O R T Reclassified AUDITED REPORT (ADP 002+003+004+005+006) Group and sales revenues (outside the Group) O P E R A T I N G EXPENSES (ADP 009+013+017+018+019+022+029) 007 1.507.033 1.507.033 0 Due to a different presentation, but for the purpose of comparability of GFI-POD a n d A u d i t e d r e p o r t i t i s n e c e s s a r y t o j o i n t l y view GFI-POD items “Staff costs” (ADP 013; HRK 353,176 thous.), “Other expenditures” (ADP 018; HRK 134,451 thous.), “Value adjustment” (ADP 019; HRK 1,670 thous.), “Provisions” (ADP 022; HRK 40,313 thous.) and “Other operating expenses” (ADP 029; HRK 11,826 thous.) in relation to items “Staff costs” (Note 8; HRK 439,531 thous.) and “Other operating expenses” (Note 9; HRK 101,905 thous.) of Audited report. 1 January 2021 to 31 December 2021 ADP code Note GFI-POD Note D i f f e r e n c e Explanation OPERATING INCOME 001 1.644.008 1.644.008 0 I. Revenues from sales with undertakings in a 002+ 003 5 1.605.128 1.605.128 0 II. Revenues from use of own products, goods 004+ 005+ Part of 6+ 38.880 38.880 0 GFI-POD items “Revenues from use of own products, goods and services” (ADP 004; and services, other operating revenues with 006 undertakings in a Group and other operating revenues (outside the Group) part of 10 HRK 326 thous.), “Other operating revenues (outside the Group)” (ADP 006; HRK 38,554 thous.) are in Audited report presented under items “Other income” (Note 6; “Income f r o m d o n a t i o n s a n d o t h e r ” H R K 7,7 1 3 t h o u s ., “I n c o m e f r o m p r o v i s i o n r e l e a s e ” H R K 1 4 ,0 2 7 thous., “Reimbursed costs” HRK 1,492 thous., “Income from insurance and legal claims” HRK 8,118 thous., “Income from own consumption” HRK 326 thous., “Collection of written-off receivables “ HRK 53 thous., “Other income” HRK 5,330 thous.), and “Other gains/(losses) - net” (Note 10; “Net gains on sale of property, plant and equipment” HRK 1,820 thous.). Comment: The total amount of item “Other income” in Audited report (Note 6) is HRK 3 7 ,0 6 0 t h o u s . a n d i s p r e s e n t e d i n i t e m s “R e v e n u e s f r o m u s e o f own products, goods and services, other operating revenues with undertakings in a Group and other operating revenues (outside the Group)” (ADP 004 and 006; HRK 37,060 thous.). T h e t o t a l a m o u n t o f i t e m “O t h e r g a i n s / ( l o s s e s ) - net” in Audited report (Note 10) is 1,820 t h o u s . a n d i s p r e s e n t e d i n i t e m “R e v e n u e s f r o m u s e o f o w n p r o d u c t s , g o o d s and services, other operating revenues with undertakings in a Group and other operating revenues (outside the Group)” (ADP 004 and 006, HRK 1,820 thous.). 61 ANNUAL REPORT 2021 Summary of adjustments of GFI-POD reclassified income statement and consolidated statement of comprehensive income from Audited report for 2021 / GROUP (continued) in thousands of HRK GFI-POD INCOME STATEMENT for the period from GFI-POD AUDITED R E P O R T Reclassified AUDITED REPORT part of 9 u n d e r i t e m s “S t a f f c o s t s ” ( N o t e 8; “Provisions for termination benefits and jubilee awards” HRK 9,405 thous.), “Other operating expenses” (Note 9; “Provisions for legal proceedings” HRK 2,744 thous., “Provisions for tourist land lease and other” HRK 28,164 thous.). C o m m e n t : T h e t o t a l a m o u n t o f i t e m “S t a f f c o s t s ” i n A u d i t e d r e p o r t ( N o t e 8) is HRK 439,531 thous. and is presented in “Staff costs” (ADP 013; HRK 353,176 thous.), “Other expenditures” (ADP 018; HRK 76,950 thous.) and “Provisions” (ADP 022; HRK 9,405 thous.). The total a m o u n t o f i t e m “O t h e r o p e r a t i n g e x p e n s e s ” in Audited report (Note 9) is HRK 101,905 thous. and is presented in items “Other expenditures” (ADP 018; HRK 57,501 thous.), “Value adjustment” (ADP 019; HRK 1,670 thous.), “Provisions” (ADP 022; HRK 30,908 thous.) and “Other operating expenses” (ADP 029; HRK 11,826 thous.). VII. Other operating expenses 029 Part of 9 11.826 11.826 0 GFI-POD item “Other operating expenses” (ADP 029; HRK 11,826 thous.) is in Audited report presented under items “Other operating expenses” (Note 9; “Write-off of property, plant and equipment” HRK 3,892 thous., “Other operating expenses” HRK 7,934 thous.). Comment: The total amount of item “Other operating expenses” in Audited report (Note 9) is HRK 101,905 thous. and is presented in items “Other expenditures” (ADP 018; HRK 57,501 thous.), “Value adjustment” (ADP 019; HRK 1,670 thous.), “Provisions” (ADP 022; HRK 30,908 thous.) and “Other operating expenses” (ADP 029; HRK 11,826 thous.). FINANCIAL INCOME 030 11 35.354 35.354 0 GFI-POD item “Financial income” (ADP 030; HRK 35,354 thous.) is in Audited report p r e s e n t e d u n d e r i t e m s “F i n a n c i a l i n c o m e / ( l o s s ) - n e t ” i n p a r t o f f i n a n c i a l income (Note 11; “Interest income” HRK 83 thous., “Net foreign exchange gains/(losses) - other” HRK 11,676 thous., “Realised and change of net gains/(losses) from changes in v a l u e o f f o r w a r d s a n d i n t e r e s t r a t e s w a p s ” H R K 9,2 3 3 t h o u s ., “T e r m i n a t i o n o f c o n t r o l over the subsidiary” HRK 13,316 thous., “Income from cassa sconto” HRK 817 thous. “Dividend income and other financial income” HRK 229 thous.). C o m m e n t : T h e t o t a l a m o u n t o f i t e m “F i n a n c e i n c o m e / ( e x p e n s e ) - net” in Audited report (Note 11) is HRK 35,903 thous. and is presented in items “Financial income” (ADP 030; HRK 35,354 thous.) and “Financial costs” (ADP 041; HRK 71,257 thous.). FINANCIAL COSTS 041 11 71.257 71.257 0 GFI-POD item “Financial costs” (ADP 041; HRK 71,257 thous.) is in Audited report presented under item “Finance income/(expense) - net” in part of financial expenses (Note 11; “Interest expense” HRK 71,257 thous.) Comment: The total amount of item “Finance income/(expense) - net” in Audited report (Note 11) is HRK 35,903 thous. and is presented in items “Financial income” (ADP 030; HRK 35,354 thous.) and “Financial costs” (ADP 041; HRK 71,257 thous.). SHARE IN LOSS OF COMPANIES LINKED BY VIRTUE OF PARTICIPATING INTEREST SHARE IN LOSS OF COMPANIES LINKED BY VIRTUE OF PARTICIPATING INTEREST 049 18 548 548 0 T h e G F I - P O D i t e m “S h a r e i n p r o f i t f r o m c o m p a n i e s r e l a t e d t o p a r t i c i p a t i n g i n t e r e s t s ” ( A D P 0 4 9 ; H R K 5 4 8 t h o u s .) i s s t a t e d i n t h e A u d i t e d R e p o r t i n t h e c o m p a r a b l e a m o u n t o f H R K 5 4 8 t h o u s .). 051 18 144 144 0 The GFI-POD item “Share in loss from companies related to participating interests” (ADP 051; H R K 1 4 4 t h o u s .) i s s t a t e d i n t h e A u d i t e d R e p o r t i n t h e c o m p a r a b l e a m o u n t o f H R K 1 4 4 t h o u s .). TOTAL INCOME (ADP 001+030) 053 1.679.910 1.679.910 0 TOTAL COSTS (ADP 007+041) 054 1.578.434 1.578.434 0 PROFIT OR LOSS BEFORE TAX (ADP 053-054) 055 101.475 101.475 0 INCOME TAX EXPENSE 058 -7.232 -7.232 0 PROFIT OR LOSS FOR THE PERIOD (ADP 055-058) 059 108.707 108.707 0 1 January 2021 to 31 December 2021 ADP code Note GFI-POD Note D i f f e r e n c e Explanation V. Value adjustment 019 Part of 9 1.670 1.670 0 GFI-POD item “Value adjustment” (ADP 019; HRK 1,670 thous.) is in Audited report p r e s e n t e d u n d e r i t e m “O t h e r o p e r a t i n g e x p e n s e s ” ( N o t e 9; “Value adjustment of assets” in comparable amount of HRK 1,670 thous.). Comment: The total amount of item “Other operating expenses” in Audited report (Note 9) VI. Provisions 022 Part of 8+ 40.313 40.313 0 is HRK 101,905 thous. and is presented in items “Other expenditures” (ADP 018; HRK 57,501 thous.), “Value adjustment” (ADP 019; HRK 1,670 thous.), “Provisions” (ADP 022; HRK 30,908 thous.) and “Other operating expenses” (ADP 029; HRK 11,826 thous.). GFI-POD item “Provisions” (ADP 022; HRK 40,313 thous.) is in Audited report presented 62 ANNUAL REPORT 2021 Summary of adjustments of GFI-POD reclassified balance sheet and consolidated balance sheet from Audited Report for 2020 / GROUP in thousands of HRK GFI-POD BALANCE SHEET as at 31 December 2020 GFI-POD ADP code AUDITED R E P O R T Note Reclassified G F I - P O D AUDITED REPORT N o t e D i f f e r e n c e E x p l a n a t i o n NON-CURRENT ASSETS (ADP 003+010+020+036) 002 14+15+16+17+ p a r t o f 1 8 b + 2 0 + p a r t o f 2 1 + 2 5 + p a r t of 30 6.087.157 6.087.157 0 I. Intangible assets 003 16 46.400 46.400 0 II. Tangible assets 010 14+ 15+ 30 5.662.917 5.662.917 0 GFI-POD item “Tangible assets” (ADP 010; HRK 5,662,917 thous.) is in Audited report presented under items “Property, plant and equipment” (Note 14 in comparable amount of H R K 5,6 4 7 ,3 1 1 t h o u s .), “I n v e s t m e n t p r o p e r t y ” ( N o t e 1 5 i n c o m p a r a b l e a m o u n t o f H R K 3,9 4 2 thous.), and “Right-of-use assets” (Note 30 in comparable amount of HRK 11,664 thous.). III. Non-current financial assets 020 17+ part of 18b+ 20+ part of 21 46.430 46.430 0 GFI-POD item “Financial assets” (ADP 020; HRK 46,430 thous.) is in Audited report presented under items “Investment in associated entity” (Note 18 in comparable amount of HRK 46,024 thous.), Financial assets” (Note 20 in comparable amount of HRK 317 thous.) and in the non-current part of item “Loans and deposits” (Note 21 in comparable amount of HRK 89 thous.). IV. T r a d e r e c e i v a b l e s 031 Part of 23 0 0 0 V. Deferred tax assets 036 25 331.410 331.410 0 CURRENT ASSETS (ADP 038+046+053+063) 037 Part of 21+ 22+ part of 23+ part of 24+ 26 737.067 737.067 0 D u e t o a d i f f e r e n t p r e s e n t a t i o n , b u t f o r t h e p u r p o s e o f c o m p a r a b i l i t y o f G F I - P O D a n d Audited report it is necessary to jointly view GFI-POD items “Current assets” (ADP 037; HRK 737,067 thous.) and “Prepayments and accrued income” (ADP 064; HRK 55,359 t h o u s .) i n r e l a t i o n t o i t e m “C u r r e n t a s s e t s ” o f A u d i t e d r e p o r t ( H R K 7 9 2 ,4 2 5 t h o u s .). I. Inventories 038 22 30.336 30.336 0 II. Receivables 046 Part of 23 40.185 40.185 0 GFI-POD item “Receivables” (ADP 046; HRK 40,185 thous.) is in Audited report presented under items “Trade and other receivables” (Note 23; “Trade receivables – net” HRK 25,375 thous., “VAT receivable” HRK 4,900 thous., “Advances to suppliers” HRK 2,304 thous., “Receivables from employees” HRK 298 thous., “Receivables from state institutions” HRK 4,529 thous., “Other receivables” HRK 2,047 thous.) and “Income tax receivable” HRK 733 thous. presented in balance sheet as a separate line). C o m m e n t : T h e t o t a l a m o u n t o f i t e m “T r a d e a n d o t h e r r e c e i v a b l e s ” i n A u d i t e d r e p o r t ( N o t e 2 3 ) is HRK 94,811 thous. and is presented in items “Receivables” (ADP 046; HRK 39,452 thous.) and “Prepayments and accrued income” (ADP 064; HRK 55,359 thous.). III. Current financial assets 053 P a r t of 21+ part of 24 613 613 0 GFI-POD item “Financial assets” (ADP 053; HRK 613 thous.) is in Audited report presented under item “Loans and deposits” - current part (Note 21 in comparable amount of HRK 613 thous.). IV. Cash and cash equivalents 063 26 665.933 665.933 0 GFI-POD item “Cash and cash equivalents” (ADP 063; HRK 665,933 thous.) is in Audited report presented under item “Cash and cash equivalents” (Note 26 in comparable amount of HRK 665,933 thous.). PREPAYMENTS AND ACCRUED INCOME 064 Part of 23 55.359 55.359 0 GFI-POD item “Prepayments and accrued income” (ADP 064; HRK 55,359 thous.) is i n A u d i t e d r e p o r t p r e s e n t e d u n d e r i t e m s “T r a d e a n d o t h e r receivables” (Note 23; “Accrued income” HRK 715 thous., “Interest receivables” HRK 43 thous., “Prepaid expenses” HRK 54,600 thous.). Comment: The total amount of item “Trade and other receivables” in Audited report (Note 23) is HRK 94,811 thous. and is presented in items “Receivables” (ADP 046; HRK 39,452 thous.) and “Prepayments and accrued income” (ADP 064; HRK 55,359 thous.). TOTAL ASSETS 065 6.879.583 6.879.583 0 63 ANNUAL REPORT 2021 Summary of adjustments of GFI-POD reclassified balance sheet and consolidated balance sheet from Audited Report for 2020 / GROUP (continued) in thousands of HRK GFI-POD BALANCE SHEET as at 31 December 2020 GFI-POD ADP code AUDITED R E P O R T Note Reclassified G F I - P O D AUDITED REPORT N o t e D i f f e r e n c e E x p l a n a t i o n CAPITAL AND RESERVES 067 27+ 28 2.863.857 2.863.857 0 GFI-POD item “Capital and reserves” (ADP 067; HRK 2,863,857 thous.) is in Audited report presented under item “Share capital” (Notes 27 and 28 in comparable amount of HRK 2,863,857 thous.). PROVISIONS 090 Part of 32 + part of 31 141.118 141.118 0 GFI-POD item “Provisions” (ADP 090; HRK 141,118 thous.) is in Audited report presented under non-current liabilities in item “Provisions” (Note 32; part of “Termination benefits and jubilee awards” in the amount of HRK 26,090 thous. and item “Legal proceedings” in the amount of HRK 57,420 thous. in the comparable amount) and non-current liabilities under item “Concession fee” (Note 31 in comparable amount of HRK 57,608 thous). NON-CURRENT LIABILITIES (ADP 101+105+106) 097 P a r t o f 2 4 + 2 5 + p a r t o f 2 9 + p a r t o f 3 0 + p a r t o f 3 1 2.867.349 2.867.349 0 Due to a different presentation, but for the purpose of comparability of GFI-POD and A u d i t e d r e p o r t i t i s n e c e s s a r y t o j o i n t l y v i e w G F I - P O D i t e m s “N o n - c u r r e n t l i a b i l i t i e s ” (ADP 097; HRK 2,867,349 thous.) and “Provisions” (ADP 090; HRK 141,118 thous.) in r e l a t i o n t o i t e m “N o n - c u r r e n t l i a b i l i t i e s ” o f A u d i t e d r e p o r t ( H R K 3,0 0 8 ,4 6 8 thous.). I. Liabilities to banks and other financial institutions 103 Part of 29 2.770.276 2.770.276 0 GFI-POD item “Liabilities to banks and other financial institutions” (ADP 103; HRK 2,770,276 thous.) is in Audited report presented under non-current part of item “Borrowings” (Note 29 in comparable amount of HRK 2,770,276 thous.). II. Other non-current liabilities 107 Part of 24+ p a r t o f 3 0 + part of 32 38.781 38.781 0 GFI-POD item “Other non-current liabilities” (ADP 107; HRK 38,781 thous.) is in Audited report presented under non-current part of item “Derivative financial instruments” (Note 24 in comparable amount of 11,602 thous.), “Lease liabilities” (Note 30 in comparable amount of HRK 6,926 thous.) and part of long-term liabilities in the item “Provisions” (Note 32 “Termination benefits and jubilee awards” HRK 502 thous. and “Bonuses” HRK 19,751 thous.). Comment: The total amount of item “Derivative financial instruments” in Audited report (Note 24) is 16,982 thous. and is presented in items “Other non-current liabilities” (ADP 107; HRK 11,602 thous.) and “Other current liabilities” (ADP 123; HRK 5,380 thous.). III. Deferred tax liabilities 108 25 58.292 58.292 0 CURRENT LIABILITIES (ADP 108+113+114+115+117+118+119+121) 109 Part of 24+ 29+ part of 30+ part of 31+ part of 37 934.438 934.438 0 Due to a different presentation, but for the purpose of comparability of GFI-POD and Audited report it is necessary to jointly view GFI-POD items “Current liabilities” (ADP 109; HRK 934,438 thous.) and “Accrued expenses and deferred income” (ADP 124; HRK 72,821 thous.) in relation to item “Current liabilities” of Audited report (HRK 1,007,258 thous.). I. Liabilities to banks and other financial institutions 115 Part of 29 738.366 738.366 0 GFI-POD items “Liabilities to banks and other financial institutions” (ADP 115; HRK 733,062 thous.) and “Liabilities for loans, deposits and other” (ADP 114; HRK 5,304 thous.) are in Audited report presented under current part of item “Borrowings” (Note 29; “Bank borrowings” in comparable amount of HRK 738,366 thous.). II. Amounts payable for prepayment 116 Part of 31 69.609 69.609 0 GFI-POD item “Amounts payable for prepayment” (ADP 116; HRK 69,609 thous.) is in Audited report presented under current part of item “Trade and other payables” (Note 31; “Advances received” in comparable amount of HRK 69,609 thous.). Comment: The total current amount of item “Trade and other payables” in Audited r e p o r t ( N o t e 3 1 ) i s H R K 2 4 1 ,3 9 0 t h o u s . a n d i s p r e s e n t e d i n i t e m s “A m o u n t s payable for prepayment” (ADP 116; HRK 69,609 thous.), “Trade payables and liabilities to undertakings in a Group” (ADP 117; HRK 61,809 thous.), “Liabilities for securities” (ADP 118; HRK 6,625 thous.), “Liabilities to employees” (ADP 119; HRK 19,187 thous.), “Taxes, contributions and s i m i l a r l i a b i l i t i e s ” ( A D P 1 2 0 ; H R K 6,1 3 0 t h o u s .), “L i a b i l i t i e s a r i s i n g f r o m s h a r e i n t h e r e s u l t ” (ADP 121; HRK 389 thous.), “Other current liabilities” (ADP 123; HRK 10,706 thous.) and “Accrued expenses and deferred income” (ADP 124; HRK 66,936 thous.). 64 ANNUAL REPORT 2021 Summary of adjustments of GFI-POD reclassified balance sheet and consolidated balance sheet from Audited Report for 2020 / GROUP (continued) in thousands of HRK GFI-POD BALANCE SHEET as at 31 December 2020 GFI-POD ADP code AUDITED R E P O R T Note Reclassified G F I - P O D AUDITED REPORT N o t e D i f f e r e n c e E x p l a n a t i o n III. Liabilities towards undertakings within the group, Liabilities towards companies linked by virtue of participating interest, Liabilities towards suppliers 110, 112 and 117 Part of 31 61.809 61.809 0 GFI-POD items “Trade payables” (ADP 117; HRK 61,809 thous.) is in Audited report presented under current part of item “Trade and other payables” (Note 31; “Trade payables” HRK 61,725 thous., “Trade payables – related parties” HRK 84 thous.). Comment: The total current amount of item “Trade and other payables” in Audited report (Note 31) is HRK 241,390 thous. and is presented in items “Amounts payable for p r e p a y m e n t ” ( A D P 1 1 6 ; H R K 6 9 ,6 0 9 t h o u s .), “T r a d e p a y a b l e s a n d l i a b i l i t i e s t o u n d e r t a k i n g s in a Group” (ADP 117; HRK 61,809 thous.), “Liabilities for securities” (ADP 118; HRK 6,625 thous.), “Liabilities to employees” (ADP 119; HRK 19,187 thous.), “Taxes, contributions and s i m i l a r l i a b i l i t i e s ” ( A D P 1 2 0 ; HRK 6,130 thous.), “Liabilities arising from share in the result” (ADP 121; HRK 389 thous.), “Other current liabilities” (ADP 123; HRK 10,706 thous.) and “Accrued expenses and deferred income” (ADP 124; HRK 66,936 thous.). IV. Liabilities for securities 118 Part of 31 6.625 6.625 0 G F I - P O D i t e m s “L i a b i l i t i e s for securities” (ADP 118; HRK 6,625 thous.) is in Audited report presented under current part of item “Trade and other payables” (Note 31; “Liabilities under bills of exchange” in comparable amoun HRK 6.625 thous.). V. Liabilities to employees 119 Part of 31 19.187 19.187 0 GFI-POD items “Liabilities to employees” (ADP 119; HRK 19,187 thous.) is in Audited report presented under current part of item “Trade and other payables” (Note 31; “Liabilities to employees” in comparable amount HRK 19,187 thous.). Comment: The total current amount of item “Trade and other payables” in Audited report (Note 31) is HRK 241,390 thous. and is presented in items “Amounts payable for p r e p a y m e n t ” ( A D P 1 1 6 ; H R K 6 9 ,6 0 9 t h o u s .), “T r a d e p a y a b l e s a n d l i a b i l i t i e s t o u n d e r t a k i n g s in a Group” (ADP 117; HRK 61,809 thous.), “Liabilities for securities” (ADP 118; HRK 6,625 thous.), “Liabilities to employees” (ADP 119; HRK 19,187 thous.), “Taxes, contributions and s i m i l a r l i a b i l i t i e s ” ( A D P 1 2 0 ; HRK 6,130 thous.), “Liabilities arising from share in the result” (ADP 121; HRK 389 thous.), “Other current liabilities” (ADP 123; HRK 10,706 thous.) and “Accrued expenses and deferred income” (ADP 124; HRK 66,936 thous.). VI. Taxes, contributions and similar liabilities 120 Part of 31 6.130 6.130 0 GFI-POD item “Taxes, contributions and similar liabilities” (ADP 120; HRK 6,130 thous.) is in Audited report presented under current part of item “Trade and other payables” (Note 31; “Liabilities for taxes and contributions and similar charges” in comparable amount of HRK 6,129 thous.) and “Income tax liability” (in the comparable amount of HRK 1 thous.) Comment: The total current amount of item “Trade and other payables” in Audited report (Note 31) is HRK 241,390 thous. and is presented in items “Amounts payable for p r e p a y m e n t ” ( A D P 1 1 6 ; H R K 6 9 ,6 0 9 t h o u s .), “T r a d e p a y a b l e s a n d l i a b i l i t i e s t o u n d e r t a k i n g s in a Group” (ADP 117; HRK 61,809 thous.), “Liabilities for securities” (ADP 118; HRK 6,625 thous.), “Liabilities to employees” (ADP 119; HRK 19,187 thous.), “Taxes, contributions and s i m i l a r l i a b i l i t i e s ” ( A D P 1 2 0 ; HRK 6,130 thous.), “Liabilities arising from share in the result” (ADP 121; HRK 389 thous.), “Other current liabilities” (ADP 123; HRK 10,706 thous.) and “Accrued expenses and deferred income” (ADP 124; HRK 66,936 thous.). 65 ANNUAL REPORT 2021 Summary of adjustments of GFI-POD reclassified balance sheet and consolidated balance sheet from Audited Report for 2020 / GROUP (continued) in thousands of HRK GFI-POD BALANCE SHEET as at 31 December 2020 GFI-POD ADP code AUDITED R E P O R T Note Reclassified G F I - P O D AUDITED REPORT N o t e D i f f e r e n c e E x p l a n a t i o n VII. Liabilities arising from share in the result and other current liabilities 121 and 123 Part of 24+ part of 30+ part of 31+ part of 37 32.712 32.712 0 GFI-POD item “Liabilities arising from share in the result” (ADP 121; HRK 389 thous.) and “Other current liabilities” (ADP 123; HRK 32,323 thous.) is in Audited report presented under current part of items “Trade and other payables” (Note 31; “Liabilities for dividend” HRK 389 thous., “Other liabilities” HRK 10,706 thous.), current amount of “Lease liabilities” (Note 30 in comparable amount of HRK 2,243 thous.), “Derivative financial instruments” (Note 24 in comparable amount of HRK 5,380 thous.) and note 37 in the comparable amount of HRK 13,994 thous.). Comment: The total current amount of item “Trade and other payables” in Audited r e p o r t ( N o t e 3 1 ) i s H R K 2 4 1 ,3 9 0 t h o u s . a n d i s p r e s e n t e d i n i t e m s “A m o u n t s payable for prepayment” (ADP 116; HRK 69,609 thous.), “Trade payables and liabilities to undertakings in a Group” (ADP 117; HRK 61,809 thous.), “Liabilities for securities” (ADP 118; HRK 6,625 thous.), “Liabilities to employees” (ADP 119; HRK 19,187 thous.), “Taxes, contributions and s i m i l a r l i a b i l i t i e s ” ( A D P 1 2 0 ; H R K 6,1 3 0 t h o u s .), “L i a b i l i t i e s a r i s i n g f r o m s h a r e i n t h e r e s u l t ” (ADP 121; HRK 389 thous.), “Other current liabilities” (ADP 123; HRK 10,706 thous.) and “Accrued expenses and deferred income” (ADP 124; HRK 66,936 thous.). The total current amount of item “Derivative financial instruments” in Audited report (Note 24) is 5,380 thous. and is presented in items “Other current liabilities” (ADP 123; HRK 5,380 thous.). ACCRUED EXPENSES AND DEFERRED INCOME 124 Part of 31+ part of 32 72.821 72.821 0 GFI-POD item “Accrued expenses and deferred income” (ADP 124; HRK 72,821 thous.) is in Audited report presented under items “Trade and other payables” (Note 31; “Interest payable” HRK 33,727 thous., current part of item “Concession fees payable” HRK 1,920 thous., “Liabilities for calculated vacation and r e d i s t r i b u t i o n h o u r s ” HRK 2,496 thous., “Accrued VAT liabilities in unrealized income” HRK 121 thous., “Liabilities for calculated costs” HRK 28,673 thous.) and current part of items “Provisions” (Note 32; current part of item “Termination benefits and jubilee awards” HRK 5,884 thous.). Comment: The total current amount of item “Trade and other payables” in Audited report (Note 31) is HRK 241,390 thous. and is presented in items “Amounts payable for prepayment” (ADP 116; HRK 69,609 thous.), “Trade payables and liabilities to undertakings in a Group” (ADP 117; HRK 61,809 thous.), “Liabilities for securities” (ADP 118; HRK 6,625 thous.), “Liabilities to employees” (ADP 119; HRK 19,187 thous.), “Taxes, contributions and similar liabilities” (ADP 120; HRK 6,130 thous.), “Liabilities arising from share in the result” (ADP 121; HRK 389 thous.), “Other current liabilities” (ADP 123; HRK 10,706 thous.) and “Accrued expenses and deferred income” (ADP 124; HRK 66,936 thous.). The total current amount of item “Provisions” in Audited report (Note 32) is HRK 5,884 thous. and is presented in item “Accrued expenses and deferred income” (ADP 124: HRK 5,884 thous.). TOTAL LIABILITIES 125 6.879.583 6.879.583 0 66 ANNUAL REPORT 2021 Summary of adjustments of GFI-POD reclassified income statement and consolidated statement of comprehensive income from Audited report for 2020 / GROUP in thousands of HRK GFI-POD INCOME STATEMENT for the period from 1 January 2020 to 31 December 2020 GFI-POD ADP code AUDITED R E P O R T Note Reclassified G F I - P O D AUDITED REPORT N o t e D i f f e r e n c e E x p l a n a t i o n (ADP 002+003+004+005+006) Group and sales revenues (outside the Group) O P E R A T I N G EXPENSES (ADP 009+013+017+018+019+022+029) 007 1.070.376 1.070.376 0 D u e t o a d i f f e r e n t p r e s e n t a t i o n , b u t f o r t h e p u r p o s e o f c o m p a r a b i l i t y o f G F I - P O D a n d Audited report it is necessary to jointly view GFI-POD items “Staff costs” (ADP 013; HRK 189,951 thous.), “Other expenditures” (ADP 018; HRK 89,098 thous.), “Value adjustment” (ADP 019; HRK 1,510 thous.), “Provisions” (ADP 022; 28,714 thous.) and “Other operating expenses” (ADP 029; HRK 10,015 thous.) in relation to items “Staff costs” (Note 8; HRK 227,051 thous.) and “Other operating expenses” (Note 9; HRK 92,236 thous.) of Audited report. I. Material costs 009 7 254.644 254.644 0 GFI-POD item “Material costs” (ADP 009; HRK 254,644 thous.) is in Audited report presented under item “Cost of materials and services” (Note 7 in comparable amount of HRK 254,644 thous.). II. Staff costs 013 Part of 8 189.951 189.951 0 GFI-POD item “Staff costs” (ADP 013; HRK 189,951 thous.) is in Audited report presented u n d e r i t e m “S t a f f c o s t s ” ( N o t e 8 ; “N e t s a l a r i e s ” H R K 1 2 2 ,0 4 3 t h o u s ., “P e n s i o n c o n t r i b u t i o n s ” HRK 36,138 thous., “Health insurance contributions” HRK 24,606 thous., “Other (contributions and taxes)” HRK 7,163 thous.). C o m m e n t : T h e t o t a l a m o u n t o f i t e m “S t a f f c o s t s ” i n A u d i t e d r e p o r t ( N o t e 8) is HRK 227,051 thous. and is presented in “Staff costs” (ADP 013; HRK 189,951 thous.), “Other expenditures” (ADP 018; HRK 23,509 thous.) and “Provisions” (ADP 022; HRK 13,592 thous.). III. Depreciation and amortisation 017 14+15+16+30 496.444 496.444 0 OPERATING INCOME 001 675.611 675.611 0 I. Revenues from sales with undertakings in a 002+ 003 5 642.479 642.479 0 II. Revenues from use of own products, goods 004+ 005+ Part of 6+ 33.132 33.132 0 GFI-POD items “Revenues from use of own products, goods and services” (ADP 004; HRK and services, other operating revenues with 006 undertakings in a Group and other operating revenues (outside the Group) part of 10 461 thous.) and “Other operating revenues (outside the Group)” (ADP 006; HRK 32,671 thous.) are in Audited report presented under items “Other income” (Note 6; “Income from donations and other” HRK 12,255 thous., “Income from provision release” HRK 1,650 thous., “Reimbursed costs” HRK 2,055 thous., “Income from insurance and legal claims” HRK 2,798 thous., “Income from own consumption” HRK 461 thous., “Collection of receivables previously written-off” HRK 1,111 thous., “Other income” HRK 8,025 thous.), and “Other gains/(losses) - net” (Note 10; “Net gains on sale of property, plant and equipment” HRK 4,777 thous.). Comment: The total amount of item “Other income” in Audited report (Note 6) is HRK 28,355 thous. and is presented in items “Revenues from use of own products, goods and services, other operating revenues with undertakings in a Group and other operating revenues (outside the Group)” (ADP 004, 005 and 006; HRK 28,355 thous.). The total amount of item “Other gains/(losses) - net” in Audited report (Note 10) is HRK 4,777 thous. and is presented in item “Revenues from use of own products, goods and services, other operating revenues with undertakings in a Group and other operating revenues (outside the Group)” (ADP 004, 005 and 006; HRK 4,777 thous.). 67 ANNUAL REPORT 2021 Summary of adjustments of GFI-POD reclassified income statement and consolidated statement of comprehensive income from Audited report for 2020 / GROUP (continued) in thousands of HRK GFI-POD INCOME STATEMENT for the period from 1 January 2020 to 31 December 2020 GFI-POD ADP code AUDITED R E P O R T Note Reclassified G F I - P O D AUDITED REPORT N o t e D i f f e r e n c e E x p l a n a t i o n IV. Other expenditures 018 Part of 8+ part of 9 89.098 89.098 0 GFI-POD item “Other expenditures” (ADP 018; HRK 89,098 thous.) is in Audited report presented under items “Staff costs” (Note 8; “Termination benefits” HRK 466 thous., “Other staff costs” HRK 23,044 thous.) and “Other operating expenses” (Note 9; “Municipal charges, concessions and other” HRK 38,689 thous., “Professional services” HRK 14,452 thous., “Entertainment” HRK 2,199 thous. HRK, “Insurance premiums” HRK 7,043 thous., “Bank charges” HRK 880 thous., “Professional journals and other administrative costs” 2,325 thous.). Comment: The total amount of item “Staff costs” in Audited report (Note 8) is HRK 227,051 thous. and is presented in “Staff costs” (ADP 013; HRK 189,951 thous.), “Other expenditures” (ADP 018; HRK 23,509 thous.) and “Provisions” (ADP 022; HRK 13,592 thous.). The total amount of item “Other operating expenses” in Audited report (Note 9) is HRK 92,236 thous. and is presented in items “Other expenditures” (ADP 018; HRK 65,588 thous.), “Value adjustment” (ADP 019; HRK1,510 thous.), “Provisions” (ADP 022; HRK 15,123 thous.) and “Other operating expenses” (ADP 029; HRK 10,015 thous.). V. Value adjustment 019 Part of 9 1.510 1.510 0 GFI-POD item “Value adjustment” (ADP 019; HRK 1,510 thous.) is in Audited report presented under item “Other operating expenses” (Note 9; “Impairment of assets “ in comparable amount of HRK 1,510 thous.). The total amount of item “Other operating expenses” in Audited report (Note 9) is HRK 92,236 thous. and is presented in items “Other expenditures” (ADP 018; HRK 65,588 thous.), “Value adjustment” (ADP 019; HRK 1,510 thous.), “Provisions” (ADP 022; HRK 15,123 thous.) and “Other operating expenses” (ADP 029; HRK 10,015 thous.). VI. Provisions 022 Part of 8+ part of 9 28.714 28.714 0 GFI-POD item “Provisions” (ADP 022; HRK 28,714 thous.) is in Audited report presented under items “Staff costs” (Note 8; “Provisions for termination benefits and jubilee awards” HRK 13,591 thous.) and “Other operating expenses” (Note 9; “Provisions” HRK 9,623 thous. and “Provisions for severance pay” HRK 5,500 thous.). Comment: The total amount of item “Staff costs” in Audited report (Note 8) is HRK 227,051 thous. and is presented in “Staff costs” (ADP 013; HRK 189,951 thous.), “Other expenditures” (ADP 018; HRK 23,509 thous.) and “Provisions” (ADP 022; HRK 13,592 thous.). The total amount of item “Other operating expenses” in Audited report (Note 9) is HRK 92,236 thous. and is presented in items “Other expenditures” (ADP 018; HRK 65,588 thous.), “Value adjustment” (ADP 019; HRK 1,510 thous.), “Provisions” (ADP 022; HRK 15,123 thous.) and “Other operating expenses” (ADP 029; HRK 10,015 thous.). VII. Other operating expenses 029 Part of 9 10.015 10.015 0 GFI-POD item “Other operating expenses” (ADP 029; HRK 10,015 thous.) is in Audited report presented under items “Other operating expenses” (Note 9; “Write-off of property, plant and equipment” HRK 1,531 thous., “Other operating expenses” HRK 8,848 thous.). The total amount of item “Other operating expenses” in Audited report (Note 9) is HRK 92,236 thous. and is presented in items “Other expenditures” (ADP 018; HRK 65,588 thous.), “Value adjustment” (ADP 019; HRK1,510 thous.), “Provisions” (ADP 022; HRK 15,123 thous.) and “Other operating expenses” (ADP 029; HRK 10,015 thous.). 68 ANNUAL REPORT 2021 Summary of adjustments of GFI-POD reclassified income statement and consolidated statement of comprehensive income from Audited report for 2020 / GROUP (continued) in thousands of HRK GFI-POD INCOME STATEMENT for the period from GFI-POD AUDITED R E P O R T Reclassified AUDITED REPORT 1 January 2020 to 31 December 2020 ADP code Note GFI-POD Note Difference Explanation FINANCIAL INCOME 030 11 21.291 21.291 0 GFI-POD item “Financial income” (ADP 030; HRK 21,291 thous.) is in Audited report presented under items “Financial income/(loss) - net” in part of financial income (Note 11; “Interest income” HRK 514 thous., “Net foreign exchange gains/(losses) - other” HRK 890 thous., “Realised net gains/(losses) from changes in value of forwards and interest rate swaps” HRK 17,770 thous., “Income from cassa sconto” HRK 1,957 thous., and other financial income HRK 160 thous.). Comment: The total amount of item “Finance income/(expense) - net” in Audited report (Note 11) is HRK 104,641 thous. and is presented in items “Financial income” (ADP 030; HRK 21,291 thous.) and “Financial costs” (ADP 041; HRK 125,932 thous.). FINANCIAL COSTS 041 11 125.932 125.932 0 GFI-POD item “Financial costs” (ADP 041; HRK 125,932 thous.) is in Audited report presented under item “Finance income/(expense) - net” in part of financial expenses (Note 11; “Interest expense” HRK 66,170 thous., “Net foreign exchange gains from financing activities” HRK 41,918 thous., and “Changes in fair value of forwards and interest rate swaps” HRK 17,844 thous.). Comment: The total amount of item “Finance income/(expense) - net” in Audited report (Note 11) is HRK 104,641 thous. and is presented in items “Financial income” (ADP 030; HRK 21,291 thous.) and “Financial costs” (ADP 041; HRK 125,932 thous.). SHARE IN LOSS OF COMPANIES LINKED BY VIRTUE OF PARTICIPATING INTEREST 051 18 1.644 1.644 0 GFI-POD item “Share of loss from joint ventures” (ADP 051; HRK 1,644 thous.) is in Audited report presented in comparable amount of HRK 1,644 thous. TOTAL INCOME (ADP 001+030) 053 696.902 696.902 0 TOTAL COSTS (ADP 007+041) 054 1.197.952 1.197.952 0 PROFIT OR LOSS BEFORE TAX (ADP 053-054) 055 -501.050 -501.050 0 INCOME TAX EXPENSE 058 -142.243 -142.243 0 PROFIT OR LOSS FOR THE PERIOD (ADP 055-058) 059 -358.806 -358.806 0 69 ANNUAL REPORT 2021 Summary of adjustments of GFI-POD cash flow statement and consolidated cash flow statement from Audited report for 2021 / GROUP in thousands of HRK AUDITED GFI-POD CASH FLOW STATEMENT for the period GFI-POD R E P O R T Reclassified Audited ACTIVITIES B) NET CASH FLOW FROM INVESTMENT ACTIVITIES C) NET CASH FLOW FROM FINANCING ACTIVITIES thous.) is in Audited report presented in items “Net cash inflow from operating activities” in comparable amount of HRK 680,682 thous. and item “Interest paid” (Net cash inflow from financing activities) in the amount of HRK -70,643 thous. 034 -157.173 -157.173 0 GFI-POD item “Net cash flow from investment activities” (ADP 034; HRK -157,173 thous.) is in Audited report presented in item “Net cash outflow from investment activities” in comparable amount of HRK -157,173 thous. 046 -3.541 -3.541 0 GFI-POD item “Net cash flow from financing activities” (ADP 046; HRK -3,541 thous.) is in Audited report presented in item “Net cash inflow from financing activities” in comparable amount of HRK -74,184 thous. increased for the item “Interest paid” in the amount of HRK 70,643 thous. D) N E T I N C R E A S E O R D E C R E A S E OF CASH FLOW (ADP 020+034+046) E) CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD F) CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD (ADP 048+049) 048 449.325 449.325 0 049 665.933 665.933 0 050 1.115.258 1.115.258 0 Summary of adjustments of GFI-POD cash flow statement and consolidated cash flow statement from Audited report for 2020 / GROUP in thousands of HRK AUDITED GFI-POD CASH FLOW STATEMENT for the period GFI-POD R E P O R T Reclassified Audited ACTIVITIES B) NET CASH FLOW FROM INVESTMENT ACTIVITIES C) NET CASH FLOW FROM FINANCING ACTIVITIES thous.) is in Audited report presented in items “Net cash inflow from operating activities” in comparable amount of HRK -3,186 thous. and item “Interest paid” (Net cash inflow from financing activities) in the amount of HRK -34,291 thous. 034 -585.950 -585.950 0 GFI-POD item “Net cash flow from investment activities” (ADP 034; HRK -585,950 thous.) is in Audited report presented in item “Net cash outflow from investment activities” in comparable amount of HRK -585,950 thous. 046 739.217 739.217 0 GFI-POD item “Net cash flow from financing activities” (ADP 046; HRK 739,217 thous.) is in Audited report presented in item “Net cash inflow from financing activities” in comparable amount of HRK 704,926 thous. increased for the item “Interest paid” in the amount of HRK 34,291 thous. D) N E T I N C R E A S E O R D E C R E A S E OF CASH FLOW (ADP 020+034+046) E) CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD F) CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD (ADP 048+049) 048 115.790 115.790 0 049 550.143 550.143 0 050 665.933 665.933 0 from 1 January 2021 to 31 December 2021 ADP code Note GFI-POD report D i f f e r e n c e Explanation A) NET CASH FLOW FROM OPERATING 020 610.039 610.039 0 GFI-POD item “Net cash flow from operating activities” (ADP 020; HRK 610,039 from 1 January 2020 to 31 December 2020 ADP code Note GFI-POD report D i f f e r e n c e Explanation A) NET CASH FLOW FROM OPERATING 020 -37.477 -37.477 0 GFI-POD item “Net cash flow from operating activities” (ADP 020; HRK -37,477 70 ANNUAL REPORT 2021 Summary of adjustments of GFI-POD statement of changes in equity and consolidated statement of changes in shareholder’s equity from Audited report for 2021 / GROUP in thousands of HRK G F I - P O D STATEMENT OF CHANGES IN EQUITY for the period from 1 January 2021 to 31 December 2021 GFI-POD ADP code AUDITED R E P O R T Note Reclassified G F I - P O D Audited report Difference Explanation CAPITAL AND RESERVES (ADP 31 to 50) 51 27+28+33 3.311.059 3.311.059 0 GFI-POD item “Capital and reserves” (ADP 067; HRK 3,311,059 thous.) is in Audited report presented in items “Share capital” (Note 27 in comparable amount of HRK 1,6 7 2 ,0 2 1 t h o u s .), “T r e a s u r y s h a r e s ” (Note 27 comparable amount of HRK -124,418 thous.), “Capital reserves” (Note 28 in comparable amount of HRK 5,224 thous.), “Fair value reserves” (Note 28 in comparable amount of HRK 81 thous.), “Legal reserves” (Note 28 in comparable amount of HRK 83,601 thous.), “Other reserves” (Note 28 in comparable amount of HRK 163,749 thous.) and “Retained earnings” (Note 28 in comparable amount of HRK 467,737 thous.) and “Non-controlling interest” (Note 33 in the comparable amount of HRK 1,043,064 thous.). Comment: To be fully compliant, the following items should be viewed as follows: the “Other reserves” item of Audited report (Note 28; HRK 163,749 thous.) matches the GFI POD item “Reserves for own shares” (ADP 072; HRK 136,815 thous.) and part of GFI POD item “Retained earnings” (ADP 083; HRK 24,684 thous.) and GFI POD items “Other reserves” (ADP 075 HRK 2,250 thous.). The “Retained earnings” item of Audited report (Note 28; HRK 467,737 thous.) matches the sum of GFI POD items “Profit for the financial year” (ADP 086; HRK 104,375 thous.) and part of “Retained earnings” (ADP 083; HRK 363,362 thous.). Summary of adjustments of GFI-POD statement of changes in equity and consolidated statement of changes in shareholder’s equity from Audited report for 2020 / GROUP in thousands of HRK G F I - P O D STATEMENT OF CHANGES IN EQUITY for the period from 1 January 2020 to 31 December 2020 GFI-POD ADP code AUDITED R E P O R T Note Reclassified G F I - P O D Audited report Difference Explanation CAPITAL AND RESERVES (ADP 31 to 50) 51 27+28+33 2.863.857 2.863.857 0 GFI-POD item “Capital and reserves” (ADP 067; HRK 2,863,857 thous.) is in Audited report presented in items “Share capital” (Note 27 in comparable amount of HRK 1,6 7 2 ,0 2 1 t h o u s .), “T r e a s u r y s h a r e s ” (Note 27 comparable amount of HRK -124,418 thous.), “Capital reserves” (Note 28 in comparable amount of HRK 5,224 thous.), “Fair value reserves” (Note 28 in comparable amount of HRK 1 thous.), “Legal reserves” (Note 28 in comparable amount of HRK 83,601 thous.), “Other reserves” (Note 28 in comparable amount of HRK 161,993 thous.) “Retained earnings” (Note 28 in comparable amount of HRK 363,625 thous.) and “Non-controlling interest” (Note 33 in comparable amount of HRK 701,810 thous.). Comment: To be fully compliant, the following items should be viewed as follows: the “Other reserves” item of Audited report (Note 28; HRK 161,993 thous.) matches the GFI POD item “Reserves for own shares” (ADP 072; HRK 136,815 thous.) and part of GFI POD item “Retained earnings” (ADP 083; HRK 22,846 thous.) and GFI POD items “Other r e s e r v e s ” ( A D P 0 7 5 H R K 2,3 3 2 thous.). The “Retained earnings” item of Audited report (Note 28; HRK 363,626 thous.) matches the sum of GFI POD items “Profit for the financial year” (ADP 086; HRK -329,594 thous.) and part of “Retained earnings” (ADP 083; HRK 693,220 thous.). 71 ANNUAL REPORT 2021 Reporting period: from 01.01.2021 to 31.12.2021 Annual financial statement Registration number (MB): 3474771 I s s u e r ’s h o m e M e m b e r S t a t e c o d e HR E n t i t y ’s r e g i s t r a t i o n n u m b e r ( M B S ) : 040020883 Personal identification number (OIB): 36201212847 LEI 529900DUWS1DGNEK4C68 Institution code: 30577 Name of the issuer: Valamar Riviera d.d. Postcode and town: 52440 Poreč Street and house number: Stancija Kaligari 1 E-mail address: [email protected] Web address: www.valamar-riviera.com Number of employees N a m e s o f s u b s i d i a r i e s (according to IFRS): MB: Bookkeeping firm: No Contact person: Sopta Anka ( o n l y n a m e a n d s u r n a m e o f t h e c o n t a c t p e r s o n ) Telephone: 052 408 188 E-mail address: [email protected] Audit firm: Ernst & Young d.o.o., UHY Rudan d.o.o. (name of the audit firm) Certified auditor: Berislav Horvat, Vedrana Miletić ( n a m e a n d s u r n a m e ) (authorized representative’s signature) L.S. (end of the reporting period): 2442 Consolidated report: KN ( K N - n o n c o n s o l i d a t e d / K D - c o n s o l i d a t e d ) Audited: RD (RN-non audited/RD-audited) 72 ANNUAL REPORT 2021 BALANCE SHEET (as at 31.12.2021) Submitter: Valamar Riviera d.d. in HRK L a s t d a y o f t h e A t t h e reporting Item 1 ADP p r e c e d i n g b u s i n e s s code year 2 3 date of the current period 4 A) RECEIVABLES FOR SUBSCRIBED CAPITAL UNPAID 001 B) FIXED ASSETS (ADP 003+010+020+031+036) 002 5.324.136.157 5.152.301.804 I. INTANGIBLE ASSETS (ADP 004 to 009) 003 42.275.329 34.640.301 1 Research and Development 004 2 Concessions, patents, licences, trademarks, software and other rights 005 35.550.820 26.854.197 3 Goodwill 006 6.567.609 6.567.609 4 Advance payments for purchase of intangible assets 007 5 Intangible assets in preparation 008 156.900 1.218.495 6 Other intangible assets 009 II. TANGIBLE ASSETS (ADP 011 to 019) 010 4.292.520.443 3.936.984.239 1 Land 011 629.012.020 593.370.669 2 Buildings 012 2.722.066.344 2.593.423.408 3 Plants and equipment 013 409.245.659 355.975.206 4 Tools, working inventory and transportation assets 014 91.158.729 72.736.320 5 Biological asset 015 6 Advance payments for purchase of tangible assets 016 159.973 42.528 7 Tangible assets in preparation 017 366.577.576 267.938.392 8 Other tangible assets 018 70.357.714 50.317.735 9 Investments property 019 3.942.428 3.179.981 III. FIXED FINANCIAL ASSETS (ADP 021 to 030) 020 774.869.872 1.017.453.237 1 Investments in holdings (shares) of undertakings within the group 021 727.328.038 941.803.942 2 Investments in other securities of undertakings within the group 022 3 Loans, deposits etc given to undertakings in a Group 023 4 I n v e s t m e n t s i n h o l d i n g s ( s h a r e s ) o f c o m p a n i e s l i n k e d b y v i r t u e o f p a r t i c i p a t i n g i n t e r e s t 024 47.191.530 70.112.312 5 I n v e s t m e n t i n o t h e r s e c u r i t i e s o f c o m p a n i e s l i n k e d b y v i r t u e o f p a r t i c i p a t i n g i n t e r e s t 025 6 Loans, deposits etc. given to companies linked by virtue of participating interest 026 7 Investments in securities 027 121.271 219.121 8 Loans, deposits, etc. given 028 89.033 5.177.862 9 Other investments accounted for using the equity method 029 10 Other fixed financial assets 030 140.000 140.000 IV. RECEIVABLES (ADP 032 to 035) 031 1 Receivables from undertakings within the group 032 2 Receivables from companies linked by virtue of participating interests 033 3 C u s t o m e r receivables 034 4 Other receivables 035 V. DEFERRED TAX ASSETS 036 214.470.513 163.224.027 C) CURENT ASSETS (ADP 038+046+053+063) 037 583.232.857 656.422.372 I. INVENTORIES (ADP 039 to 045) 038 27.296.274 23.619.254 1 R a w m a t e r i a l s 039 26.356.791 22.520.626 2 Work in progress 040 3 F i n i s h e d goods 041 4 Merchandise 042 939.483 1.098.628 5 Advance payments for inventories 043 6 Fixed assets held for sale 044 7 Biological asset 045 II. RECEIVABLES (ADP 047 to 052) 046 32.385.214 50.219.276 1 Receivables from undertakings within the group 047 186.829 19.738.193 2 Receivables from companies linked by virtue of participating interest 048 330.822 7.293.713 3 C u s t o m e r receivables 049 23.158.299 16.667.610 4 Receivables from employees and members of the undertaking 050 277.464 625.968 5 Receivables from government and other institutions 051 4.795.299 3.070.818 6 Other receivables 052 3.636.501 2.822.974 III. SHORT-TERM FINANCIAL ASSETS (ADP 054 to 062) 053 578.131 444.055 1 Investments in holdings (shares) of undertakings within the group 054 2 Investments in other securities of undertakings within the group 055 3 Loans, deposits, etc. to undertakings within the group 056 28.300 28.300 4 I n v e s t m e n t s i n h o l d i n g s ( s h a r e s ) o f c o m p a n i e s l i n k e d b y v i r t u e o f p a r t i c i p a t i n g i n t e r e s t 057 5 I n v e s t m e n t i n o t h e r s e c u r i t i e s o f c o m p a n i e s l i n k e d b y v i r t u e o f p a r t i c i p a t i n g i n t e r e s t 058 6 Loans, deposits etc. given to companies linked by virtue of participating interest 059 7 Investments in securities 060 8 Loans, deposits, etc. given 061 549.831 415.755 9 Other financial assets 062 IV. CASH AT BANK AND IN HAND 063 522.973.238 582.139.787 D) PREPAID EXPENSES AND ACCRUED INCOME 064 46.702.706 21.272.442 E) TOTAL ASSETS (ADP 001+002+037+064) 065 5.954.071.720 5.829.996.618 F) OFF-BALANCE SHEET ITEMS 066 54.261.380 54.173.148 73 ANNUAL REPORT 2021 BALANCE SHEET (as at 31.12.2021) (continued) Submitter: Valamar Riviera d.d. in HRK ADP Last day of the A t t h e reporting Item code pr eceding business year date of the current period 1 2 3 4 LIABILITIES A) CAPITAL AND RESERVES (ADP 068 to 070+076+077+083+086+089) 067 2.385.224.020 2.619.280.406 I. INITIAL (SUBSCRIBED) CAPITAL 068 1.672.021.210 1.672.021.210 II. CAPITAL RESERVES 069 5.710.563 5.710.563 III. RESERVES FROM PROFIT (ADP 071+072-073+074+075) 070 98.247.551 98.247.551 1 Legal reserves 071 83.601.061 83.601.061 2 Reserves for treasury share 072 136.815.284 136.815.284 3 Treasury shares and holdings (deductible item) 073 -124.418.266 -124.418.266 4 Statutory reserves 074 5 Other reserves 075 2.249.472 2.249.472 I V . R E V A L U A T I O N RESERVES 076 V. FAIR VALUE RESERVES AND OTHER (ADP 078 to 082) 077 872 81.109 1 F i n a n c i a l a s s e t s a t f a i r v a l u e t h r o u g h o t h e r c o m p r e h e n s i v e i n c o m e ( i .e. a v a i l a b l e f o r s a l e ) 078 872 81.109 2 Cash flow hedge - effective portion 079 3 Hedge of a net investment in a foreign operation - effective portion 080 4 Other fair value reserves 081 5 E x c h a n g e d i f f e r e n c e s a r i s i n g f r o m t h e t r a n s l a t i o n o f f o r e i g n o p e r a t i o n s ( c o n s o l i d a t i o n ) 082 VI. RETAINED PROFIT OR LOSS BROUGHT FORWARD (ADP 084-085) 083 917.793.503 538.614.167 1 Retained profit 084 917.793.503 538.614.167 2 Loss brought forward 085 VII. PROFIT OR LOSS FOR THE BUSINESS YEAR (ADP 087-088) 086 -308.549.679 304.605.806 1 Profit for the business year 087 304.605.806 2 Loss for the business year 088 308.549.679 VIII. MINORITY (NON-CONTROLLING) INTEREST 089 B) PROVISIONS (ADP 091 to 096) 090 113.213.704 134.552.238 1 Provisions for pensions, termination benefits and similar obligations 091 21.180.405 24.962.956 2 Provisions for tax liabilities 092 3 Provisions for ongoing legal cases 093 36.378.988 28.843.417 4 Provisions for renewal of natural resources 094 5 Provision for warranty obligations 095 6 Other provisions 096 55.654.311 80.745.865 C) LONG-TERM LIABILITIES (ADP 098 to 108) 097 2.524.889.178 2.331.903.180 1 Liabilities towards undertakings within the group 098 2 Liabilities for loans, deposits, etc. to companies within the group 099 3 Liabilities towards companies linked by virtue of participating interest 100 4 L i a b i l i t i e s f o r l o a n s , d e p o s i t s e t c . o f c o m p a n i e s l i n k e d b y v i r t u e o f p a r t i c i p a t i n g i n t e r e s t 101 5 Liabilities for loans, deposits etc. 102 6 Liabilities towards banks and other financial institutions 103 2.474.586.439 2.303.872.723 7 Liabilities for advance payments 104 8 Liabilities towards suppliers 105 9 Liabilities for securities 106 10 Other long-term liabilities 107 36.995.567 15.575.274 11 Deferred tax liability 108 13.307.172 12.455.183 D) SHORT-TERM LIABILITIES (ADP 110 to 123) 109 865.350.845 665.431.238 1 Liabilities towards undertakings within the group 110 135.664 101.669 2 Liabilities for loans, deposits, etc. to companies within the group 111 3 Liabilities towards companies linked by virtue of participating interest 112 7.389 4 L i a b i l i t i e s f o r l o a n s , d e p o s i t s e t c . o f c o m p a n i e s l i n k e d b y v i r t u e o f p a r t i c i p a t i n g i n t e r e s t 113 5 Liabilities for loans, deposits etc. 114 6 Liabilities towards banks and other financial institutions 115 693.967.037 523.630.896 7 Liabilities for advance payments 116 61.767.845 36.066.605 8 Liabilities towards suppliers 117 49.993.663 51.117.222 9 Liabilities for securities 118 6.625.196 10 Liabilities towards employees 119 15.921.399 24.804.908 11 Taxes, contributions and similar liabilities 120 4.664.984 14.661.562 12 Liabilities arising from the share in the result 121 9.600 13 Liabilities arising from fixed assets held for sale 122 14 Other short-term liabilities 123 32.265.457 15.040.987 E) ACCRUALS AND DEFERRED INCOME 124 65.393.973 78.829.556 F) TOTAL – LIABILITIES (ADP 067+090+097+109+124) 125 5.954.071.720 5.829.996.618 G) OFF-BALANCE SHEET ITEMS 126 54.261.380 54.173.148 74 ANNUAL REPORT 2021 STATEMENT OF PROFIT OR LOSS (for 01.01.2021 to 31.12.2021) Submitter: Valamar Riviera d.d. in HRK Item ADP Sa code m e period of the p r e v i o u s y e a r Current period 1 2 3 4 I. OPERATING INCOME (ADP 002 to 006) 001 571.818.875 1.670.374.528 1 Income from sales with undertakings within the group 002 6.559.169 31.631.791 2 Income from sales (outside group) 003 540.402.390 1.329.300.465 3 Income from the use of own products, goods and services 004 208.649 233.998 4 Other operating income with undertakings within the group 005 269.761 281.037.544 5 Other operating income (outside the group) 006 24.378.906 28.170.730 II. OPERATING EXPENSES (ADP 008+009+013+017+018+019+022+029) 007 890.254.827 1.255.329.580 1 Changes in inventories of work in progress and finished goods 008 2 Material costs (ADP 010 to 011) 009 223.980.434 396.119.584 a) Costs of raw material 010 118.752.994 211.804.737 b) Costs of goods sold 011 4.218.790 10.230.447 c) Other external costs 012 101.008.650 174.084.400 3 Staff costs (ADP 014 to 016) 013 162.756.912 301.251.199 a) Net salaries and wages 014 103.705.374 185.544.244 b) Tax and contributions from salaries expenses 015 40.219.038 76.418.573 c) Contributions on salaries 016 18.832.500 39.288.382 4 Depreciation 017 391.987.115 397.597.196 5. Other expenses 018 75.372.719 113.160.696 6. Value adjustments (ADP 020+021) 019 1.394.462 1.646.054 a) fixed assets other than financial assets 020 b) current assets other than financial assets 021 1.394.462 1.646.054 7 Provisions (ADP 023 to 028) 022 25.566.223 36.609.347 a) Provisions for pensions, termination benefits and similar obligations 023 16.210.160 9.293.175 b) Provisions for tax liabilities 024 c ) P r o v i s i o n s f o r o n g o i n g legal cases 025 9.356.063 2.487.712 d) Provisions for renewal of natural resources 026 e) Provisions for warranty obligations 027 f) Other provisions 028 24.828.460 8 Other operating expenses 029 9.196.962 8.945.504 III. FINANCIAL INCOME (ADP 031 to 040) 030 19.931.425 21.059.327 1 I n c o m e f r o m i n v e s t m e n t s i n h o l d i n g s ( s h a r e s ) o f u n d e r t a k i n g s w i t h i n t h e g r o u p 031 2 Income from investments in holdings (shares) of companies linked by virtue of participating interest 3 Income from other long-term financial investment and loans granted to undertakings within the group 032 033 undertakings within the group undertakings within the group 4 Other interest income from operations with undertakings within the group 5 Exchange rate differences and other financial income from operations with 034 035 6 Income from other long-term financial investments and loans 036 7 Other interest income 037 639.146 291.847 8 Exchange rate differences and other financial income 038 824.514 10.791.830 9 Unrealised gains (income) from financial assets 039 4.503.562 10 Other financial income 040 18.467.765 5.472.088 IV. FINANCIAL EXPENDITURE (ADP 042 to 048) 041 115.027.459 64.980.124 1 Interest expenses and similar expenses with undertakings within the group 2 Exchange rate differences and other expenses from operations with 3 Interest expenses and similar expenses 042 043 044 56.628.643 60.092.169 4 Exchange rate differences and other expenses 045 38.603.478 5 Unrealised losses (expenses) from financial assets 046 16.832.811 6 Value adjustments of financial assets (net) 047 7 Other financial expenses 048 2.962.527 4.887.955 V. S H A R E I N P R O F I T F R O M C O M P A N I E S L I N K E D B Y V I R T U E O F P A R T I C I P A T I N G I N T E R E S T 049 VI. SHARE IN PROFIT FROM JOINT VENTURES 050 V I I . S H A R E I N L O S S O F C O M P A N I E S L I N K E D B Y V I R T U E O F P A R T I C I P A T I N G I N T E R E S T 051 VIII. SHARE IN LOSS OF JOINT VENTURES 052 IX. TOTAL INCOME (ADP 001+030+049 +050) 053 591.750.300 1.691.433.855 X. TOTAL EXPENDITURE (ADP 007+041+051+052) 054 1.005.282.286 1.320.309.704 XI. PRE-TAX PROFIT OR LOSS (ADP 053-054) 055 -413.531.986 371.124.151 1 Pre-tax profit (ADP 053-054) 056 371.124.151 2 Pre-tax loss (ADP 054-053) 057 -413.531.986 XII. INCOME TAX 058 -104.982.307 66.518.345 XIII. PROFIT OR LOSS FOR THE PERIOD (ADP 055-059) 059 -308.549.679 304.605.806 1 Profit for the period (ADP 055-059) 060 304.605.806 2 Loss for the period (ADP 059-055) 061 -308.549.679 75 ANNUAL REPORT 2021 STATEMENT OF PROFIT OR LOSS (for 01.01.2021 to 31.12.2021) (continued) Submitter: Valamar Riviera d.d. in HRK Item ADP S a code m e period of the p r e v i o u s y e a r Current period 1 2 3 4 DISCONTINUED OPERATIONS (to be filled in by undertakings subject to IFRS only with discontinued operations) XIV. PRE-TAX PROFIT OR LOSS OF DISCONTINUED OPERATIONS (ADP 063-064) 062 1 Pre-tax profit from discontinued operations 063 2 P r e - t a x l o s s o n d i s c o n t i n u e d operations 064 XV. INCOME TAX OF DISCONTINUED OPERATIONS 065 1 Discontinued operations profit for the period (ADP 062-065) 066 2 D i s c o n t i n u e d o p e r a t i o n s l o s s f o r t h e p e r i o d ( A D P 0 6 5 - 0 6 2 ) 067 TOTAL OPERATIONS (to be filled in only by undertakings subject to IFRS with discontinued operations) XVI. PRE-TAX PROFIT OR LOSS (ADP 055+062) 068 1 Pre-tax profit (ADP 068) 069 2 Pre-tax loss (ADP 068) 070 XVII. INCOME TAX (ADP 058+065) 071 XVIII. PROFIT OR LOSS FOR THE PERIOD (ADP 068-071) 072 1 Profit for the period (ADP 068-071) 073 2 Loss for the period (ADP 071-068) 074 APPENDIX to the P&L (to be filled in by undertakings that draw up consolidated annual financial statements) XIX. PROFIT OR LOSS FOR THE PERIOD (ADP 076+077) 075 1 Attributable to owners of the parent 076 2 Attributable to minority (non-controlling) interest 077 STATEMENT OF OTHER COMPRHENSIVE INCOME (to be filled in by undertakings subject to IFRS) I. PROFIT OR LOSS FOR THE PERIOD 078 -308.549.679 304.605.806 II. OTHER COMPREHENSIVE INCOME/LOSS BEFORE TAX (ADP 080 to 087) 079 -73.904 97.850 III. ITEMS THAT WILL NOT BE RECLASSIFIED TO PROFIT OR LOSS (ADP 081 to 085) 080 -73.904 97.850 1 Changes in revaluation reserves of fixed tangible and intangible assets 081 2 Gains or losses from subsequent measurement of equity instruments at fair value through other comprehensive income 3 Fair value changes of financial liabilities at fair value through statement of profit or loss, attributable to changes in their credit risk 082 -73.904 97.850 083 4 Actuarial gains/losses on the defined benefit obligation 084 5 Other items that will not be reclassified 085 6 Income tax relating to items that will not be reclassified 086 -13.303 17.613 I V . I T E M S T H A T M A Y B E R E C L A S S I F I E D T O P R O F I T O R L O S S ( A D P 0 8 8 t o 0 9 5 ) 0 8 7 1 Exchange rate differences from translation of foreign operations 088 2 Gains or losses from subsequent measurement of debt securities at fair value through other comprehensive income 089 3 Profit or loss arising from effective cash flow hedging 090 4 Profit or loss arising from effective hedge of a net investment in a foreign operation 5 Share in other comprehensive income/loss of companies linked by virtue of participating interests 091 092 6 C h a n g e s i n f a i r v a l u e o f t h e t i m e v a l u e o f o p t i o n 093 7 Changes in fair value of forward elements of forward contracts 094 8 Other items that may be reclassified to profit or loss 095 9 Income tax relating to items that may be reclassified to profit or loss 096 V. NET OTHER COMPREHENSIVE INCOME OR LOSS (ADP 080+087-086-096) 097 -60.601 80.237 VI. COMPREHENSIVE INCOME OR LOSS FOR THE PERIOD (ADP 078+097) 098 -308.610.280 304.686.043 A P P E N D I X t o t h e S t a t e m e n t o n c o m p r e h e n s i v e i n c o m e ( t o b e f i l l e d i n b y e n t r e p r e n e u r s w h o d r a w u p c o n s o l i d a t e d s t a t e m e n t s ) VII. COMPREHENSIVE INCOME OR LOSS FOR THE PERIOD (ADP 100+101) 099 1 Attributable to owners of the parent 100 2 Attributable to minority (non-controlling) interest 101 76 ANNUAL REPORT 2021 STATEMENT OF CASH FLOWS - indirect method (for the period 01.01.2021 to 31.12.2021) Submitter: Valamar Riviera d.d. in HRK 3 Changes in the working capital (ADP 013 to 016) 012 -105.109.538 -23.892.406 a) Increase or decrease in short-term liabilities 013 -58.984.649 -28.430.139 b) Increase or decrease in short-term receivables 014 -41.213.521 860.713 c) Increase or decrease in inventories 015 -4.911.368 3.677.020 d) Other increase or decrease in the working capital 016 II. Cash from operations (ADP 011+012) 017 -9.566.020 537.980.825 4 Interest paid 018 -27.934.882 -64.432.651 5 Income tax paid 019 A ) N E T C A S H F L O W F R O M O P E R A T I N G A C T I V I T I E S ( A D P 0 1 7 t o 0 1 9 ) 020 -37.500.902 473.548.174 CASH FLOW FROM INVESTMENT ACTIVITIES 1 C a s h r e c e i p t s f r o m s a l e s o f f i x e d t a n g i b l e a n d i n t a n g i b l e a s s e t s 021 8.932.090 3.647.864 2 Cash receipts from sales of financial instruments 022 3 Interest received 023 489.691 82.752 4 Dividends received 024 3.709 5 Cash receipts from repayment of loans and deposit 025 189.339 182.247 6 Other cash receipts from investment activities 026 1.110.110 III. Total cash receipts from investment activities (ADP 021 to 026) 027 9.611.120 5.026.682 1 C a s h p a y m e n t s f o r t h e p u r c h a s e o f f i x e d t a n g i b l e and intangible assets 028 -428.835.136 -77.557.476 2 C a s h p a y m e n t s f o r t h e a c q u i s i t i o n o f f i n a n c i a l i n s t r u m e n t s 029 3 C a s h p a y m e n t s f o r l o a n s a n d d e p o s i t s f o r t h e p e r i o d 030 -211.896 -5.137.000 4 A c q u i s i t i o n o f a s u b s i d i a r y , n e t o f c a s h a c q u i r e d 031 5 Other cash payments from investment activities 032 IV. Total cash payments from investment activities (ADP 028 to 032) 033 -429.047.032 -82.694.476 B) NET CASH FLOW FROM INVESTMENT ACTIVITIES (ADP 027+033) 034 -419.435.912 -77.667.794 CASH FLOW FROM FINANCING ACTIVITIES 1 C a s h r e c e i p t s f r o m t h e i n c r e a s e o f i n i t i a l ( s u b s c r i b e d ) c a p i t a l 035 2 Cash receipts from the issue of equity financial instruments and debt financial instruments 3 Cash receipts from credit principals, loans and other borrowings 036 037 776.471.599 344.850.628 4 Other cash receipts from financing activities 038 3.389.999 1.756.034 V. Total cash receipts from financing activities (ADP 035 to 038) 039 779.861.598 346.606.662 1 Cash payments for the repayment of credit principals, loans and other borrowings and debt financial instruments 040 -43.659.164 -679.122.703 Item 1 ADP S a m e p e r i o d o f t h e code p r e v i o u s y e a r 2 3 C u r r e n t p e r i o d 4 CASH FLOW FROM OPERATING ACTIVITIES 1 Pre-tax profit 001 -413.531.986 371.124.151 2 Adjustments (ADP 003 to 010) 002 509.075.504 190.749.080 a) Depreciation 003 391.987.115 397.597.196 b ) G a i n s a n d l o s s e s f r o m s a l e a n d v a l u e a d j u s t m e n t o f f i x e d t a n g i b l e a n d i n t a n g i b l e a s s e t s 004 -3.978.000 -279.190.767 c) G a i n s a n d l o s s e s f r o m s a l e a n d u n r e a l i s e d g a i n s a n d l o s s e s a n d v a l u e a d j u s t m e n t o f f i n a n c i a l a s s e t s d) Interest and dividend income 005 006 -507.817 -70.802 e) Interest expenses 007 62.034.183 64.980.125 f) Provisions 008 20.421.285 21.540.065 g) Exchange rate differences (unrealised) 009 38.603.447 -7.490.750 h) Other adjustments for non-cash transactions and unrealised gains and losses 010 515.291 -6.615.987 I. C a s h f l o w i n c r e a s e o r d e c r e a s e b e f o r e c h a n g e s i n t h e w o r k i n g c a p i t a l ( A D P 0 0 1 + 0 0 2 ) 011 95.543.518 561.873.231 2 Dividends paid 041 3 Cash payments for finance lease 042 4 Cash payments for the redemption of treasury shares and decrease of initial 043 (subscribed) capital 5 Other cash payments from financing activities 044 -4.141.654 -4.197.790 VI. Total cash payments from financing activities (ADP 040 to 044) 045 -47.800.818 -683.320.493 C) NET CASH FLOW FROM FINANCIAL ACTIVITIES (ADP 039+045) 046 732.060.780 -336.713.831 1 Unrealised exchange rate differences in cash and cash equivalents 047 D) NET INCREASE OR DECREASE OF CASH FLOWS (ADP 020+034+046+047) 048 275.123.966 59.166.549 E) CASH AND CASH EQUIVALENTS AT THE BEGINNING OF PERIOD 049 247.849.272 522.973.238 F) CASH AND CASH EQUIVALENTS AT THE END OF PERIOD (ADP 048+049) 050 522.973.238 582.139.787 + 8 do 17) STATEMENT OF CHANGES IN EQUITY (for the period 01.01.2021 to 31.12.2021) Submitter: Valamar Riviera d.d. in HRK Distributable to majority owners Item ADP code Initial (subscribed) capital Capital reserves Legal reserves Reserves for treasury shares Treasury shares and holdings (deductible item) Statutory r e s e r v e s Other reserves Revaluation reserves Fair value of financial assets through other comprehen- sive income ( a v a i l a b l e f o r sale) Cash flow hedge - effective portion Hedge o f a net i n v e s t m e n t i n a f o r e i g n operation - e f f e c t i v e portion Other f a i r v a l u e reserves Exchange rate differences from translation of foreign operations Retained p r o f i t / l o s s brought forward Profit/loss for the business year Total attributable to owners of the parent Minority (non- controlling) interest T o t a l c a p i t a l and reserves 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 (3 do 6 - 7 19 20 (18+19) Previous period 1. Balance on the first day of the previous business year 01 1.672.021.210 5.710.563 83.601.061 136.815.284 124.418.266 61.473 539.646.072 377.006.905 2.690.444.302 2.690.444.302 2 Changes in accounting policies 02 3 Correction of errors 03 4 Balance on the first day of the previous business year (restated) (ADP 01 to 03) 04 1.672.021.210 5.710.563 83.601.061 136.815.284 124.418.266 61.473 539.646.072 377.006.905 2.690.444.302 2.690.444.302 5 P r o f i t / l o s s of the period 05 -308.549.679 -308.549.679 -308.549.679 6 Exchange rate differences from translation of foreign operations 06 7 Changes in revaluation reserves of fixed tangible and intangible assets 07 8 Gains or losses from subsequent measurement of financial assets at fair value through other comprehensive income (available for sale) 9 Gains or losses on efficient cash flow hedging 10 G a i n s o r l o s s e s a r i s i n g f r o m e f f e c t i v e h e d g e o f a n e t i n v e s t m e n t i n a f o r e i g n o p e r a t i o n 11 Share in other comprehensive income/loss of companies linked by virtue of participating interest 12 Actuarial gains/losses on defined benefit plans 13 Other changes in equity unrelated to owners 14 Tax on transactions recognised directly in equity 15 Increase/decrease in initial (subscribed) capital (other than from reinvesting profit and other than arising from the pre-bankruptcy settlement procedure) 16 Decrease in initial (subscribed) capital arising from the pre-bankruptcy settlement procedure 17 Decrease in initial (subscribed) capital arising from the reinvestment of profit 17 18 Redemption of treasury shares/holdings 18 19 Payment of share in profit/dividend 19 20 Other distribution to owners 20 21 Other distributions and payments to members/shareholders 21 2.249.472 1.140.526 3.389.998 3.389.998 22 Transfer to reserves according to the annual schedule 22 377.006.905 -377.006.905 23 Increase in reserves arising from the pre-bankruptcy settlement procedure 23 2 4 B a l a n c e o n t h e l a s t d a y o f t h e p r e v i o u s b u s i n e s s y e a r r e p o r t i n g p e r i o d (ADP 04 to 23) 24 1.672.021.210 5.710.563 83.601.061 136.815.284 124.418.266 2.249.472 872 917.793.503 -308.549.679 2.385.224.020 2.385.224.020 (ADP 06 to 14) 1. Balance on the first day of the previous business year 28 1.672.021.210 5.710.563 83.601.061 136.815.284 124.418.266 2.249.472 872 917.793.503 -308.549.679 2.385.224.020 2.385.224.020 2 Changes in accounting policies 29 3 Correction of errors 30 4 B a l a n c e o n t h e f i r s t d a y o f t h e c u r r e n t b u s i n e s s y e a r ( r e s t a t e d ) (ADP 28 to 30) 31 1.672.021.210 5.710.563 83.601.061 136.815.284 124.418.266 2.249.472 872 917.793.503 -308.549.679 2.385.224.020 2.385.224.020 5 P r o f i t / l o s s of the period 32 304.605.806 304.605.806 304.605.806 6 Exchange rate differences from translation of foreign operations 33 7 Changes in revaluation reserves of fixed tangible and intangible assets 34 settlement procedure settlement procedure (ADP 33 to 41) ANNUAL REPORT 2021 77 18 Redemption of treasury shares/holdings 45 19 Payments from members/shareholders 46 20 Payment of share in profit/dividend 47 21 Other distributions and payments to members/shareholders 48 1.756.034 1.756.034 1.756.034 22 Carryforward per annual plan 49 -380.935.370 308.549.679 -72.385.691 -72.385.691 23 Increase in reserves arising from the pre-bankruptcy settlement procedure 50 24 Balance on the last day of the current business year reporting period (ADP 31 to 40) 51 1.672.021.210 5.710.563 83.601.061 136.815.284 124.418.266 2.249.472 81.109 538.614.167 304.605.806 2.619.280.406 2.619.280.406 II. COMPREHENSIVE INCOME OR LOSS FOR THE CURRENT PERIOD (ADP 32 + 52) 53 80.237 304.605.806 304.686.043 304.686.043 III. TRANSACTIONS WITH OWNERS IN THE CURRENT PERIOD RECOGNISED 54 -379.179.336 308.549.679 -70.629.657 -70.629.657 35 97.850 97.850 97.850 36 37 38 39 40 41 -17.613 -17.613 -17.613 42 43 44 08 -73.904 -73.904 -73.904 09 10 11 12 13 14 13.303 13.303 13.303 15 16 APPENDIX TO THE STATEMENT OF CHANGES IN EQUITY (to be filled in by undertakings that draw up financial statements in accordance with the IFRS) I. OTHER COMPREHENSIVE INCOME OF THE PREVIOUS PERIOD, NET OF TAX 25 I I . COMPREHENSIVE INCOME OR LOSS FOR THE PREVIOUS PERIOD (ADP 05+25) 26 I I I . TRANSACTIONS WITH OWNERS IN THE PREVIOUS PERIOD RECOGNISED 27 Current period 8 Gains or losses from subsequent measurement of financial assets at fair value 9 Gains or losses on efficient cash flow hedging 1 0 G a i n s o r l o s s e s a r i s i n g f r o m e f f e c t i v e h e d g e o f a n e t i n v e s t m e n t i n a f o r e i g n o p e r a t i o n 1 1 Share in other comprehensive income/loss of companies linked by virtue of 1 2 Actuarial gains/losses on defined benefit plans 13 Other changes in equity unrelated to owners 14 Tax on transactions recognised directly in equity 15 Decrease in initial (subscribed) capital (other than arising from the 2.249.472 -60.601 -60.601 378.147.431 -308.549.679 -377.006.905 -60.601 -308.610.280 3.389.998 -60.601 -308.610.280 3.389.998 DIRECTLY IN EQUITY (ADP 15 to 23) through other comprehensive income (available for sale) participating interest pre-bankruptcy settlement procedure or from the reinvestment of profit) 16 Decrease in initial (subscribed) capital arising from the pre-bankruptcy 17 Increase of initial (subscribed) capital arising from the pre-bankruptcy APPENDIX TO THE STATEMENT OF CHANGES IN EQUITY (to be filled in by undertakings that draw up financial statements in accordance with the IFRS) I. OTHER COMPREHENSIVE INCOME FOR THE CURRENT PERIOD, NET OF TAX 52 DIRECTLY IN EQUITY (ADP 42 to 50) 80.237 80.237 80.237 78 ANNUAL REPORT 2021 NOTES TO THE ANNUAL FINANCIAL STATEMENTS - GFI Name of the issuer: Valamar Riviera d.d. Personal identification number OIB: 36201212847 Reporting period: 01.01.2021. to 31.12.2021. Notes to the financial statements are to be drawn up in accordance with the International Financial Reporting Standards (hereinafter: IFRS) in such a way that they: a) present information about the basis for the preparation of the financial statements and the specific accounting policies used in accordance with the International Accounting Standard 1 (IAS 1), b) disclose any information required by IFRSs that is not presented elsewhere in the statement of financial position, statement of comprehensive income, statement of cash flows and statement of changes in equity, c) provide additional information that is not presented elsewhere in the statement of financial position, statement of comprehensive income, statement of cash flows and statement of changes in equity, but is relevant for understanding any of them. d) In the notes to the financial statements, in addition to the information stated above, information in respect of the following matters shall be disclosed: 1. issuer’s name, registered office (address), legal form, country of establishment, entity’s registration number and, if applicable, the indication whether the issuer is undergoing liquidation, bankruptcy proceedings, shortened termination proceedings or extraordinary administration 2. adopted accounting policies 3. the total amount of any financial commitments, guarantees or contingencies that are not included in the balance sheet, and an indication of the nature and form of any valuable security which has been provided; any commitments concerning pensions of the issuer within the group or company linked by virtue of participating interest shall be disclosed separately 4. the amount of advances and credits granted to the members of the administrative, managerial and supervisory bodies, with indications of the interest rates, main conditions and any amounts repaid, written-off or revoked, as well as commitments entered into on their behalf by way of guarantees of any kind, with an indication of the total for each category 5. the amount and nature of individual items of income or expenditure which are of exceptional size or incidence 6. amounts owed by the issuer and falling due after more than five years, as well as the total debts of the issuer covered by valuable security furnished by the issuer, specifying the type and form of security 7. average number of employees during the financial year 8. w h e r e , i n a c c o r d a n c e w i t h t h e r e g u l a t i o n s , the issuer capitalised on the cost of salaries in part or in full, information on the amount of the total cost of employees during the year broken down into the amount directly debiting the costs of the period and the amount capitalised on the value of the assets during the period, showing separately the total amount of net salaries and the amount of taxes, contributions from salaries and contributions on salaries 9. the amount of the emoluments granted in respect of the financial year to the members of the administrative, managerial and supervisory bodies by reason of their responsibilities, and any commitments arising or entered into in respect of retirement pensions for former members of those bodies, with an indication of the total for each category 10. the average number of persons employed during the financial year, broken down by categories and, if they are not disclosed separately in the profit and loss account, the staff costs relating to the financial year, broken down between net salaries and wages, tax costs and contributions from salaries, contributions on salaries and other salary costs, excluding cost allowances 11. where a provision for deferred tax is recognised in the balance sheet, the deferred tax balances at the end of the financial year, and the movement in those balances during the financial year 12. the name and registered office of each of the companies in which the issuer, either itself or through a person acting in their own name but on the issuer’s 79 ANNUAL REPORT 2021 NOTES TO THE ANNUAL FINANCIAL STATEMENTS - GFI (continued) behalf, holds a participating interest, showing the proportion of the capital held, the amount of capital and reserves, and the profit or loss for the latest financial year of the company concerned for which financial statements have been adopted; the information concerning capital and reserves and the profit or loss may be omitted where the company concerned does not publish its balance sheet and is not controlled by another company 13. the number and the nominal value or, in the absence of a nominal value, the accounting par value of the shares subscribed during the financial year within the limits of the authorised capital 14. where there is more than one class of shares, the number and the nominal value or, in the absence of a nominal value, the accounting value for each class 15. the existence of any participation certificates, convertible debentures, warrants, options or similar securities or rights, with an indication of their number and the rights they confer 16. the name, registered office and legal form of each of the companies of which the issuer is a member having unlimited liability 17. the name, registered office and legal form of each of the companies of which the issuer is a member having unlimited liability 18. the name and registered office of the company which draws up the consolidated financial statements of the smallest group of companies of which the issuer forms part as a controlled group member and which is also included in the group of companies referred to in point 17. 19. the place where copies of the consolidated financial statements referred to in points 17 and 18 may be obtained, provided that they are available 20. the proposed appropriation of profit or treatment of loss, or where applicable, the appropriation of the profit or treatment of the loss 21. the nature and business purpose of the company’s arrangements that are not included in the balance sheet and the financial impact on the company of those arrangements, provided that the risks or benefits arising from such arrangements are material and in so far as the disclosure of such risks or benefits is necessary for the purposes of assessing the financial position of the company 22. the nature and the financial effect of material events arising after the balance sheet date which are not reflected in the profit and loss account or balance sheet 23. the net income broken down by categories of activity and into geographical markets, in so far as those categories and markets differ substantially from one another, taking account of the manner in which the sale of products and the provision of services are organised 24. the total fees for the financial year charged by each statutory auditor or audit firm for the statutory audit of the annual financial statements, i.e. annual consolidated financial statements, the total fees charged for other assurance services, the total fees charged for tax advisory services and the total fees charged for other non-audit services, total research and development expenditure as the basis for granting state aid. Detailed information on financial statements are available in PDF document „Annual report 2021“ which has been simultaneously published with this document on HANFA (Croatian Financial Services Supervisory Agency), Zagreb Stock Exchange and Issuers web pages. Detailed information on the preparation of financial statements and certain accounting policies are available in PDF document „Annual report 2021“ which has been simultaneously published with this document on HANFA (Croatian Financial Services Supervisory Agency), Zagreb Stock Exchange and Issuers web pages. Company Valamar Riviera d.d. below presents comparison tables of items in GFI POD financial statements and audited Notes for 2020 and 2021. 80 ANNUAL REPORT 2021 Summary of adjustments of GFI-POD balance sheet and unconsolidated balance sheet from Audited report for 2021 / COMPANY in thousands of HRK GFI-POD BALANCE SHEET as at 31 December 2021 GFI-POD ADP code AUDITED R E P O R T Note Reclassified G F I - P O D AUDITED REPORT N o t e D i f f e r e n c e E x p l a n a t i o n NON-CURRENT ASSETS (ADP 003+010+020+031+036) 002 14+15+16+ 1 7 + p a r t o f 1 8 + 2 0 + p a r t o f 2 1 + p a r t o f 2 3 + 2 5 + part of 30 5.152.302 5.152.302 0 I. Intangible assets 003 16 34.640 34.640 0 II. Tangible assets 010 14+ 15+ part of 30 III. Non-current financial assets 020 17+ part of 18+ 20+ part of 21 3.936.985 3.936.985 0 GFI-POD item “Tangible assets” (ADP 010; HRK 3,936,985 thous.) is in Audited report presented under items “Property, plant and equipment” (Note 14 in comparable amount of H R K 3,9 1 6 ,9 3 9 t h o u s .), “I n v e s t m e n t p r o p e r t y ” ( N o t e 1 5 i n c o m p a r a b l e a m o u n t o f H R K 3,1 8 0 thous.), and “Right-of-use assets” (Note 30 in comparable amount of HRK 16,866 thous). 1.017.453 1.017.453 0 GFI-POD item “Financial assets” (ADP 020; HRK 1,017,453 thous.) is in Audited report p r e s e n t e d u n d e r i t e m s “I n v e s t m e n t i n s u b s i d i a r i e s ” ( N o t e 1 7 i n c o m p a r a b l e a m o u n t o f 9 4 1 ,8 0 4 t h o u s .), “I n v e s t m e n t i n a s s o c i a t e d e n t i t y ” ( N o t e 1 8 i n c o m p a r a b l e a m o u n t o f H R K 7 0 ,1 1 2 t h o u s . ( p r e s e n t e d i n A u d i t r e p o r t a s a s e p a r a t e l i n e ) ) , F i n a n c i a l a s s e t s ” ( N o t e 2 0 i n c o m p a r a b l e a m o u n t o f H R K 3 5 9 t h o u s .) a n d i n t h e n o n - c u r r e n t p a r t o f i t e m “L o a n s a n d d e p o s i t s ” ( N o t e 2 1 i n c o m p a r a b l e a m o u n t o f H R K 5,1 7 8 t h o u s .). IV. T r a d e r e c e i v a b l e s 031 Part of 23 0 0 0 V. Deferred tax assets 036 25 163.224 163.224 0 CURRENT ASSETS (ADP 038+046+053+063) 037 Part of 21+ 22+ part of 23+ 26 656.422 656.422 0 D u e t o a d i f f e r e n t p r e s e n t a t i o n , b u t f o r t h e p u r p o s e o f c o m p a r a b i l i t y o f G F I - P O D a n d Audited report it is necessary to jointly view GFI-POD items “Current assets” (ADP 037; HRK 656,422 thous.) and “Prepayments and accrued income” (ADP 064; HRK 21,273 t h o u s .) i n r e l a t i o n t o i t e m “C u r r e n t a s s e t s ” o f A u d i t e d r e p o r t ( H R K 6 7 7 ,6 9 5 t h o u s .). I. Inventories 038 22 23.619 23.619 0 II. Receivables 046 Part of 23 50.219 50.219 0 GFI-POD item “Receivables” (ADP 046; HRK 50,219 thous.) is in Audited report presented under items “Trade and other receivables” (Note 23; “Trade receivables – net” HRK 43,673 thous., “VAT receivable” HRK 2,235 thous., “Advances to suppliers” HRK 457 thous., “Receivables from e m p l o y e e s ” H R K 6 2 6 t h o u s ., “R e c e i v a b l e s f r o m s t a t e i n s t i t u t i o n s ” H R K 8 3 4 t h o u s ., p a r t o f “O t h e r c u r r e n t l i a b i l i t i e s ” H R K 2,3 9 2 t h o u s . a n d “I n c o m e t a x r e c e i v a b l e ” H R K 2 t h o u s .). C o m m e n t : T h e t o t a l a m o u n t o f i t e m “T r a d e a n d o t h e r r e c e i v a b l e s ” i n A u d i t e d r e p o r t ( N o t e 2 3 ) is HRK 71,490 thous. and is presented in items “Receivables” (ADP 046; HRK 50,217 thous.) and “Prepayments and accrued income” (ADP 064; HRK 21,273 thous.). III. Current financial assets 053 Part of 21 444 444 0 GFI-POD item “Financial assets” (ADP 053; HRK 444 thous.) is in Audited report presented under i t e m “L o a n s a n d d e p o s i t s ” - c u r r e n t p a r t ( N o t e 2 1 i n c o m p a r a b l e a m o u n t o f H R K 4 4 4 t h o u s .). IV. Cash and cash equivalents 063 26 582.141 582.141 0 GFI-POD item “Cash and cash equivalents” (ADP 063; HRK 582,141 thous.) is in Audited report presented under item “Cash and cash equivalents” (Note 26 in comparable amount of HRK 582,141 thous.). PREPAYMENTS AND ACCRUED INCOME 064 Part of 23 21.273 21.273 0 GFI-POD item “Prepayments and accrued income” (ADP 064; HRK 21,273 thous.) is i n A u d i t e d r e p o r t p r e s e n t e d u n d e r i t e m s “T r a d e a n d o t h e r receivables” (Note 23; “Accrued income” HRK 2,398 thous., “Interest receivables” HRK 27 thous., “Prepaid expenses” HRK 18,818 thous. and part of “Other current liabilities” HRK 30 thous.). Comment: The total amount of item “Trade and other receivables” in Audited report (Note 23) is HRK 71,490 thous. and is presented in items “Receivables” (ADP 046; HRK 50,217 thous.) and “Prepayments and accrued income” (ADP 064; HRK 21,273 thous.). TOTAL ASSETS 065 5.829.997 5.829.997 0 81 ANNUAL REPORT 2021 Summary of adjustments of GFI-POD balance sheet and unconsolidated balance sheet from Audited report for 2021 / COMPANY (continued) in thousands of HRK GFI-POD BALANCE SHEET as at 31 December 2021 GFI-POD ADP code AUDITED R E P O R T Note Reclassified G F I - P O D AUDITED REPORT N o t e D i f f e r e n c e E x p l a n a t i o n CAPITAL AND RESERVES 067 27+28 2.619.280 2.619.280 0 GFI-POD item “Capital and reserves” (ADP 067; HRK 2,619,280 thous.) is in Audited report presented under item “Share capital” (Notes 27 and 28 in comparable amount of HRK 2,619,280 thous.). PROVISIONS 090 Part of 32+ part of 31 NON-CURRENT LIABILITIES (ADP 103+107+108) 097 Part of 24+25+ part of 29+ part of 30+ part of 31+ par t of 32 134.552 134.552 0 GFI-POD item “Provisions” (ADP 090; HRK 134,552 thous.) is in Audited report presented under non-current liabilities in item “Provisions” (Note 32 part of the item “Severance pay and jubilee awards” in the amount HRK 24,964 thous. with the i t e m “L e g a l D i s p u t e s ” i n a comparable amount HRK 28,843 thous. and “Other” HRK 24,828 thous.) and non-current liabilities under item “Concession fee” (Note 31 in comparable amount of HRK 55,917 thous). 2.331.904 2.331.904 0 Due to a different presentation, but for the purpose of comparability of GFI-POD and Audited report it is necessary to jointly view GFI-POD items “Non-current liabilities” (ADP 097; HRK 2,331,904 thous.) and “Provisions” (ADP 090; HRK 134,552 thous.) in relation to item “Non-current liabilities” of Audited report (HRK 2,466,456 thous.). I. Liabilities to banks and other financial institutions 103 Part of 29 2.303.873 2.303.873 0 GFI-POD item “Liabilities to banks and other financial institutions” (ADP 103; HRK 2,303,873 thous.) is in Audited report presented under non-current part of item “Borrowings” (Note 29 in comparable amount of HRK 2,303,873 thous.). II. Other non-current liabilities 107 Part of 24+ part of 30+ part of 32 15.575 15.575 0 GFI-POD item “Other non-current liabilities” (ADP 107; HRK 15,575 thous.) is in Audited report presented under non-current part of item “Derivative financial instruments” (Note 24 i n c o m p a r a b l e a m o u n t o f 4,3 6 2 t h o u s .), “L e a s e l i a b i l i t i e s ” (Note 30 in comparable amount o f H R K 1 1 ,2 1 2 t h o u s .) a n d p a r t o f l o n g - t e r m l i a b i l i t i e s in the item “Provisions” (Note 32 “Severance pay and jubilee awards” HRK 1 thous.). Comment: The total amount of item “Derivative financial instruments” in Audited report ( N o t e 2 4 ) i s 7,7 4 9 t h o u s . a n d i s p r e s e n t e d i n i t e m s “O t h e r n o n - c u r r e n t l i a b i l i t i e s ” ( A D P 1 0 7 ; HRK 4,362 thous.) and “Other current liabilities” (ADP 123; HRK 3,387 thous.). III. Deferred tax liabilities 108 25 12.455 12.455 0 CURRENT LIABILITIES (ADP 110+112+115+116+117+118+119+121+123) 109 Part of 24+ part of 29+ part of 30+ part of 31 665.431 665.431 0 Due to a different presentation, but for the purpose of comparability of GFI-POD and Audited report it is necessary to jointly view GFI-POD items “Current liabilities” (ADP 109; HRK 665,431 thous.) and “Accrued expenses and deferred income” (ADP 124; HRK 78,830 thous.) in relation to item “Current liabilities” of Audited report (HRK 744,261 thous.). I. Liabilities to banks and other financial institutions 115 Part of 29 523.631 523.631 0 GFI-POD item “Liabilities to banks and other financial institutions” (ADP 115; HRK 523,631 thous.) is in Audited report presented under current part of item “Borrowings” (Note 29; “Bank borrowings” in comparable amount of HRK 523,631 thous.). II. Amounts payable for prepayment 116 Part of 31 36.065 36.065 0 GFI-POD item “Amounts payable for prepayment” (ADP 116; HRK 36,065 thous.) is in Audited report presented under current part of item “Trade and other payables” (Note 31; “Advances received” in comparable amount of HRK 36,065 thous.). Comment: The total current amount of item “Trade and other payables” in Audited report (Note 31) is HRK 195,893 thous. and is presented in items “Amounts payable for prepayment” (ADP 116; HRK 36,065 thous.), “Liabilities towards undertakings within the group, Liabilities towards companies linked by virtue of participating interest, Liabilities towards suppliers” (ADP 110, 112 and 117; HRK 51,226 thous.), “Liabilities to employees” (ADP 119; HRK 24,805 thous.), “Taxes, contributions and similar liabilities” (ADP 120; HRK 14,662 thous.), “Liabilities arising from share in the result” (ADP 123; HRK 8,685 thous.) and part of the item “Accrued expenses and deferred income” (ADP 124; HRK 60,449 thous.). 82 ANNUAL REPORT 2021 Summary of adjustments of GFI-POD balance sheet and unconsolidated balance sheet from Audited report for 2021 / COMPANY (continued) in thousands of HRK GFI-POD BALANCE SHEET as at 31 December 2021 GFI-POD ADP code AUDITED R E P O R T Note Reclassified G F I - P O D AUDITED REPORT N o t e D i f f e r e n c e E x p l a n a t i o n by virtue of participating interest, Liabilities towards suppliers HRK 7 thous.) and “Trade payables” (ADP 117; HRK 51,117 thous.) is in Audited report presented under current part of item “Trade and other payables” (Note 31; “Trade payables” HRK 51,095 thous., “Trade payables – related parties” HRK 131 thous.). Comment: The total current amount of item “Trade and other payables” in Audited r e p o r t ( N o t e 3 1 ) i s H R K 1 9 5 ,8 9 3 t h o u s . a n d i s p r e s e n t e d i n i t e m s “A m o u n t s p a y a b l e for p r e p a y m e n t ” ( A D P 1 1 6 ; H R K 3 6 ,0 6 5 t h o u s .), “L i a b i l i t i e s t o w a r d s u n d e r t a k i n g s w i t h i n t h e g r o u p , L i a b i l i t i e s t o w a r d s companies linked by virtue of participating interest, Liabilities towards suppliers” (ADP 110, 112 and 117; HRK 51,226 thous.), “Liabilities to employees” (ADP 119; HRK 24,805 thous.), “Taxes, contributions and similar liabilities” (ADP 120; HRK 14,662 thous.), “Liabilities arising from share in the result” (ADP 123; HRK 8,685 thous.) and part of the item “Accrued expenses and deferred income” (ADP 124; HRK 60,449 thous.). GFI-POD items “Liabilities to employees” (ADP 119; HRK 24,805 thous.) is in Audited report presented under current part of item “Trade and other payables” (Note 31; “Liabilities to employees” in comparable amount HRK 24,805 thous.). Comment: The total current amount of item “Trade and other payables” in Audited r e p o r t ( N o t e 3 1 ) i s H R K 1 9 5 ,8 9 3 t h o u s . a n d i s p r e s e n t e d i n i t e m s “A m o u n t s p a y a b l e for p r e p a y m e n t ” ( A D P 1 1 6 ; H R K 3 6 ,0 6 5 t h o u s .), “L i a b i l i t i e s t o w a r d s u n d e r t a k i n g s w i t h i n t h e g r o u p , L i a b i l i t i e s t o w a r d s companies linked by virtue of participating interest, Liabilities towards suppliers” (ADP 110, 112 and 117; HRK 51,226 thous.), “Liabilities to employees” (ADP 119; HRK 24,805 thous.), “Taxes, contributions and similar liabilities” (ADP 120; HRK 14,662 thous.), “Liabilities arising from share in the result” (ADP 123; HRK 8,685 thous.) and part of the item “Accrued expenses and deferred income” (ADP 124; HRK 60,449 thous.). GFI-POD item “Taxes, contributions and similar liabilities” (ADP 120; HRK 14,662 thous.) is in Audited report presented under current part of item “Trade and other payables” (Note 31; “Liabilities for taxes and contributions and similar charges” in comparable amount of HRK 14,662 thous.). Comment: The total current amount of item “Trade and other payables” in Audited r e p o r t ( N o t e 3 1 ) i s H R K 1 9 5 ,8 9 3 t h o u s . a n d i s p r e s e n t e d i n i t e m s “A m o u n t s p a y a b l e for p r e p a y m e n t ” ( A D P 1 1 6 ; H R K 3 6 ,0 6 5 t h o u s .), “L i a b i l i t i e s t o w a r d s u n d e r t a k i n g s w i t h i n t h e g r o u p , L i a b i l i t i e s t o w a r d s companies linked by virtue of participating interest, Liabilities towards suppliers” (ADP 110, 112 and 117; HRK 51,226 thous.), “Liabilities to employees” (ADP 119; HRK 24,805 thous.), “Taxes, contributions and similar liabilities” (ADP 120; HRK 14,662 thous.), “Liabilities arising from share in the result” (ADP 123; HRK 8,685 thous.) and part of the item “Accrued expenses and deferred income” (ADP 124; HRK 60,449 thous.). GFI-POD item “Other current liabilities” (ADP 123; HRK 15,041 thous.) is in Audited report presented under current part of items “Trade and other payables” (Note 31; “Other liabilities” HRK 8,685 thous.), “Derivative financial instruments” (Note 24 in comparable amount of HRK 3,387 thous.) and “Lease liabilities” (Note 30 in comparable amount of HRK 2,969 thous.). Comment: The total current amount of item “Trade and other payables” in Audited r e p o r t ( N o t e 3 1 ) i s H R K 1 9 5 ,8 9 3 t h o u s . a n d i s p r e s e n t e d i n i t e m s “A m o u n t s p a y a b l e for p r e p a y m e n t ” ( A D P 1 1 6 ; H R K 3 6 ,0 6 5 t h o u s .), “L i a b i l i t i e s t o w a r d s u n d e r t a k i n g s w i t h i n t h e g r o u p , L i a b i l i t i e s t o w a r d s companies linked by virtue of participating interest, Liabilities towards suppliers” (ADP 110, 112 and 117; HRK 51,226 thous.), “Liabilities to employees” (ADP 119; HRK 24,805 thous.), “Taxes, contributions and similar liabilities” (ADP 120; HRK 14,662 thous.), “Liabilities arising from share in the result” (ADP 123; HRK 8,685 thous.) and part of the item “Accrued expenses and deferred income” (ADP 124; HRK 60,449 thous.). The total amount of item “Derivative financial instruments” in Audited report (Note 24) is 7,749 thous. and is presented in items “Other non-current liabilities” (ADP 107; HRK 4,362 thous.) and “Other current liabilities” (ADP 123; HRK 3,387 thous.). III. Liabilities towards undertakings within the 110, 112 Part of 31 51.226 51.226 0 GFI-POD items “Liabilities to undertakings in a Group” (ADP 110; HRK 102 thous.), group, Liabilities towards companies linked and 117 “Liabilities towards companies linked by virtue of participating interest” (ADP 112; IV. Liabilities to employees 119 Part of 31 24.805 24.805 0 V. Taxes, contributions and similar liabilities 120 Part of 31 14.662 14.662 0 VI. Other current liabilities 123 Part of 24+ part of 30+ part of 31 15.041 15.041 0 83 ANNUAL REPORT 2021 Summary of adjustments of GFI-POD balance sheet and unconsolidated balance sheet from Audited report for 2021 / COMPANY (continued) in thousands of HRK GFI-POD BALANCE SHEET GFI-POD AUDITED R E P O R T Reclassified AUDITED REPORT part of 32 TOTAL LIABILITIES 125 5.829.997 5.829.997 0 thous.) is in Audited report presented under items “Trade and other payables” (Note 31; “Interest payable” HRK 29,002 thous., current part of item “Concession fees payable” HRK 1,920 thous., “Liabilities for calculated vacation and redistribution hours” HRK 9,379 thous., “Accrued VAT liabilities in unrealized income” HRK 295 thous., “Liabilities for calculated costs” HRK 19,853 thous.) and current part of items “Provisions” (Note 32; current item “Termination benefits and jubilee awards” HRK 818 thous. and “Bonuses” HRK 17,563 thous.). Comment: The total current amount of item “Trade and other payables” in Audited report (Note 31) is HRK 195,893 thous. and is presented in items “Amounts payable for prepayment” (ADP 116; HRK 36,065 thous.), “Liabilities towards undertakings within the group, Liabilities towards companies linked by virtue of participating i n t e r e s t , L i a b i l i t i e s t o w a r d s s u p p l i e r s ” (ADP 110, 112 and 117; HRK 51,226 thous.), “Liabilities to employees” (ADP 119; HRK 24,805 thous.), “Taxes, contributions and similar liabilities” (ADP 120; HRK 14,662 thous.), “Liabilities arising from share in the result” (ADP 123; HRK 8,685 thous.) and part of the item “Accrued expenses and deferred income” (ADP 124; HRK 60,449 thous.). The total short-term part of the item “Provisions” of the Audited Report (Note 32) in the amount of 18,381 thous. in the item “Deferred payment of expenses and income for the future period” (ADP 124: HRK 18,381 thous.). as at 31 December 2021 ADP code Note GFI-POD Note D i f f e r e n c e Explanation ACCRUED EXPENSES AND DEFERRED INCOME 124 Part of 31+ 78.830 78.830 0 GFI-POD item “Accrued expenses and deferred income” (ADP 124; HRK 78,830 84 ANNUAL REPORT 2021 Summary of adjustments of GFI-POD reclassified income statement and unconsolidated statement of comprehensive income from Audited report for 2021 / COMPANY in thousands of HRK GFI-POD INCOME STATEMENT for the period from 1 January 2021 to 31 December 2021 GFI-POD ADP code AUDITED R E P O R T Note Reclassified G F I - P O D AUDITED REPORT N o t e D i f f e r e n c e E x p l a n a t i o n (ADP 002+003+004+005+006) Group and sales revenues (outside the Group) II. Revenues from use of own products, goods and services, other operating revenues with undertakings in a Group and other operating revenues (outside the Group) 004+ 005+ 006 Part of 6+ part of 10 309.442 309.442 0 GFI-POD items “Revenues from use of own products, goods and services” (ADP 004; HRK 234 thous.), “Other operating revenues with undertakings in a Group” (ADP 005; HRK 281,038 thous.) and “Other operating revenues (outside the Group)” (ADP 006; HRK 28,171 thous.) are in Audited report presented under items “Other income” (Note 6; “Income from donations and other” HRK 2,104 thous., “Income from provision release” H R K 1 4 ,0 0 4 t h o u s ., “R e i m b u r s e d costs” HRK 2,470 thous., “Income from insurance and legal claims” HRK 4,531 thous., “Income from own consumption” HRK 234 thous., “Collection of receivables previously written-off” HRK 34 thous., “Other income” HRK 4,363 thous.), and “Other gains/(losses) - net” (Note 10; “Net gains on sale of property, plant and equipment” HRK 281,702 thous.). Comment: The total amount of item “Other income” in Audited report (Note 6) is HRK 27,740 thous. and is presented in items “Revenues from use of own products, goods and services, other operating revenues with undertakings in a Group and other o p e r a t i n g r e v e n u e s (outside the Group)” (ADP 004, 005 and 006; HRK 27,740 thous.). The total amount of item “Other gains/(losses) - net” in Audited report (Note 10) is 281,702 thous. and is presented in item “Revenues from use of own products, goods and services, other operating revenues with undertakings in a Group and other operating revenues (outside the Group)” (ADP 004, 005 and 006, HRK 281,702 thous.). OPERATING EXPENSES (ADP 009+013+017+018+019+022+029) 007 1.255.330 1.255.330 0 Due to a different presentation, but for the purpose of comparability of GFI-POD a n d A u d i t e d r e p o r t i t i s n e c e s s a r y t o j o i n t l y view GFI-POD items “Staff costs” (ADP 013; HRK 301,251 thous.), “Other expenditures” (ADP 018; HRK 113,161 thous.), “Value adjustment” (ADP 019; HRK 1,646 thous.), “Provisions” (ADP 022; 36,609 t h o u s .) a n d “O t h e r o p e r a t i n g expenses” (ADP 029; HRK 8,946 thous.) in relation to items “Staff costs” (Note 8; HRK 376,046 thous.) and “Other operating expenses” (Note 9; HRK 85,566 thous.) of Audited report. OPERATING INCOME 001 1.670.375 1.670.375 0 I. Revenues from sales with undertakings in a 002+ 003 5 1.360.932 1.360.932 0 85 ANNUAL REPORT 2021 Summary of adjustments of GFI-POD reclassified income statement and unconsolidated statement of comprehensive income from Audited report for 2021 / COMPANY (continued) in thousands of HRK GFI-POD INCOME STATEMENT for the period from GFI-POD AUDITED R E P O R T Reclassified AUDITED REPORT part of 9 under items “Staff costs” (Note 8; “Provisions for termination benefits and jubilee awards” HRK 9,293 thous.), “Other operating expenses” (Note 9; “Provisions for legal proceedings” HRK 2,488 thous. and “Reservations for tourist land lease and other” HRK 24,828 thous.). Comment: The total amount of item “Staff costs” in Audited report (Note 8) is HRK 376,046 thous. and is presented in “Staff costs” (ADP 013; HRK 301,251 thous.), “Other expenditures” (ADP 018; HRK 65,502 thous.) and “Provisions” (ADP 022; HRK 9,293 thous.). The total amount of item “Other operating expenses” in Audited report (Note 9) is HRK 85,566 thous. and is presented in items “Other expenditures” (ADP 018; HRK 47,658 thous.), “Value adjustment” (ADP 019; HRK 1,646 thous.), “Provisions” (ADP 022; HRK 27,316 thous.) and “Other operating expenses” (ADP 029; HRK 8,946 thous.). VII. Other operating expenses 029 Part of 9 8.946 8.946 0 GFI-POD item “Other operating expenses” (ADP 029; HRK 8,946 thous.) is in Audited report presented under items “Other operating expenses” (Note 9; “Write-off of property, plant and equipment” HRK 2,511 thous., “Other operating expenses” HRK 6,435 thous.). Comment: The total amount of item “Other operating expenses” in Audited report (Note 9) is HRK 85,566 thous. and is presented in items “Other expenditures” (ADP 018; HRK 47,658 thous.), “Value adjustment” (ADP 019; HRK 1,646 thous.), “Provisions” (ADP 022; HRK 27,316 thous.) and “Other operating expenses” (ADP 029; HRK 8,946 thous.). FINANCIAL INCOME 030 11 21.059 21.059 0 GFI-POD item “Financial income” (ADP 030; HRK 21,059 thous.) is in Audited report presented under items “Financial income/(loss) - net” in part of financial income (Note 11; “Interest income” HRK 67 thous., “Net foreign exchange gains/(losses) - other” HRK 3,312 thous., “Realised net gains/(losses) from changes in value of forwards and interest rate swaps” HRK 4,729 thous., “Income from cassa sconto” HRK 743 thous. “Dividend income and other financial income” HRK 229 thous., “Net foreign exchange gains from financial activities” HRK 7,475 thous. and “Change in the value of currency forward contracts and interest rate swaps” HRK 4,504 thous.). Comment: The total amount of item “Finance income/(expense) - net” in Audited report (Note 11) is HRK 43,921 thous. and is presented in items “Financial income” (ADP 030; HRK 21,059 thous.) and “Financial costs” (ADP 041; HRK 64,980 thous.). FINANCIAL COSTS 041 11 64.980 64.980 0 GFI-POD item “Financial costs” (ADP 041; HRK 64,980 thous.) is in Audited report presented under item “Finance income/(expense) - net” in part of financial expenses (Note 11; “Interest expense” HRK 64,980 thous.) Comment: The total amount of item “Finance income/(expense) - net” in Audited report (Note 11) is HRK 43,921 thous. and is presented in items “Financial income” (ADP 030; HRK 21,059 thous.) and “Financial costs” (ADP 041; HRK 64,980 thous.). TOTAL INCOME (ADP 001+030) 053 1.691.434 1.691.434 0 TOTAL COSTS (ADP 007+041) 054 1.320.310 1.320.310 0 PROFIT OR LOSS BEFORE TAX (ADP 053-054) 055 371.124 371.124 0 INCOME TAX EXPENSE 058 66.518 66.518 0 PROFIT OR LOSS FOR THE PERIOD (ADP 055-058) 059 304.606 304.606 0 1 January 2021 to 31 December 2021 ADP code Note GFI-POD Note D i f f e r e n c e Explanation V. Value adjustment 019 Part of 9 1.646 1.646 0 GFI-POD item “Value adjustment” (ADP 019; HRK 1,646 thous.) is in Audited report p r e s e n t e d u n d e r i t e m “O t h e r o p e r a t i n g e x p e n s e s ” ( N o t e 9; “Value adjustment of assets” in comparable amount of HRK 1,646 thous.). Comment: The total amount of item “Other operating expenses” in Audited report (Note 9) VI. Provisions 022 Part of 8+ 36.609 36.609 0 is HRK 85,566 thous. and is presented in items “Other expenditures” (ADP 018; HRK 47,658 thous.), “Value adjustment” (ADP 019; HRK 1,646 thous.), “Provisions” (ADP 022; HRK 27,316 thous.) and “Other operating expenses” (ADP 029; HRK 8,946 thous.). GFI-POD item “Provisions” (ADP 022; HRK 36,609 thous.) is in Audited report presented 86 ANNUAL REPORT 2021 Summary of adjustments of GFI-POD reclassified balance sheet and unconsolidated balance sheet from Audited Report for 2020 / COMPANY in thousands of HRK GFI-POD BALANCE SHEET as at 31 December 2020 GFI-POD ADP code AUDITED R E P O R T Note Reclassified G F I - P O D AUDITED REPORT N o t e D i f f e r e n c e E x p l a n a t i o n NON-CURRENT ASSETS (ADP 003+010+020+036) 002 14+15+16+ 17+ p a r t o f 1 8 b + 2 0 + p a r t o f 2 1 + 2 5 + p a r t of 30 5.324.136 5.324.136 0 I. Intangible assets 003 16 42.275 42.275 0 II. Tangible assets 010 14+ 15+ 30 4.292.520 4.292.520 0 GFI-POD item “Tangible assets” (ADP 010; HRK 4,292,520 thous.) is in Audited report presented under items “Property, plant and equipment” (Note 14 in comparable amount of H R K 4,2 7 6 ,1 3 2 t h o u s .), “I n v e s t m e n t p r o p e r t y ” ( N o t e 1 5 i n c o m p a r a b l e a m o u n t o f H R K 3,9 4 2 thous.), and “Right-of-use assets” (Note 30 in comparable amount of HRK 12,446 thous). III. Non-current financial assets 020 17+ part of 18b+ 20+ part of 21 774.870 774.870 0 GFI-POD item “Financial assets” (ADP 020; HRK 774,870 thous.) is in Audited report presented u n d e r i t e m s “I n v e s t m e n t i n s u b s i d i a r i e s ” ( N o t e 1 7 i n c o m p a r a b l e a m o u n t o f 7 2 7 ,3 2 8 t h o u s .), “I n v e s t m e n t i n a s s o c i a t e d e n t i t y ” ( N o t e 1 8 i n c o m p a r a b l e a m o u n t o f H R K 4 7 ,1 9 2 t h o u s . (presented in balance sheet as a separate line)), Financial assets” (Note 20 in comparable a m o u n t o f H R K 2 6 1 t h o u s .) a n d i n t h e n o n - c u r r e n t p a r t o f i t e m “L o a n s a n d d e p o s i t s ” ( N o t e 2 1 in comparable amount of HRK 89 thous.). IV. T r a d e r e c e i v a b l e s 031 Part of 23 0 0 0 V. Deferred tax assets 036 25 214.471 214.471 0 CURRENT ASSETS (ADP 038+046+053+063) 037 Part of 21+ 22+ part of 23+ part of 24+ 26 583.233 583.233 0 Due to a different presentation, but for the purpose of comparability of GFI-POD and Audited report it is necessary to jointly view GFI-POD items “Current assets” (ADP 037; HRK 583,233 thous.) and “Prepayments and accrued income” (ADP 064; HRK 46,703 thous.) in relation to item “Current assets” of Audited report (HRK 629,936 thous.). I. Inventories 038 22 27.296 27.296 0 II. Receivables 046 Part of 23 32.385 32.385 0 GFI-POD item “Receivables” (ADP 046; HRK 32,385 thous.) is in Audited report presented under items “Trade and other receivables” (Note 23; “Trade receivables – net” HRK 23,650 thous., “VAT receivable” HRK 3,482 thous., “Advances to suppliers” HRK 1,698 thous., “Receivables from employees” HRK 277 thous., “Receivables from state institutions” HRK 1,313 thous., and “Income tax receivable” HRK 1,967 thous.). Comment: The total amount of item “Trade and other receivables” in Audited report (Note 23) is HRK 79,088 thous. and is presented in items “Receivables” (ADP 046; HRK 32,385 thous.) and “Prepayments and accrued income” (ADP 064; HRK 46,703 thous.). III. Current financial assets 053 P a r t of 21+ part of 24 578 578 0 GFI-POD item “Financial assets” (ADP 053; HRK 578 thous.) is in Audited report presented under i t e m “L o a n s a n d d e p o s i t s ” - c u r r e n t p a r t ( N o t e 2 1 i n c o m p a r a b l e a m o u n t o f H R K 5 7 8 t h o u s .). IV. Cash and cash equivalents 063 26 522.974 522.974 0 GFI-POD item “Cash and cash equivalents” (ADP 063; HRK 522,974 thous.) is in Audited report presented under item “Cash and cash equivalents” (Note 26 in comparable amount of HRK 522,974 thous.). PREPAYMENTS AND ACCRUED INCOME 064 Part of 23 46.703 46.703 0 GFI-POD item “Prepayments and accrued income” (ADP 064; HRK 46,703 thous.) is i n A u d i t e d r e p o r t p r e s e n t e d u n d e r i t e m s “T r a d e a n d o t h e r receivables” (Note 23; “Accrued income” HRK 769 thous., “Interest receivables” HRK 43 thous., “Prepaid expenses” HRK 45,889 thous.). Comment: The total amount of item “Trade and other receivables” in Audited report (Note 23) is HRK 79,088 thous. and is presented in items “Receivables” (ADP 046; HRK 32,385 thous.) and “Prepayments and accrued income” (ADP 064; HRK 46,703 thous.). TOTAL ASSETS 065 5.954.072 5.954.072 0 87 ANNUAL REPORT 2021 Summary of adjustments of GFI-POD reclassified balance sheet and unconsolidated balance sheet from Audited Report for 2020 / COMPANY (continued) in thousands of HRK GFI-POD BALANCE SHEET GFI-POD AUDITED R E P O R T Reclassified AUDITED REPORT NON-CURRENT LIABILITIES (ADP 101+105+106) part of 31 097 Part of 24+25+ part of 29+ part of 30+ part of 31+ part of 32 presented under non-current liabilities in item “Provisions” (Note 32 part of the item “Severance pay and jubilee awards” in the amount HRK 21,180 thous. with the item “Legal Disputes” in a comparable amount HRK 36,379 thous.) and non-current liabilities under item “Concession fee” (Note 31 in comparable amount of HRK 55,656 thous). 2.524.889 2.524.889 0 Due to a different presentation, but for the purpose of comparability of GFI-POD and Audited report it is necessary to jointly view GFI-POD items “Non-current liabilities” (ADP 097; HRK 2,524,889 thous.) and “Provisions” (ADP 090; HRK 113,214 thous.) in relation to item “Non-current liabilities” of Audited report (HRK 2,638,103 thous.). part of 30+ part of 32 III. Deferred tax liabilities 108 25 13.307 13.307 0 report presented under non-current part of item “Derivative financial instruments” (Note 24 i n c o m p a r a b l e a m o u n t o f 1 1 ,6 0 2 t h o u s .), “L e a s e l i a b i l i t i e s ” (Note 30 in comparable amount of HRK 7,391 thous.) and part of long-term liabilities in the item “Provisions” (Note 32 “Severance pay and jubilee awards” HRK 439 thous. and “Bonuses” HRK 17,563 thous.). Comment: The total amount of item “Derivative financial instruments” in Audited report (Note 24) is 16,982 thous. and is presented in items “Other non-current liabilities” (ADP 107; HRK 11,602 thous.) and “Other current liabilities” (ADP 123; HRK 5,380 thous.). CURRENT LIABILITIES (ADP 108+113+114+115+117+118+119+121) 109 Part of 24+ 29+ part of 30+ part of 31+ part of 37 865.351 865.351 0 Due to a different presentation, but for the purpose of comparability of GFI-POD and Audited report it is necessary to jointly view GFI-POD items “Current liabilities” (ADP 109; HRK 865,351 thous.) and “Accrued expenses and deferred income” (ADP 124; HRK 65,394 thous.) in relation to item “Current liabilities” of Audited report (HRK 930,745 thous.). I. Liabilities to banks and other financial institutions 115 Part of 29 693.967 693.967 0 GFI-POD item “Liabilities to banks and other financial institutions” (ADP 115; HRK 693,967 thous.) is in Audited report presented under current part of item “Borrowings” (Note 29; “Bank borrowings” in comparable amount of HRK 693,967 thous.). II. Amounts payable for prepayment 116 Part of 31 61.768 61.768 0 GFI-POD item “Amounts payable for prepayment” (ADP 116; HRK 61,768 thous.) is in Audited report presented under current part of item “Trade and other payables” (Note 31; “Advances received” in comparable amount of HRK 61,768 thous.). Comment: The total current amount of item “Trade and other payables” in Audited report (Note 31) is HRK 209,237 thous. and is presented in items “Amounts payable for prepayment” (ADP 116; HRK 61,768 thous.), “Trade payables and liabilities to undertakings in a Group” (ADP 110 and 117; HRK 50,129 thous.), “Liabilities for securities” (ADP 118; HRK 6,625 thous.), “Liabilities to employees” (ADP 119; HRK 15,921 thous.), “T a x e s , c o n t r i b u t i o n s a n d s i m i l a r l i a b i l i t i e s ” ( A D P 120; HRK 4,665 thous.), “Liabilities arising from share in the result” (ADP 121 and ADP 123; HRK 10,320 thous.) and part of the item “Accrued expenses and deferred income” (ADP 124; HRK 59,809 thous.). as at 31 December 2020 ADP code Note GFI-POD Note D i f f e r e n c e Explanation CAPITAL AND RESERVES 067 27+28 2.385.224 2.385.224 0 GFI-POD item “Capital and reserves” (ADP 067; HRK 2,385,224 thous.) is in Audited report presented under item “Share capital” (Notes 27 and 28 in comparable amount of HRK 2,385,224 thous.). PROVISIONS 090 Part of 32 + 113.214 113.214 0 GFI-POD item “Provisions” (ADP 090; HRK 113,214 thous.) is in Audited report I. Liabilities to banks and other financial institutions 103 Part of 29 2.474.586 2.474.586 0 GFI-POD item “Liabilities to banks and other financial institutions” (ADP 103; HRK 2,474,586 thous.) is in Audited report presented under non-current part of item “Borrowings” (Note 29 in comparable amount of HRK 2,474,586 thous.). II. Other non-current liabilities 107 Part of 24+ 36.996 36.996 0 GFI-POD item “Other non-current liabilities” (ADP 107; HRK 36,996 thous.) is in Audited 88 ANNUAL REPORT 2021 Summary of adjustments of GFI-POD reclassified balance sheet and unconsolidated balance sheet from Audited Report for 2020 / COMPANY (continued) in thousands of HRK GFI-POD BALANCE SHEET as at 31 December 2020 GFI-POD ADP code AUDITED R E P O R T Note Reclassified G F I - P O D AUDITED REPORT N o t e D i f f e r e n c e E x p l a n a t i o n III. Liabilities towards undertakings within the group, Liabilities towards companies linked by virtue of participating interest, Liabilities towards suppliers 110, 112 and 117 Part of 31 50.129 50.129 0 GFI-POD items “Liabilities to undertakings in a Group” (ADP 110; HRK 136 thous.) and “Trade payables” (ADP 117; HRK 49,993 thous.) is in Audited report presented under current part of item “Trade and other payables” (Note 31; “Trade payables” HRK 49,910 thous., “Trade payables – related parties” HRK 220 thous.). Comment: The total current amount of item “Trade and other payables” in Audited report (Note 31) is HRK 209,237 thous. and is presented in items “Amounts payable for prepayment” (ADP 116; HRK 61,768 thous.), “Trade payables and liabilities to undertakings in a Group” (ADP 110 and 117; HRK 50,129 thous.), “Liabilities for securities” (ADP 118; HRK 6,625 thous.), “Liabilities to employees” (ADP 119; HRK 15,921 thous.), “T a x e s , c o n t r i b u t i o n s a n d s i m i l a r l i a b i l i t i e s ” ( A D P 120; HRK 4,665 thous.), “Liabilities arising from share in the result” (ADP 121 and ADP 123; HRK 10,320 thous.) and part of the item “Accrued expenses and deferred income” (ADP 124; HRK 59,809 thous.). IV. Liabilities for securities 118 Part of 31 6.625 6.625 0 G F I - P O D i t e m s “L i a b i l i t i e s for securities” (ADP 118; HRK 6,625 thous.) is in Audited report presented under current part of item “Trade and other payables” (Note 31; “Liabilities under bills of exchange” in comparable amount HRK 6,625 thous.). V. Liabilities to employees 119 Part of 31 15.921 15.921 0 GFI-POD items “Liabilities to employees” (ADP 119; HRK 15,921 thous.) is in Audited report presented under current part of item “Trade and other payables” (Note 31; “Liabilities to employees” in comparable amount HRK 15,921 thous.). Comment: The total current amount of item “Trade and other payables” in Audited report (Note 31) is HRK 209,237 thous. and is presented in items “Amounts payable for prepayment” (ADP 116; HRK 61,768 thous.), “Trade payables and liabilities to undertakings in a Group” (ADP 110 and 117; HRK 50,129 thous.), “Liabilities for securities” (ADP 118; HRK 6,625 thous.), “Liabilities to employees” (ADP 119; HRK 15,921 thous.), “T a x e s , c o n t r i b u t i o n s a n d s i m i l a r l i a b i l i t i e s ” ( A D P 120; HRK 4,665 thous.), “Liabilities arising from share in the result” (ADP 121 and ADP 123; HRK 10,320 thous.) and part of the item “Accrued expenses and deferred income” (ADP 124; HRK 59,809 thous.). VI. Taxes, contributions and similar liabilities 120 Part of 31 4.665 4.665 0 GFI-POD item “Taxes, contributions and similar liabilities” (ADP 120; HRK 4,665 thous.) is in Audited report presented under current part of item “Trade and other payables” (Note 31; “Liabilities for taxes and contributions and similar charges” in comparable amount of HRK 4,665 thous.). Comment: The total current amount of item “Trade and other payables” in Audited report (Note 31) is HRK 209,237 thous. and is presented in items “Amounts payable for prepayment” (ADP 116; HRK 61,768 thous.), “Trade payables and liabilities to undertakings in a Group” (ADP 110 and 117; HRK 50,129 thous.), “Liabilities for securities” (ADP 118; HRK 6,625 thous.), “Liabilities to employees” (ADP 119; HRK 15,921 thous.), “T a x e s , c o n t r i b u t i o n s a n d s i m i l a r l i a b i l i t i e s ” ( A D P 120; HRK 4,665 thous.), “Liabilities arising from share in the result” (ADP 121 and ADP 123; HRK 10,320 thous.) and part of the item “Accrued expenses and deferred income” (ADP 124; HRK 59,809 thous.). 89 ANNUAL REPORT 2021 Summary of adjustments of GFI-POD reclassified balance sheet and unconsolidated balance sheet from Audited Report for 2020 / COMPANY (continued) in thousands of HRK GFI-POD BALANCE SHEET as at 31 December 2020 GFI-POD ADP code AUDITED R E P O R T Note Reclassified G F I - P O D AUDITED REPORT N o t e D i f f e r e n c e E x p l a n a t i o n VII. Liabilities arising from share in the result and other current liabilities 121 and 123 Part of 24+ part of 30+ part of 31+ part of 37 32.276 32.276 0 GFI-POD item “Liabilities arising from share in the result” (ADP 121; HRK 10 thous.) and “Other current liabilities” (ADP 123; HRK 32,265 thous.) is in Audited report presented under current part of items “Trade and other payables” (Note 31; “Liabilities for dividend” HRK 10 thous., “Other liabilities” HRK 10,310 thous.), “Derivative financial instruments” (Note 24 in comparable amount of HRK 5,380 thous.) and “Lease liabilities” (Note 30 in comparable amount of HRK 2,582 thous.) and Note 37 in the comparable amount of HRK 13,994 thous.). Comment: The total current amount of item “Trade and other payables” in Audited report (Note 31) is HRK 209,237 thous. and is presented in items “Amounts payable for prepayment” (ADP 116; HRK 61,768 thous.), “Trade payables and liabilities to u n d e r t a k i n g s i n a Group” (ADP 110 and 117; HRK 50,129 thous.), “Liabilities for securities” (ADP 118; HRK 6,625 thous.), “Liabilities to employees” (ADP 119; HRK 15,921 thous.), “Taxes, contributions and similar liabilities” (ADP 120; HRK 4,665 thous.), “Liabilities arising from share in the result” (ADP 121 and ADP 123; HRK 10,320 thous.) and part of the item “Accrued expenses and deferred income” (ADP 124; HRK 59,809 thous.). The total amount of item “Derivative financial instruments” in Audited report (Note 24) is 16,982 thous. and is presented in items “Other non-current liabilities” (ADP 107; HRK 11,603 thous.) and “Other current liabilities” (ADP 123; HRK 5,379 thous.). ACCRUED EXPENSES AND DEFERRED INCOME 124 Part of 31+ part of 32 65.394 65.394 0 GFI-POD item “Accrued expenses and deferred income” (ADP 124; HRK 65,394 thous.) is in Audited report presented under items “Trade and other payables” (Note 31; “Interest payable” HRK 32,895 thous., current part of item “Concession fees payable” HRK 1,919 thous., “Liabilities for calculated vacation and redistribution hours” HRK 1,533 thous., “Accrued VAT liabilities in unrealized income” HRK 121 thous., “Liabilities for calculated costs” HRK 23,340 thous.) and current part of items “Provisions” (Note 32; current item “Termination benefits and jubilee awards” HRK 5,585 thous.). Comment: The total current amount of item “Trade and other payables” in Audited report (Note 31) is HRK 209,237 thous. and is presented in items “Amounts payable for prepayment” (ADP 116; HRK 61,768 thous.), “Trade payables and liabilities to undertakings in a Group” (ADP 110 and 117; HRK 50,129 thous.), “Liabilities for securities” (ADP 118; HRK 6,625 thous.), “Liabilities to employees” (ADP 119; HRK 15,921 thous.), “Taxes, contributions and similar liabilities” (ADP 120; HRK 4,665 thous.), “Liabilities arising from share in the result” (ADP 121 and ADP 123; HRK 10,320 thous.) and part of the item “Accrued expenses and deferred income” (ADP 124; HRK 59,809 thous.). The total short-term part of the item “Provisions” of the Audited Report (Note 32) in the amount of 5,585 thous. in the item “Deferred payment of expenses and income for the future period” (ADP 124: HRK 5,585 thous.). TOTAL LIABILITIES 125 5.954.072 5.954.072 0 90 ANNUAL REPORT 2021 Summary of adjustments of GFI-POD reclassified income statement and unconsolidated statement of comprehensive income from Audited report for 2020 / COMPANY in thousands of HRK GFI-POD INCOME STATEMENTfor the period from 1 January 2020 to 31 December 2020 GFI-POD ADP code AUDITED R E P O R T Note Reclassified G F I - P O D AUDITED REPORT N o t e D i f f e r e n c e E x p l a n a t i o n (ADP 002+003+004+005+006) Group and sales revenues (outside the Group) O P E R A T I N G EXPENSES (ADP 009+013+017+018+019+022+029) 007 890.255 890.255 0 Due to a different presentation, but for the purpose of comparability of GFI-POD and Audited report it is necessary to jointly view GFI-POD items “Staff costs” (ADP 013; HRK 162,757 thous.), “Other expenditures” (ADP 018; HRK 75,373 thous.), “Value adjustment” (ADP 019; HRK 1,394 thous.), “Provisions” (ADP 022; 25,566 thous.) and “O t h e r o p e r a t i n g expenses” (ADP 029; HRK 9,198 thous.) in relation to items “Staff costs” (Note 8; HRK 194,267 thous.) and “Other operating expenses” (Note 9; HRK 80,020 thous.) of Audited report. I. Material costs 009 7 223.981 223.981 0 GFI-POD item “Material costs” (ADP 009; HRK 223,981 thous.) is in Audited report presented under item “Cost of materials and services” (Note 7 in comparable amount of HRK 223,981 thous.). II. Staff costs 013 Part of 8 162.757 162.757 0 GFI-POD item “Staff costs” (ADP 013; HRK 162,757 thous.) is in Audited report presented under item “Staff costs” (Note 8; “Net salaries” HRK 103,705 thous., “Pension contributions” HRK 30,087 thous., “Health insurance contributions” HRK 21,802 thous., “Other (contributions and taxes)” HRK 7,163 thous.). Comment: The total amount of item “Staff costs” in Audited report (Note 8) is HRK 194,267 thous. and is presented in “Staff costs” (ADP 013; HRK 162,757 thous.), “Other expenditures” (ADP 018; HRK 20,800 thous.) and “Provisions” (ADP 022; HRK 10,710 thous.). III. Depreciation and amortisation 017 14+15+16+30 391.987 391.987 0 OPERATING INCOME 001 571.819 571.819 0 I. Revenues from sales with undertakings in a 002+ 003 5 546.962 546.962 0 II. Revenues from use of own products, goods 004+ 005+ and services, other operating revenues with 006 undertakings in a Group and other operating revenues (outside the Group) Part of 6+ part of 10 24.857 24.857 0 GFI-POD items “Revenues from use of own products, goods and services” (ADP 004; HRK 208 thous.), “Other operating revenues with undertakings in a Group” (ADP 005; HRK 270 thous.) and “Other operating revenues (outside the Group)” (ADP 006; HRK 24,379 thous.) are in Audited report presented under items “Other income” (Note 6; “Income from donations and other” HRK 7,506 thous., “Income from provision release” HRK 233 thous., “Reimbursed costs” HRK 2,140 thous., “Income from insurance and legal claims” HRK 1,829 thous., “Income from own consumption” HRK 209 thous., “Other income” HRK 7,760 thous.), and “Other gains/(losses) - net” (Note 10; “Net gains on sale of property, plant and equipment” HRK 5,180 thous.). Comment: The total amount of item “Other income” in Audited report (Note 6) is HRK 19,677 thous. and is presented in items “Revenues from use of own products, goods and services, other operating revenues with undertakings in a Group and other operating revenues (outside the Group)” (ADP 004, 005 and 006; HRK 19,677 thous.). The total amount of item “Other gains/(losses) - net” in Audited report (Note 10) is 5,180 thous. and is presented in item “Revenues from use of own products, goods and services, other operating revenues with undertakings in a Group and other operating revenues (outside the Group)” (ADP 004, 005 and 006, HRK 5,180 thous.). 91 ANNUAL REPORT 2021 Summary of adjustments of GFI-POD reclassified income statement and unconsolidated statement of comprehensive income from Audited report for 2020 / COMPANY (continued) in thousands of HRK GFI-POD INCOME STATEMENTfor the period from 1 January 2020 to 31 December 2020 GFI-POD ADP code AUDITED R E P O R T Note Reclassified G F I - P O D AUDITED REPORT N o t e D i f f e r e n c e E x p l a n a t i o n 194,267 thous. and is presented in “Staff costs” (ADP 013; HRK 162,757 thous.), “Other part of 9 under items “Staff costs” (Note 8; “Provisions for termination benefits and jubilee awards” HRK 10,710 thous.), “Other operating expenses” (Note 9; “Provisions” HRK 9,356 thous.) and “Other operating expenses” (Note 9; “Provisions for severance pay” HRK 5,500 thous.). Comment: The total amount of item “Staff costs” in Audited report (Note 8) is HRK 194,267 thous. and is presented in “Staff costs” (ADP 013; HRK 162,757 thous.), “Other expenditures” (ADP 018; HRK 20,800 thous.) and “Provisions” (ADP 022; HRK 10,710 thous.). The total amount of item “Other operating expenses” in Audited report (Note 9) is HRK 80,020 thous. and is presented in items “Other expenditures” (ADP 018; HRK 54,572 thous.), “Value adjustment” (ADP 019; HRK 1,394 thous.), “Provisions” (ADP 022; HRK 14,856 thous.) and “Other operating expenses” (ADP 029; HRK 9,198 thous.). VII. Other operating expenses 029 Part of 9 9.198 9.198 0 GFI-POD item “Other operating expenses” (ADP 029; HRK 9,198 thous.) is in Audited report presented under items “Other operating expenses” (Note 9; “Write-off of property, plant and equipment” HRK 1,202 thous., “Other operating expenses” HRK 7,996 thous.). Comment: The total amount of item “Other operating expenses” in Audited report (Note 9) is HRK 80,020 thous. and is presented in items “Other expenditures” (ADP 018; HRK 54,572 thous.), “Value adjustment” (ADP 019; HRK 1,394 thous.), “Provisions” (ADP 022; HRK 14,856 thous.) and “Other operating expenses” (ADP 029; HRK 9,198 thous.). FINANCIAL INCOME 030 11 19.931 19.931 0 GFI-POD item “Financial income” (ADP 030; HRK 19,931 thous.) is in Audited report presented under items “Financial income/(loss) - net” in part of financial income (Note 11; “Interest income” HRK 508 thous., “Net foreign exchange gains/(losses) - other” HRK 825 thous., “Realised net gains/(losses) from changes in value of forwards and interest rate swaps” HRK 16,759 thous., “Income from cassa sconto” HRK 1,709 thous. and other financial income HRK 130 thous.). Comment: The total amount of item “Finance income/(expense) - net” in Audited report (Note 11) is HRK 95,096 thous. and is presented in items “Financial income” (ADP 030; HRK 19,931 thous.) and “Financial costs” (ADP 041; HRK 115,027 thous.). IV. Other expenditures 018 Part of 8+ part of 9 75.372 75.372 0 GFI-POD item “Other expenditures” (ADP 018; HRK 75,372 thous.) is in Audited report presented under items “Staff costs” (Note 8; “Termination benefits” HRK 329 thous., “Other staff costs” HRK 20,471 thous.) and “Other operating expenses” (Note 9; “Municipal charges, concessions and other” HRK 32,959 thous., “Professional services” HRK 11,872 thous., “Entertainment” HRK 2,023 thous. HRK, “Insurance premiums” HRK 6,075 thous., “Bank charges” HRK 574 thous., “Subscription to magazines and other administrative expenses” HRK 1,069 thous.). Comment: The total amount of item “Staff costs” in Audited report (Note 8) is HRK V. Value adjustment 019 Part of 9 1.394 1.394 0 expenditures” (ADP 018; HRK 20,800 thous.) and “Provisions” (ADP 022; HRK 10,710 thous.). The total amount of item “Other operating expenses” in Audited report (Note 9) is HRK 80,020 thous. and is presented in items “Other expenditures” (ADP 018; HRK 54,572 thous.), “Value adjustment” (ADP 019; HRK 1,394 thous.), “Provisions” (ADP 022; HRK 14,856 thous.) and “Other operating expenses” (ADP 029; HRK 9,198 thous.). GFI-POD item “Value adjustment” (ADP 019; HRK 1,394 thous.) is in Audited report presented under item “Other operating expenses” (Note 9; “Impairment of assets” in comparable amount of HRK 1,394 thous.). Comment: The total amount of item “Other operating expenses” in Audited report (Note VI. Provisions 022 Part of 8+ 25.566 25.566 0 9) is HRK 80,020 thous. and is presented in items “Other expenditures” (ADP 018; HRK 54,572 thous.), “Value adjustment” (ADP 019; HRK 1,394 thous.), “Provisions” (ADP 022; HRK 14,856 thous.) and “Other operating expenses” (ADP 029; HRK 9,198 thous.). GFI-POD item “Provisions” (ADP 022; HRK 25,566 thous.) is in Audited report presented 92 ANNUAL REPORT 2021 Summary of adjustments of GFI-POD reclassified income statement and unconsolidated statement of comprehensive income from Audited report for 2020 / COMPANY (continued) in thousands of HRK GFI-POD INCOME STATEMENTfor the period from 1 January 2020 to 31 December 2020 GFI-POD ADP code AUDITED R E P O R T Note Reclassified G F I - P O D AUDITED REPORT N o t e D i f f e r e n c e E x p l a n a t i o n FINANCIAL COSTS 041 11 115.027 115.027 0 GFI-POD item “Financial costs” (ADP 041; HRK 115,027 thous.) is in Audited report presented under item “Finance income/(expense) - net” in part of financial expenses (Note 11; “Interest expense” HRK 59,591 thous., “Net foreign exchange gains from financing activities” HRK 38,603 thous. and “Changes in fair value of forwards and interest rate swaps” HRK 16,833 thous.). Comment: The total amount of item “Finance income/(expense) - net” in Audited report (Note 11) is HRK 95,096 thous. and is presented in items “Financial income” (ADP 030; HRK 19,931 thous.) and “Financial costs” (ADP 041; HRK 115,027 thous.). TOTAL INCOME (ADP 001+030) 053 591.750 591.750 0 TOTAL COSTS (ADP 007+041) 054 1.005.282 1.005.282 0 PROFIT OR LOSS BEFORE TAX (ADP 053-054) 055 -413.532 -413.532 0 INCOME TAX EXPENSE 058 -104.982 -104.982 0 PROFIT OR LOSS FOR THE PERIOD (ADP 055-058) 059 -308.550 -308.550 0 93 ANNUAL REPORT 2021 Summary of adjustments of GFI-POD cash flow statement and unconsolidated cash flow statement from Audited report for 2021 / COMPANY in thousands of HRK AUDITED GFI-POD CASH FLOW STATEMENT for the period GFI-POD R E P O R T Reclassified Audited ACTIVITIES B) NET CASH FLOW FROM INVESTMENT ACTIVITIES C) NET CASH FLOW FROM FINANCING ACTIVITIES thous.) is in Audited report presented in items “Net cash inflow from operating activities” in comparable amount of HRK 537,980 thous. and item “Interest paid” (Net cash inflow from financing activities) in the amount of HRK -64,432 thous. 034 -77.667 -77.667 0 G F I - P O D i t e m “N e t c a s h flow from investment activities” (ADP 034; HRK -77,667 thous.) is in Audited report presented in item “Net cash outflow from investment activities” in comparable amount of HRK -77,667 thous. 046 -336.714 -336.714 0 GFI-POD item “Net cash flow from financing activities” (ADP 046; HRK -336,714 thous.) is in Audited report presented in item “Net cash inflow from financing activities” in comparable amount of HRK -272,282 thous. increased for the item “Interest paid” in the amount of HRK -64,432 thous. D) N E T I N C R E A S E O R D E C R E A S E OF CASH FLOW (ADP 020+034+046) E) CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD F) CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD (ADP 048+049) 048 59.167 59.167 0 049 522.973 522.973 0 050 582.141 582.141 0 Summary of adjustments of GFI-POD cash flow statement and unconsolidated cash flow statement from Audited report for 2020 / COMPANY in thousands of HRK AUDITED GFI-POD CASH FLOW STATEMENT for the period GFI-POD R E P O R T Reclassified Audited ACTIVITIES B) NET CASH FLOW FROM INVESTMENT ACTIVITIES C) NET CASH FLOW FROM FINANCING ACTIVITIES thous.) is in Audited report presented in items “Net cash inflow from operating activities” in comparable amount of HRK -9,566 thous. and item “Interest paid” (Net cash inflow from financing activities) in the amount of HRK -27,935 thous. 034 -419.436 -419.436 0 GFI-POD item “Net cash flow from investment activities” (ADP 034; HRK -419,436 thous.) is in Audited report presented in item “Net cash outflow from investment activities” in comparable amount of HRK -419,436 thous. 046 732.061 732.061 0 GFI-POD item “Net cash flow from financing activities” (ADP 046; HRK 732,061 thous.) is in Audited report presented in item “Net cash inflow from financing activities” in comparable amount of HRK 704,126 thous. increased for the item “Interest paid” in the amount of HRK 27,935 thous. D) N E T I N C R E A S E O R D E C R E A S E OF CASH FLOW (ADP 020+034+046) E) CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD F) CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD (ADP 048+049) 048 275.124 275.124 0 049 247.849 247.849 0 050 522.973 522.973 0 from 1 January 2021 to 31 December 2021 ADP code Note GFI-POD report D i f f e r e n c e Explanation A) NET CASH FLOW FROM OPERATING 020 473.548 473.548 0 GFI-POD item “Net cash flow from operating activities” (ADP 020; HRK 473,548 from 1 January 2020 to 31 December 2020 ADP code Note GFI-POD report D i f f e r e n c e Explanation A) NET CASH FLOW FROM OPERATING 020 -37.501 -37.501 0 GFI-POD item “Net cash flow from operating activities” (ADP 020; HRK -37,501 94 ANNUAL REPORT 2021 Summary of adjustments of GFI-POD statement of changes in equity and unconsolidated statement of changes in shareholder’s equity from Audited report for 2021 / COMPANY in thousands of HRK G F I - P O D STATEMENT OF CHANGES IN EQUITY for the period from 1 January 2021 to 31 December 2021 GFI-POD ADP code AUDITED R E P O R T Note Reclassified G F I - P O D Audited report Difference Explanation CAPITAL AND RESERVES (ADP 31 to 50) 51 27+28 2.619.280 2.619.280 0 GFI-POD item “Capital and reserves” (ADP 067; HRK 2,619,280 thous.) is in Audited report presented in items “Share capital” (Note 27 in comparable amount of HRK 1,672,021 thous.), “Treasury shares” (Note 27 comparable amount of HRK -124,418 thous.), “Capital reserves” (Note 28 in comparable amount of HRK 5,711 thous.), “Fair value reserves” (Note 28 in comparable amount of HRK 81 t h o u s .), “L e g a l r e s e r v e s ” (Note 28 in comparable amount of HRK 83,601 thous.), “Other reserves” (Note 28 in comparable amount of HRK 105,846 thous.) and “Retained earnings” (Note 28 in comparable amount of HRK 876,438 thous.). Comment: To be fully compliant, the following items should be viewed as follows: the “Other reserves” item of Audited report (Note 28; HRK 105,846 thous.) matches the GFI POD item “Reserves for own shares” (ADP 072; HRK 136,815 thous.) and part of GFI POD item “Retained earnings” (ADP 083; HRK -33,219 thous.) and GFI POD items “Other reserves” (ADP 075 HRK 2,250 thous.). The “Retained earnings” item of Audited report (Note 28; HRK 876,438 thous.) matches the sum of GFI POD items “Profit for the financial year” (ADP 086; HRK 304,605 thous.) and part of “Retained earnings” (ADP 083; HRK 571,833 thous.). Summary of adjustments of GFI-POD statement of changes in equity and unconsolidated statement of changes in shareholder’s equity from Audited report for 2020 / COMPANY in thousands of HRK G F I - P O D STATEMENT OF CHANGES IN EQUITY for the period from 1 January 2020 to 31 December 2020 GFI-POD ADP code AUDITED R E P O R T Note Reclassified G F I - P O D Audited report Difference Explanation CAPITAL AND RESERVES (ADP 31 to 51) 51 27+28 2.385.224 2.385.224 0 GFI-POD item “Capital and reserves” (ADP 067; HRK 2,385,224 thous.) is in Audited report presented in items “Share capital” (Note 27 in comparable amount of HRK 1,672,021 thous.), “Treasury shares” (Note 27 comparable amount of HRK -124,418 thous.), “Capital reserves” (Note 28 in comparable amount of HRK 5,711 thous.), “Fair value reserves” (Note 28 in comparable amount of HRK 1 t h o u s .), “L e g a l r e s e r v e s ” (Note 28 in comparable amount of HRK 83,601 thous.), “Other reserves” (Note 28 in comparable amount of HRK 176,476 thous.) and “Retained earnings” (Note 28 in comparable amount of HRK 571,832 thous.). Comment: To be fully compliant, the following items should be viewed as follows: the “Other reserves” item of Audited report (Note 28; HRK 176,476 thous.) matches the GFI POD item “Reserves for own shares” (ADP 072; HRK 136,815 thous.) and part of GFI POD item “Retained earnings” (ADP 083; HRK 37,411 thous.) and GFI POD items “Other reserves” (ADP 075 HRK 2,250 thous.). The “Retained earnings” item of Audited report (Note 28; HRK 571,832 thous.) matches the sum of GFI POD items “Profit for the financial year” (ADP 086; HRK -308,550 thous.) and part of “Retained earnings” (ADP 083; HRK 880,382 thous.). MANAGEMENT BOARD’S DECISION ON ESTABLISHING THE ANNUAL FINANCIAL STATEMENTS Valamar Riviera d.d. MANAGEMENT BOARD Number: 8-1/22 Poreč, 16 February 2022 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 16 February 2022, the Management Board of Valamar Riviera d.d. from Poreč, 1 Stancija Kaligari (hereinafter: Valamar Riviera d.d. or the Company) rendered the following DECISION I T h e A n n u a l R e p o r t o f V a l a m a r Riviera d.d. is hereby determined as stated in the text of the enclosed “2021 ANNUAL REPORT”. II The audited non-consolidated and consolidated Annual financial statements for the year 2021 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. III It is hereby determined that the Auditor, Ernst & Young d.o.o. from Zagreb, 50 Radnička cesta and UHY RUDAN d.o.o. za porezno savjetovanje i reviziju from Zagreb, 213 Ilica, OIB 71799539000 produced the Auditor’s report for 2021, as stated in the text that is an integral part of the Report from point I of this decision. IV The Management Report on the Company’s status for the period from 01/01/2021 to 31/12/2021 is hereby determined, as stated in the text that is an integral part of the Report from point I of this decision. 95 ANNUAL REPORT 2021 MANAGEMENT B O A R D ’S D E C I S I O N ON ESTABLISHING THE ANNUAL FINANCIAL STATEMENTS /continued V The proposed decision to distribute the Company’s realized profits in 2021 totaling HRK 304,605,805.77 to the Company’s retained profits is hereby determined. VI Pursuant to Article 300b of the Companies Act: 1. the reports mentioned in points II and IV of this Decision are submitted to the Supervisory Board for examination. It is proposed that the Supervisory Board approves the said reports, 2. the Auditor’s Report mentioned in point III of this Decision is submitted to the Supervisory Board for approval 3. It is proposed that the Supervisory Board approves the proposed pursuant to point V of this Decision, and to pass it as such to be adopted at the General Assembly. VII Pursuant to Article 133 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. VIII 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. F o r t h e a t t e n t i o n of: 1. Supervisory Board 2. HANFA -Official registry of regulated information, pursuant to point VII 3. Zagreb Stock Exchange, pursuant to point VII 4. FINA-Financial Agency, pursuant to point VIII 5. Archive Željko Kukurin Management Board President 96 ANNUAL REPORT 2021 SUPERVISORY BOARD’S DECISION ON APPROVING THE ANNUAL FINANCIAL STATEMENTS Valamar Riviera d.d. SUPERVISORY BOARD Number: 9-1/22 Poreč, 24/02/ 2022 Pursuant to Article 300d, and Article 300c of the Companies Act and Management Board Decision no. 8-1/22 dated 16/02/2022, at its meeting held on 24 February 2022, the Supervisory Board of Valamar Riviera d.d. from Poreč rendered the following DECISION I The Supervisory Board hereby approves the 2021 ANNUAL REPORT of Valamar Riviera d.d. that also includes the following: 1. Annual Financial Statements for the Year 2021, non-consolidated and consolidated, consisting of the 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 2. Report on the performed audit by Ernst & Young d.o.o. from Zagreb a n d U H Y R U D A N d.o.o. z a porezno savjetovanje i reviziju from Zagreb 3. Annual Management Report on the Company’s status / Management Report II Pursuant to Article 300d of the Companies Act, by granting approval as stated in point I of this Decision, the 2021 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. G u s t a v Wurmböck Supervisory Board Chairman 97 ANNUAL REPORT 2021 S U P E R V I S O R Y BOARD’S REPORT TO THE GENERAL ASSEMBLY O F THE COMPANY Valamar Riviera d.d. SUPERVISORY BOARD Number: 9-2/22 Poreč, February 24th, 2022 Pursuant to the provisions of Article 263 paragraph 3 and Article 300c paragraph 3 Of the Companies Act, the Supervisory Board of Valamar Riviera d.d. from Poreč, at its session held on February 24, 2022, determined and submitted the following R E P O R T T O T H E G E N E R A L A S S E M B L Y O F V A L A M A R R I V I E R A D.D. F R O M P O R E Č O N T H E P E R F O R M E D SUPERVISION OF BUSINESS MANAGEMENT FOR 2021 I In the course of the reporting period of 2021, until June 15, 2021, the Supervisory Board consisted of: Gustav Wurmböck, Chairman, Mladen Markoč and Franz Lanschützer, Deputy Chairmen and members: Georg E l t z , H a n s D o m i n i k T u r n o v s z k y , Vicko Ferić and Valter Knapić. Pursuant to the decision of the General Assembly of April 21, 2021 on the election of members of the Supervisory Board and the Workers’ Council of May 10, 2021 on the appointment of a member of the Supervisory Board for a new four-year term starting from June 16, 2021, the Supervisory Board consisted of: Gustav Wurmböck, Chairman, Mladen Markoč and Franz Lanschützer, Deputy Chairmen and members: Georg Eltz, Boris Galić, Daniel Goldscheider and Ivan Ergović, workers’ representative. In addition to the Supervisory Board, the members of the Supervisory Board also worked in their four committees: - Chairmanship of the Supervisory Board composed of: Chairman Gustav Wurmböck and Deputy Chairmen of the Supervisory Board Franz Lanschützer and Mladen Markoč. The Supervisory Board Presidium is, by its scope of work, the nomination committee and the remuneration committee in terms of the provisions of the relevant regulations and recommendations/standards of corporate governance; - Audit Committee until 15 June 2021, composed of: Georg Eltz, chairman of the board and members Franz Lanschützer, Mladen Markoč, Vicko Ferić, Gustav Wurmböck and Hans Dominik Turnovszky, and as from June 16, 2021 composed of: Georg Eltz, chairman of the board and members Mladen Markoč and Boris Galić. - Investment Committee until June 15, 2021, composed of: Franz L a n s c h ü t z e r , c h a i r m a n of the board and members, Georg Eltz, Vicko Ferić, Hans Dominik Turnovszky and Gustav Wurmböck, and as from June 16, 2021 composed of: Franz Lanschützer, chairman of the committee and members Georg Eltz and Gustav Wurmböck. - Digitization and Sustainability Committee, established on June 17, 2021, composed of: Daniel Goldscheider, chairman of the board and members Franz Lanschützer and Gustav Wurmböck. II During 2021, the Supervisory Board held thirteen (13) meetings, of which nine (9) by correspondence, at which it discussed many issues related to the Company’s business and supervised the business management of the Company, all in accordance with the Company’s Articles of Association and Rules of Procedure on the work of the Supervisory Board. All members of the Supervisory Board participated in the work of the Supervisory Board at twelve sessions, nine of which by correspondence using appropriate 98 ANNUAL REPORT 2021 SUPERVISORY BOARD’S REPORT T O T H E G E N E R A L ASSEMBLY OF THE COMPANY /continued electronic communication, while in one session in terms of paragraph 2 of Article 263b of the Companies Act Gustav Wurmböck, was excluded from participating in one session and Mladen Markoč was exemted in part from one other session in the sense of the provision of Article 270 from the Companies Act. Boards and committees of the Supervisory Board: The Presidium the Audit Committee, the Investment Committee and the Digitization and Sustainability Committee held twenty-one (21) sessions in 2021, of which the Presidium had thirteen (13) sessions, the Audit Committee five (5) sessions, and the Investment Committee two (2) and the Digitization and Sustainability Committee held one (1) session. All members participated in the Presidium sessions, while M. Markoč did not participate in three sessions, but in accordance with the acts of the Company, he authorized the member, F. Lanschützer, to participate in the debate on all topics and to propose conclusions and any decisions proposed to the Supervisory Board for adoption. In the work of the Audit Committee, the Investment Committee and the Digitization and Sustainability Committee, all members of these boards and the committee participated in all sessions. III During 2021, the Supervisory Board regularly received written business reports and other reports and proposals of the Management Board, as well as management decisions which, in accordance with regulations, the Articles of Association and acts of the Company, it considered and decided on. The difficulty, uncertainty and disruption of all business processes and activities due to the crisis caused by the corona virus pandemic (COVID 19) marked the Company’s business operations in 2020 and the first half of 2021. In the second half of 2021, the crisis manifested itself primarily in the difficulty of securing the necessary human resources to provide adequate services according to the Company’s standards, as well as disruptions in the supply of goods and investments. Such circumstances have conditioned the special attention of the members of the Supervisory Board in supervising and directing the finding of activities and measures in order to maintain business with a primary focus on generating as much revenue in the short period of the peak-season and shoulder-season. At the sessions of the Presidium of the Supervisory Board, the members, together with the Management Board, responsible persons and experts of the Company, regularly discussed all materials and proposed decisions which were then subject to decision-making or approval of the Supervisory Board, all for the timely preparation and the efficient supervision of the Company’s management. Thus, the members of the Presidium previously discussed the conditions for concluding legal transactions in the area of the Company’s business and real estate, as well as approving the conditions for legal transactions related to loan and other relations with banks; considered business plans and business reports and information on the course of business and operations of each property individually and the Company as a whole. In 2021, the members of the Presidium paid special attention to monitoring, preliminary consideration and analysis of activities and measures taken by the Management Board in relation to business relations policies in sales, procurement, relations with contractors, the continuation of the “Pause - Restart program” and agreements with social partners in the field of human resources and employees’ rights and especially the activities undertaken by the administration towards the institutions and the Government of the Republic of Croatia to adopt a series of measures such as financial assistance and/or moratorium on commitments in 2021 catering facilities. In the second half of 2021, this was especially related to monitoring the measures taken by the management to find and maintain the necessary structure and number of workers in the peak season, especially in destinations available to most guests from emitting markets, as well as providing necessary goods and services in conditions of disrupted economic flows, all with the basic goal of generating as much revenue as possible in the short period of the peak- season and shoulder-season. At the sessions of the Audit Committee, the members discussed, proposed and took positions in accordance with the function determined by the relevant regulations and general acts of the Company. Thus, the Audit Committee considered the plan and implementation of internal audit, submitted internal audit reports, both implemented in accordance with the annual plan, and those carried out extraordinarily. In addition to the above, the Audit Committee acted in accordance with the adopted Code of Business Conduct, ie the adopted policies that are an integral part of it. Particular attention was paid to the implementation of the Risk Management Policy. Furthermore, the Board considered the audited financial statements of the Company, made a recommendation to the Supervisory Board on the selection of auditors and performed all other activities in accordance with relevant regulations and internal acts, which relate to the work of auditors of financial statements. In addition, the Audit Committee adopted the Regulation on permitted audit services and 99 ANNUAL REPORT 2021 SUPERVISORY BOARD’S REPORT T O T H E G E N E R A L ASSEMBLY OF THE COMPANY /continued the Company’s strategic and operational risk plan. At the sessions of the Investment Commission, members with the management, responsible persons and experts of the Company, previously discussed the state of realization of previously approved investments, discussed and proposed to the Supervisory Board preliminary investment approvals for 2022 for their timely preparation and proposed final investment proposals for 2022 for the Company as well as for the properties and facilities of the companies under the management of the Company. At the session of the Digitalization and Sustainability Committee, the members, together with the management, responsible persons and experts of the Society, previously discussed the digitalization and sustainability projects for 2022. IV In accordance with its obligations, the Supervisory Board performed its supervisory role through meetings, boards and committees and through the acts and detailed information received from the Management Board throughout 2021, and determined that Valamar Riviera d.d. from Poreč operates in accordance with the relevant regulations, the Articles of Association and other general acts and decisions of the Company. V The Supervisory Board examined in particular the reports and proposals for decisions submitted to it by the Management Board, as follows: 1. THE ANNUAL REPORT 2021 of the company Valamar Riviera d.d., which also contains: - Annual financial reports for 2021, unconsolidated and consolidated, consisting of: statement of financial position (balance sheet), income statement, statement of other comprehensive income, statement of cash flows, statement of changes in equity and notes to the financial statements; - Audit report of the auditing companies Ernst & Young d.o.o. from Zagreb and UHY RUDAN d.o.o. from Zagreb, - Management report on the state of the Company, 2. Proposal of decision on profit distribution, 3. Report on relations with related-parties for 2021 with the Auditor’s Report. At its meeting in the presence of auditors from the auditing company Ernst & Young d.o.o. from Zagreb and UHY RUDAN d.o.o. from Zagreb, and then the Supervisory Board at its session, the Audit Committee examined the Annual Financial Statements for 2021 submitted to it. The annual financial statements have been prepared in accordance with the balance in the Company’s business books and show the correct property and business condition of the Company, and there are no objections to them. The Supervisory Board, in accordance with the previously submitted opinion of the Audit Committee, has no objections to the Auditor’s Report on the performed audit. Also, the Supervisory Board has no objections to the Annual Report of the Management Board on the state of the Company. The Supervisory Board examined and submitted to it the Report of the Management Board on relations with related-parties with the Auditor’s Report, to which there are no objections. VI In addition to the examinations presented in the previous item, the Supervisory Board supervised the management of the Company’s operations in accordance with the provisions of the Company’s Articles of Association in terms of prior consideration of proposed decisions of the Company’s Management Board. In this part, the Supervisory Board paid special attention to approving the conditions for concluding legal transactions in the area of the Company’s business activities, especially in relation to risks in relations with significant agencies; legal affairs in relation to the disposal of real estate as well as the approval of conditions for legal affairs related to loans and other relations with banks. The Supervisory Board also regularly monitored the financial and cash flows of the Company. Difficulty, uncertainty and disruption of business processes and activities due to the crisis caused by the corona virus pandemic (COVID 19) which marked the Company’s operations in 2020 and which continued in 2021, conditioned the special attention of members of the Supervisory Board in overseeing measures undertaken in relation to policies of business relations in sales, procurement, in relations with contractors, continuation of “Pause - Restart program” and agreements with social 100 ANNUAL REPORT 2021 SUPERVISORY BOARD’S REPORT T O T H E G E N E R A L ASSEMBLY OF THE COMPANY /continued partners in the field of human resources and employee rights and especially activities undertaken by management towards institutions and government The Republic of Croatia in order to adopt a series of measures, both financial assistance and / or a moratorium on liabilities in 2021, as well as prescribing health, safety and environmental standards in hospitality properties. In the second half of 2021, this was especially related to monitoring the measures taken by the management to find and maintain the necessary structure and number of workers in the peak season, especially in destinations available to most guests from emitting markets, as well as providing necessary goods and services in conditions of disrupted economic flows, all with the basic goal of generating as much revenue as possible in the short period of the peak-season and shoulder- season. In addition to the above, the Supervisory Board regularly reviewed the monthly business results of each business facility individually and the Company as a whole, in relation to previously adopted business plans. In this area, he paid special attention to the business plan for 2022. In 2021, the Supervisory Board continued to pay special attention to the management in managing hotel-tourism properties with its facilities of Imperial Riviera d.d., Valamar Obertauern GmbH and Helios Faros d.d. in accordance with the provisions of previously concluded Agreements regarding the management of hotel and tourist facilities, and in the changed circumstances due to the corona crisis. The Supervisory Board further supervised the Management Board with special attention in establishing business cooperation with pension funds and investments of strategic interest to the Company. One of the most important tasks to which the Supervisory Board paid special attention in 2021 was the continuation of business cooperation with Allianz ZB d.o.o društvom za upravljanje obveznim mirovinskim fondom from Zagreb, which acts on its own behalf and on behalf of AZ Obvezni mirovinski fond Category A, AZ Mandatory category B pension fund, AZ Profit otvoreni dobrovoljni mirovinski fond, AZ Benefit otvoreni dobrovoljni mirovinski fond, AZ A1 closed voluntary pension fund, AZ Dalekovod zatvoreni dobrovoljni mirovinski fond, AZ HKZP zatvoreni dobrovoljni mirovinski fond, OIB 25137661054, AZ Zagreb zatvoreni dobrovoljni mirovinski fond Auto Hrvatska zatvoreni dobrovoljni mirovinski fond, AZ ZABA zatvoreni dobrovoljni mirovinski fond and AZ Treći horizont zatvoreni dobrovoljni mirovinski fond with which it continued strategic investments in Croatian tourism through the second phase of recapitalization of Imperial Riviera d.d. and through the sale of three hotels in Babin Kuk in Dubrovnik. With special attention, the Supervisory Board has, by invitation and in accordance with the provisions of Articles 263 and 270 of the Companies Act, considered and then approved transactions in the subsidiary Valamar A GmbH in relation to the increase of share capital and capital reserves by payments of investors - a new member of that company Wurmböck Beteiligungs GmbH, all with the aim of acquiring ContiEstates AG, owner of Marietta Hotel Obertauern, which will become the second hotel in Austria under the management of Valamar. In accordance with the law, the Chairman of the Supervisory board Gustav Wurmböck was exempted from discussion and decision-making. In addition to the above, due to the strategic goals of the Company in internationalization, sustainability and digitalization, the Supervisory Board increased the number of members of the Management Board and appointed Mr. Željko Kukurin as the President of the Management Board and Mr. Marko Čižmek and Mrs. Ivana Budin Arhanić as members. Furthermore, the Supervisory Board, together with the Company’s Management Board, in accordance with the relevant regulations, determined the Report on Remuneration of Members of the Management Board and the Supervisory Board for 2021, which Report was submitted to the General Assembly for approval. The Supervisory Board evaluates its effectiveness and composition, as well as the effectiveness and composition of its committees/boards and the individual results of its members. The evaluation was led by the Chairman of the Supervisory Board through a transparent discussion with all members of the Supervisory Board at the meeting held on February 24, 2022, within the agenda item at which this Report was determined. In d o i n g s o , t h e S u p e r v i s o r y Board concluded that it effectively supervises the conduct of the Company’s business. It has also been concluded that the boards and the committee of the Supervisory Board effectively prepare proposals and recommendations to the Supervisory Board and these preparations, i.e. previous discussions and deliberations with the Management Board, responsible persons and experts in the Company regarding all materials and proposals which the Management referred to the Supervisory Board contribute to its efficient supervision of the C o m p a n y ’s business. The Supervisory Board also concluded that the members of the Supervisory Board and the members of the Supervisory Board and Committee use their education, knowledge and experience to the greatest extent possible in order to ensure the best possible and better 101 ANNUAL REPORT 2021 G u s t a v W u r m b ö c k SUPERVISORY BOARD’S REPORT T O T H E G E N E R A L ASSEMBLY OF THE COMPANY /continued results of the Supervisory Board’s work. In this way, the members of the Supervisory Board contribute to the results of the Company’s operations, as well as to the protection of the Company’s interests. In this sense, there is no need for improvements in the profile of the Supervisory Board or for changes in its overall size and composition, and there is no need for improvements in the functioning and preparation of meetings. The Supervisory Board also assessed the effectiveness of cooperation between the Supervisory Board and the Management Board and concluded that mutual cooperation is good, that the Management Board and persons in charge of the Company provide adequate support to members of the Supervisory Board in performing their functions, that it provides information, proposals, reports and other materials regarding the Company’s operations in accordance with the relevant regulations and acts of the Company, and thus provides the Supervisory Board with overall supervision over the conduct of the Company’s affairs. The Supervisory Board will continue to conduct such an assessment, at least once a year, as a rule when considering the audited annual financial statements for the previous year. VII Based on all the above, and in accordance with the overall knowledge from the supervision of the Company and the information obtained during the work of the Supervisory Board and the work of boards and committees of the Supervisory Board in the period from January 1 to December 31, 2021, and conducted surveys given in point V of this Report, the Supervisory Board at its meeting held on February 24, 2022: A) gave its consent to 1. THE ANNUAL REPORT 2021 of the company Valamar Riviera d.d., which a l s o contains: Annual financial reports for 2021, unconsolidated and consolidated, consisting of: statement of financial position (balance sheet), income statement, statement of other comprehensive income, statement of cash flows, statement of changes in equity and notes to the financial statements; Audit report of the auditing companies Ernst & Young d.o.o. from Zagreb and UHY RUDAN d.o.o. from Zagreb, - Management report on the condition of the Company/Management, 2. Proposal of decision on distribution of profit realized in 2021, and thus, in accordance with Article 300 d of the Companies Act, the Annual Financial Statements of Valamar Riviera d.d. from Poreč for 2021 are considered determined by the Management Board and the Supervisory Board. B) has no objection to the statement of the Management Board issued pursuant to the provision of Article 497, paragraph 3 Of the Companies Act in the Report on relations with related-parties for 2021 and issued its agreement with T h e r e p o r t o f t h e a u d i t o r s E r n s t & Y o u n g d.o.o and UHY RUDAN d.o.o given on the Report of the Management Board on relations with related-parties for 2021. Supervisory Board Chairman 102 ANNUAL REPORT 2021 G u s t a v Wurmböck SUPERVISORY BOARD’S DECISION ON ALLOCATION OF PROFIT Valamar Riviera d.d. SUPERVISORY BOARD Number: 9-3/22 P o r e č , 2 4 / 0 2 / 2 0 2 2 Pursuant to Article 300d, and Article 300c of the Companies Act and the Management Board Decision no. 8-1/22 dated 16/02/2022, at its meeting held on 24 February 2022, the Supervisory Board of Valamar Riviera d.d. from Poreč rendered the following DECISION I The proposal to distribute HRK 304,605,805.77 of the Company’s achieved profit in 2021 in the Company’s retained profit is hereby determined. II 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. Supervisory Board Chairman 103 ANNUAL REPORT 2021 Annual Financial S t a t e m e n t s i n c l u d i n g the independent Auditors’ Report for the year ended on 31 December 2021 T h i s v e r s i o n o f t h e f i n a n c i a l s t a t e m e n t s i s a t r a n s l a t i o n f r o m t h e C r o a t i a n l a n g u a g e o r i g i n a l . All possible care has been t a k e n t o e n s u r e t h a t t h e t r a n s l a t i o n i s a n a c c u r a t e r e p r e s e n t a t i o n o f t h e o r i g i n a l . H o w e v e r , i n a l l m a t t e r s o f i n t e r p r e t a t i o n of information, views or opinions, the original language version of the report takes precedence over this translation. C O N T E N T Responsibility for the financial statements 106 Independent Auditors’ Report to the shareholders of Valamar Riviera d.d., Poreč 107 - 112 Statement of comprehensive income 113 Statement of financial position 114 – 116 Statement of changes in shareholder’s equity 117 – 118 Statement of cash flows 119 N o t e s ( f o r m a n i n t e g r a l p a r t o f t h e f i n a n c i a l s t a t e m e n t s ) 129 – 207 105 R E S P O N S I B I L I T Y F O R T H E F I N A N C I A L S T A T E M E N T S Pursuant to the Croatian Accounting Law, the Management Board is responsible for ensuring that financial statements are prepared for each financial year in accordance w i t h I n t e r n a t i o n a l F i n a n c i a l R e p o r t i n g S t a n d a r d s (“I F R S ”) a s a d o p t e d by the European Union, which give a true and fair view of the state of affairs and results of Valamar R i v i e r a d.d. ( ˝ t h e C o m p a n y ˝ ) a n d i t s subsidiaries (˝the Group˝) for that period. A f t e r m a k i n g e n q u i r i e s , t h e M a n a g e m e n t B o a r d h a s a r e a s o n a b l e e x p e c t a t i o n t h a t 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. I n p r e p a r i n g c o n s o l i d a t e d a n d s e p a r a t e f i n a n c i a l s t a t e m e n t s , t h e r e s p o n s i b i l i t i e s o f the Management Board include ensuring that: • suitable accounting policies are selected and then applied consistently; • judgments and estimates are reasonable and prudent; • applicable accounting standards are followed; • the financial statements are prepared on the going concern basis. The Management Board is responsible for keeping proper accounting records, which disclose with reasonable accuracy at any time the financial position of the Company a n d t h e G r o u p , a n d m u s t a l s o e n s u r e t h a t t h e f i n a n c i a l s t a t e m e n t s c o m p l y w i t h the Croatian Accounting Law. The Management Board is also responsible for safeguarding the assets of the Company and the Group and hence for taking r e a s o n a b l e s t e p s f o r t h e p r e v e n t i o n a n d d e t e c t i o n o f f r a u d a n d o t h e r i r r e g u l a r i t i e s . Signed by the Management Board on 16 February 2022: 106 Ž eljko Kukurin Marko Č i ž mek Ivana Budin Arhani ć President of the Member of the Member of the Management Board Management Board Management Board INDEPENDENT AUDITORS’ REPORT TO THE SHAREHOLDERS OF VALAMAR RIVIERA D.D. REPORT ON THE AUDIT OF THE SEPARATE AND CONSOLIDATED FINANCIAL STATEMENTS Opinion We have audited the separate financial statements of Valamar Riviera d.d. (the C o m p a n y ) , a n d c o n s o l i d a t e d financial statements of Valamar Riviera d.d. and it’s s u b s i d i a r i e s ( t o g e t h e r - the Group), which comprise the separate and consolidated statement of financial position as at 31 December 2021, the separate and c o n s o l i d a t e d s t a t e m e n t of comprehensive income, the separate and consolidated statement of changes in equity and the separate and consolidated statement of cash f l o w s f o r t h e y e a r t h e n e n d e d , a n d n o t e s t o t h e s e p a r a t e 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 separate and consolidated financial position of the Company and the Group as at 31 December 2021 and of their separate and c o n s o l i d a t e d f i n a n c i a l p e r f o r m a n c e a n d t h e i r s e p a r a t e a n d c o n s o l i d a t e d c a s h f l o w s for the year then ended in accordance with International Financial Reporting Standards as adopted by the EU (IFRS as adopted by the EU). B a s i s f o r o p i n i o n 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 of Accountants’ (IESBA) International Code of Ethics for Professional Accountants, including International Independence Standards (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 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 the 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, i n c l u d i n g i n r e l a t i o n t o t h i s m a t t e r . A c c o r d i n g l y , our audit included the performance of procedures designed to respond to our assessment of the risks of material m i s s t a t e m e n t o f t h e s e p a r a t e a n d c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s . The results of our audit procedures, including the procedures performed to address the matter below, provide the basis for our audit opinion on the accompanying separate and consolidated financial statements. 107 INDEPENDENT AUDITORS’ REPORT TO THE SHAREHOLDERS OF VALAMAR RIVIERA D.D. / C O N T I N U E D KEY AUDIT MATTER Impairment of the tourism property R e f e r t o N o t e s 2.6. P r o p e r t y , plant and equipment and 2.8. Impairment of non-financial assets, Note 4 (a) Impairment of non-financial assets, and Note 14 on Property, Plant and Equipment of the separate and consolidated financial statements. The carrying amount of property, plant and equipment of the Company as at 31 D e c e m b e r 2 0 2 1 w a s H R K 3,9 1 6 ,9 3 9 t h o u s a n d ( G r o u p : H R K 5,2 0 1 ,7 4 8 t h o u s a n d ) and i t r e p r e s e n t e d a p p r o x i m a t e l y 6 7 % a n d 7 5 % o f t h e total assets of the Company and the Group, respectively. Property, plant and equipment mostly consists of tourism properties and related assets and is included in the separate and consolidated statements 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 of COVID 19 on sales r e v e n u e g e n e r a t e d b y t h e t o u r i s m p r o p e r t i e s , i m p a i r m e n t o f t o u r i s m p r o p e r t i e s w a s determined as a key audit matter. HOW WE ADDRESSED THE KEY AUDIT MATTER Our audit procedures related to impairment of property, plant and equipment i n c l u d e d , a m o n g o t h e r s , a s s e s s i n g t h e a p p r o p r i a t e n e s s o f t h e m e t h o d o l o g y u s e d f o r the impairment testing and testing of key Management's estimates used to determine if there are impairment indicators. W e r e v i e w e d r e l e v a n t i n t e r n a l r e p o r t s p r e p a r e d b y t h e C o m p a n y a n d t h e G r o u p . W e c o m p a r e d t h e p r o j e c t i o n s u s e d i n t h e i m p a i r m e n t m o d e l f o r c a s h g e n e r a t i n g u n i t s w i t h t h e h i s t o r i c a l d a t a , i n c l u d i n g , a m o n g o t h e r s , a c o m p a r i s o n o f g r o s s o p e r a t i n g p r o f i t , o c c u p a n c y r a t e s , a v e r a g e d a i l y r a t e , a n d r e v e n u e p e r a v a i l a b l e r o o m . W e a l s o p e r f o r m e d a u d i t p r o c e d u r e s o n t h e m a t h e m a t i c a l c o r r e c t n e s s o f c a l c u l a t i o n s u s e d i n t h e s e m o d e l s . For the cash generating units, where impairment indicators were identified by the C o m p a n y a n d t h e G r o u p , w e w e r e p r o v i d e d w i t h t h e f u t u r e c a s h f l o w f o r e c a s t s . W e evaluated these forecasts and process by which they were prepared. W e c o m p a r e d t h e p r i o r y e a r s ’ a c t u a l r e s u l t s w i t h t h e f i g u r e s i n c l u d e d i n t h e f o r e c a s t s t o e v a l u a t e a s s u m p t i o n s u s e d . W e a s s e s s e d m a n a g e m e n t s k e y a s s u m p t i o n s o n r e c o v e r y f r o m C O V I D 1 9 p a n d e m i c . W e a l s o c o m p a r e d m a n a g e m e n t ’s k e y a s s u m p t i o n s f o r l o n g - t e r m g r o w t h r a t e b y c o m p a r i n g i t t o h i s t o r i c a l g r o w t h r e s u l t s a n d m a r k e t d a t a . We performed audit procedures on the mathematical integrity of the impairment m o d e l s , s e n s i t i v i t y a n a l y s i s a n d t e s t e d t h e a p p r o p r i a t e n e s s o f d i s c o u n t r a t e s u s e d i n the calculation with the assistance of the specialists. Additionally, for the assets whose value in use was lower than their carrying value, the C o m p a n y and the Group provided us with internal assessments of the market value or r e p o r t s from the external valuers. We have reviewed the valuation reports and we have tested, on the sample basis, the correctness of the input data. In addition, we involved valuation specialists and used external data in assessing and c o r r o b o r a t i n g t h e a s s u m p t i o n s u s e d i n t h e v a l u a t i o n r e p o r t s . W e a l s o a s s e s s e d t h e a d e q u a c y o f r e l a t e d d i s c l o s u r e s i n t h e N o t e s 2.6. P r o p e r t y , p l a n t and equipment and 2.8. Impairment of non-financial assets, Note 4 (a) Impairment of non-financial assets, and Note 14 Property, Plant and Equipment of the separate and c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s a n d t h e i r c o m p l i a n c e w i t h I F R S a s a d o p t e d b y E U . 108 INDEPENDENT AUDITORS’ REPORT TO THE SHAREHOLDERS OF VALAMAR RIVIERA D.D. / C O N T I N U E D Other information included in the Company’s and the Group’s Annual Report for year 2021 M a n a g e m e n t i s r e s p o n s i b l e f o r t h e o t h e r i n f o r m a t i o n . Other information consists of t h e i n f o r m a t i o n i n c l u d e d i n t h e A n n u a l R e p o r t w h i c h i n c l u d e s t h e M a n a g e m e n t r e p o r t a n d C o r p o r a t e G o v e r n a n c e S t a t e m e n t , o t h e r t h a n t h e s e p a r a t e a n d c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s a n d o u r a u d i t o r ’s r e p o r t t h e r e o n . O u r o p i n i o n o n t h e s e p a r a t e a n d c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s d o e s n o t c o v e r t h e O t h e r i n f o r m a t i o n i n c l u d i n g t h e Management report and Corporate Governance Statement. I n c o n n e c t i o n w i t h o u r a u d i t o f t h e s e p a r a t e a n d c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s , o u r r e s p o n s i b i l i t y i s t o r e a d t h e o t h e r i n f o r m a t i o n a n d , i n d o i n g s o , c o n s i d e r w h e t h e r t h e o t h e r i n f o r m a t i o n i s m a t e r i a l l y i n c o n s i s t e n t w i t h t h e s e p a r a t e a n d c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s o r o u r k n o w l e d g e o b t a i n e d i n t h e a u d i t o r o t h e r w i s e a p p e a r s t o b e m a t e r i a l l y m i s s t a t e d . W i t h r e s p e c t t o t h e M a n a g e m e n t R e p o r t a n d C o r p o r a t e G o v e r n a n c e S t a t e m e n t , w e a l s o p e r f o r m e d p r o c e d u r e s r e q u i r e d b y t h e A c c o u n t i n g A c t . T h o s e p r o c e d u r e s i n c l u d e c o n s i d e r i n g w h e t h e r t h e M a n a g e m e n t R e p o r t i n c l u d e s t h e d i s c l o s u r e s r e q u i r e d b y A r t i c l e 2 1 o f t h e A c c o u n t i n g A c t , a n d w h e t h e r t h e C o r p o r a t e G o v e r n a n c e S t a t e m e n t i n c l u d e s t h e i n f o r m a t i o n s p e c i f i e d i n A r t i c l e 2 2 o f t h e A c c o u n t i n g A c t . B a s e d o n t h e p r o c e d u r e s u n d e r t a k e n , t o t h e e x t e n t w e a r e a b l e t o a s s e s s i t , w e r e p o r t t h a t : 1. t h e i n f o r m a t i o n g i v e n i n t h e e n c l o s e d M a n a g e m e n t r e p o r t f o r t h e 2 0 2 1 f i n a n c i a l year are consistent, in all material respects, with the enclosed separate and consolidated financial statements; 2. the enclosed Management report for 2021 financial year is prepared in accordance with requirements of Article 21 of the Accounting Act; 3. C o r p o r a t e G o v e r n a n c e S t a t e m e n t , i n c l u d e d i n t h e C o m p a n y ’s a n d t h e G r o u p ' s a n n u a l report, includes the information referred to in Article 22., paragraph 1., items 2, 5, 6 and 7 of the Accounting Act; and 4. elements of Corporate Governance Statement containing the information r e f e r r e d t o i n A r t i c l e 2 2 , p a r a g r a p h 1, items 3 and 4 of the Accounting Act, included i n t h e G r o u p ' s a n d t h e C o m p a n y ’s annual report are prepared in accordance with r e q u i r e m e n t s o f t h e A c c o u n t i n g A c t a n d a r e c o n s i s t e n t , i n a l l m a t e r i a l r e s p e c t s , with the enclosed separate and consolidated financial statements. I n a d d i t i o n , i n t h e l i g h t o f t h e k n o w l e d g e and understanding of the entity and Group a n d i t s e n v i r o n m e n t o b t a i n e d i n t h e c o u r s e o f t h e a u d i t , w e a r e a l s o r e q u i r e d t o r e p o r t i f w e h a v e i d e n t i f i e d m a t e r i a l m i s s t a t e m e n t s i n t h e M a n a g e m e n t R e p o r t , C o r p o r a t e G o v e r n a n c e S t a t e m e n t a n d Annual report. We have nothing to report in this respect. Responsibilities of management and Audit Committee for the separate and consolidated financial statements Management is responsible for the preparation and fair presentation of the separate and consolidated financial statements in accordance with IFRS as adopted by the 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. I n p r e p a r i n g t h e s e p a r a t e a n d c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s , m a n a g e m e n t i s r e s p o n s i b l e f o r a s s e s s i n g t h e C o m p a n y ’s a n d t h e G r o u p ’s a b i l i t y t o c o n t i n u e a s a g o i n g c o n c e r n , d i s c l o s i n g , a s a p p l i c a b l e , m a t t e r s r e l a t e d t o g o i n g c o n c e r n a n d u s i n g t h e g o i n g c o n c e r n b a s i s o f a c c o u n t i n g u n l e s s m a n a g e m e n t e i t h e r i n t e n d s t o l i q u i d a t e t h e C o m p a n y a n d t h e G r o u p o r t o c e a s e o p e r a t i o n s , o r h a s n o r e a l i s t i c a l t e r n a t i v e b u t t o d o s o . Audit Committee is responsible for overseeing the Company’s and the Group’s financial reporting process. Auditor’s responsibilities for the audit of the separate and consolidated financial statements O u r o b j e c t i v e s a r e t o o b t a i n r e a s o n a b l e a s s u r a n c e a b o u t w h e t h e r t h e s e p a r a t e a n d 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 o p i n i o n . R e a s o n a b l e a s s u r a n c e i s a h i g h l e v e l o f a s s u r a n c e , 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. 109 INDEPENDENT AUDITORS’ REPORT TO THE SHAREHOLDERS OF VALAMAR RIVIERA D.D. / C O N T I N U E D As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the separate and consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence t h a t i s s u f f i c i e n t a n d a p p r o p r i a t e t o p r o v i d e a b a s i s f o r o u r o p i n i o n . T h e r i s k o f not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional o m i s s i o n s , m i s r e p r e s e n t a t i o n s , or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s and Group’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. • C o n c l u d e o n t h e a p p r o p r i a t e n e s s o f m a n a g e m e n t ’s u s e o f t h e g o i n g c o n c e r n basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s and Group’s ability to continue as a going c o n c e r n . If we conclude that a material uncertainty exists, we are required to d r a w a t t e n t i o n i n o u r a u d i t o r ’s r e p o r t t o t h e r e l a t e d d i s c l o s u r e s i n t h e s e p a r a t e a n d c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s o r , i f s u c h d i s c l o s u r e s a r e i n a d e q u a t e , to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or c o n d i t i o n s m a y c a u s e t h e C o m p a n y a n d t h e G r o u p to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the separate and c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s , i n c l u d i n g t h e d i s c l o s u r e s , a n d w h e t h e r t h e separate and consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. 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 communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied. F r o m t h e m a t t e r s c o m m u n i c a t e d w i t h A u d i t C o m m i t t e e , w e d e t e r m i n e t h o s e m a t t e r s t h a t w e r e o f m o s t s i g n i f i c a n c e i n t h e a u d i t o f t h e s e p a r a t e a n d c o n s o l i d a t e d f i n a n c i a l 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 d i s c l o s u r e a b o u t t h e m a t t e r o r w h e n , i n e x t r e m e l y r a r e c i r c u m s t a n c e s , w e d e t e r m i n e 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. 110 INDEPENDENT AUDITORS’ REPORT TO THE SHAREHOLDERS OF VALAMAR RIVIERA D.D. / C O N T I N U E D R e p o r t o n O t h e r L e g a l a n d R e g u l a t o r y Requirements I n c o m p l i a n c e with Article 10(2) of Regulation (EU) No. 537/2014 of the European P a r l i a m e n t a n d t h e C o u n c i l , w e p r o v i d e t h e f o l l o w i n g i n f o r m a t i o n i n o u r i n d e p e n d e n t a u d i t o r ’s r e p o r t , w h i c h i s r e q u i r e d i n a d d i t i o n t o the requirements of ISAs: Appointment of Auditor and Period of Engagement Ernst and Young d.o.o. was initially appointed as auditors of the Company on 4 May 2017. This appointment has been renewed annually by shareholder resolution, with the most recent reappointment on 11 April 2021, representing a total period of uninterrupted engagement appointment of five years. U H Y R U D A N d.o.o. w a s i n i t i a l l y a p p o i n t e d as auditors of the Company on 9 May 2019. This appointment has been renewed annually by shareholder resolution, with the most recent reappointment on 11 April 2021, representing a total period of uninterrupted engagement appointment of three years. C o n s i s t e n c e w i t h A d d i t i o n a l Report to Audit Committee We confirm that our audit opinion on the separate and consolidated financial statements expressed herein is consistent with the additional report to the Audit C o m m i t t e e o f t h e C o m p a n y , which we issued on 17 February 2022 in accordance with A r t i c l e 1 1 o f R e g u l a t i o n ( E U ) N o . 5 3 7 / 2 0 1 4 o f t h e E u r o p e a n P a r l i a m e n t a n d t h e C o u n c i l . P r o v i s i o n o f N o n - a u d i t S e r v i c e s 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 p r o v i d e d b y u s t o t h e C o m p a n y a n d i t s c o n t r o l l e d u n d e r t a k i n g s w i t h i n t h e E u r o p e a n U n i o n . I n a d d i t i o n , t h e r e a r e n o o t h e r n o n - a u d i t s e r v i c e s w h i c h w e r e p r o v i d e d b y u s t o t h e C o m p a n y a n d i t s c o n t r o l l e d u n d e r t a k i n g s a n d w h i c h h a v e n o t b e e n d i s c l o s e d in the separate and consolidated financial statements. Report based on Delegated Regulation (EU) 2018/815 on supplementing Directive 2004/109/EZ of European parliament and Council related to regulatory technical standard for specification of single electronic reporting format of reporting Independent report on the compliance of annual separate and consolidated financial statements (further: financial statements) prepared pursuant to Article 462 (5) of the Capital Market Act (Official Gazette 65/18, 17/20 and 83/21) applying the requirements of the Delegated Regulation (EU) 2018 / 815 on establishing of single electronic reporting format for issuers (hereinafter: the ESEF Regulation). We have conducted a reasonable assurance engagement on whether the financial s t a t e m e n t s , a s c o n t a i n e d i n t h e a t t a c h e d e l e c t r o n i c f i l e [ V a l a m a r _ R i v i e r a _ d i o n i c k o _ d r u s t v o _ z a _ t u r i z a m _ e n g _ 2 0 2 1 ], a r e p r e p a r e d , f o r t h e p u r p o s e s o f p u b l i c d i s c l o s u r e p u r s u a n t t o A r t i c l e 4 6 2 , p a r a g r a p h 5 o f t h e C a p i t a l M a r k e t A c t , i n a l l m a t e r i a l r e s p e c t s i n a c c o r d a n c e w i t h t h e r e q u i r e m e n t s o f t h e E S E F R e g u l a t i o n . Responsibilities of the Management and those charged with governance Management is responsible for the preparation of the financial statements in a c c o r d a n c e w i t h E S E F R e g u l a t i o n . F u r t h e r m o r e , M a n a g e m e n t i s r e s p o n s i b l e f o r maintaining an internal control system that reasonably ensures the preparation of f i n a n c i a l s t a t e m e n t s without material non-compliances with ESEF Regulation r e q u i r e m e n t s , w h e t h e r d u e t o f r a u d o r e r r o r . The Management is also responsible for: • the public disclosure of financial statements in ESEF format • selecting and using XBLR codes in accordance with ESEF regulation Those charged with governance are responsible for overseeing the preparation of the financial statements in ESEF format as part of the financial reporting process. Auditor's responsibilities O u r r e s p o n s i b i l i t y i s t o e x p r e s s a c o n c l u s i o n , b a s e d o n t h e a u d i t e v i d e n c e g a t h e r e d , a s to whether the financial statements are free from material non-compliances with the requirements of the ESEF Regulation. We conducted our reasonable assurance engagement in accordance with International Standard for Assurance Engagements I S A E 3 0 0 0 ( r e v i s e d ) - A s s u r a n c e e n g a g e m e n t s o t h e r t h a n a u d i t s o r r e v i e w s o f h i s t o r i c a l financial information. 111 INDEPENDENT AUDITORS’ REPORT TO THE SHAREHOLDERS OF VALAMAR RIVIERA D.D. / C O N T I N U E D Work performed The nature, timing and extent of the procedures selected depend on the auditor's judgment. Reasonable assurance is a high degree of assurance, however it does not guarantee that the scope of procedures will identify all significant (material) non- compliance with ESEF regulation. In respect of the subject matter, we have performed the following procedures: • we read the requirements of the ESEF Regulation, • w e h a v e g a i n e d a n u n d e r s t a n d i n g o f t h e C o m p a n y ' s i n t e r n a l controls relevant to the application of the requirements of the ESEF Regulation, • w e h a v e i d e n t i f i e d a n d a s s e s s e d t h e r i s k s o f m a t e r i a l n o n - c o m p l i a n c e w i t h t h e ESEF Regulation due to fraud or error; and • B a s e d o n t h i s , d e v i s e a n d i m p l e m e n t p r o c e d u r e s t o r e s p o n d t o t h e a s s e s s e d r i s k s a n d t o o b t a i n r e a s o n a b l e a s s u r a n c e for the purpose of expressing our conclusion. The aim of our procedures was to assess whether: • t h e f i n a n c i a l s t a t e m e n t s , w h i c h a r e i n c l u d e d i n t h e a n n u a l r e p o r t , a r e p r e p a r e d in the relevant XHTML format, • the information contained in the financial statements required by the ESEF Regulation is marked and all markings meet the following requirements: Conclusion Based on the procedures performed and evidence gathered, the financial statements presented in ESEF format for the year ended on 31 December 2021, contained in the aforementioned attached electronic file and prepared pursuant to Article 462 paragraph 5 of the Capital Market Act prepared for public disclosure, are prepared in a l l m a t e r i a l r e s p e c t s i n l i n e w i t h t h e r e q u i r e m e n t s of Articles 3, 4 and 6 of the ESEF Regulation. F u r t h e r t o t h i s c o n c l u s i o n a s w e l l a s o p i n i o n c o n t a i n e d i n p a r t o f t h i s r e p o r t r e l a t e d t o a c c o m p a n y i n g f i n a n c i a l s t a t e m e n t s and annual report for the year ended 31 December 2021, we do not express any opinion on the information contained in these p r e s e n t a t i o n s o r o n a n y o t h e r i n f o r m a t i o n c o n t a i n e d i n t h e a f o r e m e n t i o n e d f i l e . T h e p a r t n e r s i n c h a r g e o f t h e a u d i t r e s u l t i n g i n t h i s i n d e p e n d e n t a u d i t o r ’s r e p o r t a r e Berislav Horvat for Ernst & Young d.o.o. and Vedrana Miletić for UHY RUDAN d.o.o. o t h e X B R L m a r k u p l a n g u a g e w a s u s e d , o the basic taxonomy elements listed in the ESEF Regulation with the closest accounting significance have been used, unless an additional taxonomy e l e m e n t h a s b e e n c r e a t e d i n a c c o r d a n c e w i t h A n n e x I V . E S E F R e g u l a t i o n , o the labeled elements comply with the common labeling rules under the ESEF Regulation. W e b e l i e v e t h a t t h e a u d i t e v i d e n c e o b t a i n e d i s s u f f i c i e n t a n d a p p r o p r i a t e t o p r o v i d e a basis for our conclusion. Berislav Horvat , President of the Board a n d C e r t i f i e d auditor 2 4 F e b r u a r y 2022 E r n s t & Y o u n g d.o.o Radnička cesta 50 Zagreb Republic of Croatia Dragan Rudan , Director 24 February 2022 UHY RUDAN d.o.o. Ilica 213/IV Zagreb Republic of Croatia Vedrana Mileti ć , Certified auditor 112 C O N S O L I D A T E D A N D U N C O N S O L I D A T E D S T A T E M E N T O F C O M P R E H E N S I V E I N C O M E FOR THE YEAR ENDED 31 DECEMBER 2021 GROUP COMPANY (all amounts in thousands of HRK) Note 2020 2021 2020 2021 Sales revenue 5 642,479 1,605,128 546,962 1,360,932 Other income 6 28,355 37,060 19,677 27,740 Cost of materials and services 7 ( 254,644 ) ( 458,262 ) ( 223,981 ) ( 396,120 ) Staff costs 8 ( 227,051 ) ( 439,531 ) ( 194,267 ) ( 376,046 ) Depreciation and amortisation 14,15,16,30 ( 496,444 ) ( 507,336 ) ( 391,987 ) ( 397,597 ) Other operating expenses 9 ( 92,236 ) ( 101,905 ) ( 80,020 ) ( 85,566 ) Other gains/(losses) – net 10 4,777 1,820 5,180 281,702 Operating profit/(loss) ( 394,764 ) 136,974 ( 318,436 ) 415,045 Finance result – net 11 ( 104,641 ) ( 35,902 ) ( 95,096 ) ( 43,921 ) Share of net profit/(loss) of associate 18 ( 1,644 ) 404 - - Profit/(loss) before tax ( 501,049 ) 101,476 ( 413,532 ) 371,124 Income tax 12 142,243 7,232 104,982 ( 66,518 ) Profit/(loss) for the year ( 358,806 ) 108,708 ( 308,550 ) 304,606 Other comprehensive income/(loss) Items that cannot be reclassified to P&L account Change in financial assets value 20 ( 74 ) 98 ( 74 ) 98 Tax on other comprehensive income/(loss) 14 ( 18 ) 14 ( 18 ) Total comprehensive income/(loss) for the year ( 358,866 ) 108,788 ( 308,610 ) 304,686 Profit/(loss) attributable to: Owners of the Parent Company ( 329,594 ) 104,375 - - Non-controlling interests 33 ( 29,212 ) 4,333 - - ( 358,806 ) 108,708 - - Total comprehensive income attributable to: Owners of the Parent Company ( 329,654 ) 104,455 - - Non-controlling interests 33 ( 29,212 ) 4,333 - - ( 358,866 ) 108,788 - - Earnings/(loss) per share (in HRK) attributable to equity holders of the Group during the year: - basic and diluted 13 ( 2.70 ) 0.86 - - The notes below form an integral parts of these financial statements. These financial statements were approved by the Management Board of the Company on 16 February 2022. President of the Management Board: Željko Kukurin Member of the Management Board: Marko Čižmek Member of the Management Board: Ivana Budin Arhanić 113 C O N S O L I D A T E D A N D U N C O N S O L I D A T E D S T A T E M E N T O F F I N A N C I A L P O S I T I O N GROUP COMPANY 31 December 31 December (all amounts in thousands of HRK) Note 2020 2021 2020 2021 ASSETS Non-current assets Property, plant and equipment 14 5,647,311 5,201,748 4,276,132 3,916,939 Investment property 15 3,942 3,180 3,942 3,180 Right-of-use assets 30 11,664 16,640 12,446 16,866 Intangible assets 16 46,400 39,087 42,275 34,640 Investment in subsidiaries 17 - - 727,328 941,804 Investment in associate 18 46,024 76,503 47,192 70,112 Deferred tax assets 25 331,410 329,093 214,471 163,224 Financial assets 20 317 391 261 359 Loans and deposits 21 89 5,178 89 5,178 6,087,157 5,671,820 5,324,136 5,152,302 Current assets Inventories 22 30,336 26,310 27,296 23,618 Trade and other receivables 23 94,811 62,155 79,088 71,490 Income tax receivable 733 2 - 2 Loans and deposits 21 613 38,002 578 444 Cash and cash equivalents 26 665,933 1,115,258 522,974 582,141 792,426 1,241,727 629,936 677,695 Total assets 6,879,583 6,913,547 5,954,072 5,829,997 The notes below form an integral parts of these financial statements. 114 C O N S O L I D A T E D A N D U N C O N S O L I D A T E D S T A T E M E N T O F F I N A N C I A L P O S I T I O N / C O N T I N U E D GROUP COMPANY 31 December 31 December (all amounts in thousands of HRK) Note 2020 2021 2020 2021 EQUITY Share capital 27 1,672,021 1,672,021 1,672,021 1,672,021 Treasury shares 27 ( 124,418 ) ( 124,418 ) ( 124,418 ) ( 124,418 ) Capital reserves 28 5,224 5,224 5,711 5,711 Fair value reserves 28 1 81 1 81 Legal reserves 28 83,601 83,601 83,601 83,601 Other reserves 28 161,993 163,749 176,476 105,846 Retained earnings 28 363,625 467,737 571,832 876,438 2,162,047 2,267,995 2,385,224 2,619,280 Non-controlling interest 33 701,810 1,043,064 - - Total equity 2,863,857 3,311,059 2,385,224 2,619,280 LIABILITIES Non-current liabilities Borrowings 29 2,770,276 2,547,107 2,474,586 2,303,873 Lease liabilities 30 6,925 11,273 7,391 11,212 Trade and other payables 31 57,609 58,046 55,656 55,918 Derivative financial instruments 24 11,602 4,362 11,602 4,362 Deferred tax liabilities 25 58,292 51,765 13,307 12,455 Provisions 32 103,764 108,111 75,561 78,636 3,008,468 2,780,664 2,638,103 2,466,456 The notes below form an integral parts of these financial statements. 115 C O N S O L I D A T E D A N D U N C O N S O L I D A T E D S T A T E M E N T O F F I N A N C I A L P O S I T I O N / C O N T I N U E D The notes below form an integral parts of these financial statements. GROUP COMPANY 31 December 31 December (all amounts in thousands of HRK) Note 2020 2021 2020 2021 Current liabilities Borrowings 29 553,357 565,524 508,958 523,631 Non-current part of borrowings - waivers after balance sheet date 29 185,009 - 185,009 - Lease liabilities 30 2,243 2,680 2,582 2,969 Trade and other payables 31 241,390 229,319 209,237 195,893 Liabilities for investments in associate 18 13,994 - 13,994 - Derivative financial instruments 24 5,380 3,387 5,380 3,387 Income tax liability 1 - - - Provisions 32 5,884 20,914 5,585 18,381 1,007,258 821,824 930,745 744,261 Total liabilities 4,015,726 3,602,488 3,568,848 3,210,717 Total equity and liabilities 6,879,583 6,913,547 5,954,072 5,829,997 116 C O N S O L I D A T E D S T A T E M E N T O F C H A N G E S I N S H A R E H O L D E R ' S E Q U I T Y GROUP FOR THE YEAR ENDED 31 DECEMBER 2021 (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 2020 1,672,021 ( 124,418 ) 5,224 83,601 61 160,851 690,708 2,488,048 731,022 3,219,070 Profit/loss for the year - - - - - - ( 329,594 ) ( 329,594 ) ( 29,212 ) ( 358,806 ) Other comprehensive income/loss 28 - - - - ( 60 ) - - ( 60 ) - ( 60 ) Total comprehensive income/loss for the year - - - - ( 60 ) - ( 329,594 ) ( 329,654 ) ( 29,212 ) ( 358,866 ) Return of uncollected dividend 28 - - - - - 1,142 2,248 3,390 - 3,390 Exchange rate differences from foreign business - - - - - - 263 263 - 263 Total contributions by and distributions to company owners, recognised directly in equity - - - - - 1,142 2,511 3,653 - 3,653 Balance at 31 December 2020 1,672,021 ( 124,418 ) 5,224 83,601 1 161,993 363,625 2,162,047 701,810 2,863,857 Profit/loss for the year - - - - - - 104,375 104,375 4,333 108,708 Other comprehensive income/loss 28 - - - - 80 - - 80 - 80 Total comprehensive income/loss for the year - - - - 80 - 104,375 104,455 4,333 108,788 Return of uncollected dividend 28 - - - - - 1,756 - 1,756 - 1,756 Loss of the control over subsidiaries - - - - - - ( 263 ) ( 263 ) - ( 263 ) Change in non-controlling interest - - - - - - - - 336,921 336,921 Total contributions by and distributions to company owners, recognised directly in equity - - - - - 1,756 ( 263 ) 1,493 336,921 338,414 Balance at 31 December 2021 1,672,021 ( 124,418 ) 5,224 83,601 81 163,749 467,737 2,267,995 1,043,064 3,311,059 The notes below form an integral parts of these financial statements. 117 U N C O N S O L I D A T E D S T A T E M E N T O F C H A N G E S I N S H A R E H O L D E R ' S E Q U I T Y The notes below form an integral parts of these financial statements. COMPANY FOR THE YEAR ENDED 31 DECEMBER 2021 (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 2020 1,672,021 ( 124,418 ) 5,711 83,601 61 175,334 878,134 2,690,444 Profit/loss for the year - - - - - - ( 308,550 ) ( 308,550 ) Other comprehensive income/loss 28 - - - - ( 60 ) - - ( 60 ) Total comprehensive income/loss for the year - - - - ( 60 ) - ( 308,550 ) ( 308,610 ) Return of uncollected dividend 28 - - - - - 1,142 2,248 3,390 Total contributions by and distributions to company owners, recognised directly in equity - - - - - 1,142 2,248 3,390 Balance at 31 December 2020 1,672,021 ( 124,418 ) 5,711 83,601 1 176,476 571,832 2,385,224 Profit/loss for the year - - - - - - 304,606 304,606 Other comprehensive income/loss 28 - - - - 80 - - 80 Total comprehensive income/loss for the year - - - - 80 - 304,606 304,686 Return of uncollected dividend 28 - - - - - 1,756 - 1,756 The effect of the merger of a subsidiary 37 - - - - - ( 72,386 ) - ( 72,386 ) Total contributions by and distributions to company owners, recognised directly in equity - - - - - ( 70,630 ) - ( 70,630 ) Balance at 31 December 2021 1,672,021 ( 124,418 ) 5,711 83,601 81 105,846 876,438 2,619,280 118 C O N S O L I D A T E D A N D U N C O N S O L I D A T E D S T A T E M E N T O F C A S H F L O W S FOR THE YEAR ENDED 31 DECEMBER 2021 GROUP COMPANY (all amounts in thousands of HRK) Note 2020 2021 2020 2021 Cash flow generated from operating activities Cash from operations 35 ( 6,678 ) 679,977 ( 9,566 ) 537,981 Income tax (paid)/received 3,492 705 - - Net cash inflow/(outflow) from operating activities ( 3,186 ) 680,682 ( 9,566 ) 537,981 Cash flow from investment activities Cash from merger of subsidiary 37 - - - 1,110 Purchase of property, plant and equipment 14 ( 585,331 ) ( 101,925 ) ( 421,191 ) ( 66,435 ) Purchase of intangible assets 16 ( 10,540 ) ( 13,431 ) ( 7,644 ) ( 11,122 ) Proceeds from disposal of property, plant and equipment 9,326 3,783 8,932 3,648 Loans granted ( 225 ) ( 42,723 ) ( 212 ) ( 5,137 ) Loan repayments received 324 224 189 182 Dividend received - 4 - 4 Interest received 496 98 490 83 Loss of the control over subsidiaries 38 - ( 3,203 ) - - Net cash outflow from investment activities ( 585,950 ) ( 157,173 ) ( 419,436 ) ( 77,667 ) Cash flow from financing activities Change of non-controlling interest - 336,921 - - Interest paid ( 34,291 ) ( 70,643 ) ( 27,935 ) ( 64,433 ) Proceeds from borrowings 785,614 379,851 776,472 344,850 Repayments of borrowings ( 46,111 ) ( 718,212 ) ( 43,659 ) ( 679,124 ) Lease costs (principal portion of IFRS 16) 30 ( 3,676 ) ( 3,857 ) ( 4,142 ) ( 4,196 ) Return of uncollected dividend 28 3,390 1,756 3,390 1,756 Net cash inflow/(outflow) from financing activities 704,926 ( 74,184 ) 704,126 ( 401,147 ) Net increase/(decrease) in cash and cash equivalents 115,790 449,325 275,124 59,167 Cash and cash equivalents at beginning of year 550,143 665,933 247,850 522,974 Cash and cash equivalents at year end 26 665,933 1,115,258 522,974 582,141 The notes below form an integral parts of these financial statements. 119 N O T E 1 – GENERAL INFORMATION 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: • Palme turizam d.o.o., Dubrovnik, 100% ownership until 7 May 2021 when it was merged with Parent Company Valamar Riviera d.d. • Magične stijene d.o.o., Dubrovnik, 100% ownership • Bugenvilia d.o.o., Dubrovnik, 100% ownership • I m p e r i a l R i v i e r a d.d., R a b , 4 6 .2 7 % o w n e r s h i p w i t h t h e s u b s i d i a r y P r a o n a d.o.o., Makarska • V a l a m a r A G m b H , V i e n n a , A u s t r i a , 1 0 0 % o w n e r s h i p u n t i l 2 9 N o v e m b e r 2 0 2 1 a n d 2 4 .5 4 % o w n e r s h i p f r o m 3 0 N o v e m b e r 2 0 2 1 , w i t h s u b s i d i a r i e s W B V R B e t e i l i g u n g s GmbH, Vienna and ContiEstates AG, Zug and • V a l a m a r O b e r t a u e r n G m b H , O b e r t a u e r n , A u s t r i a , 1 0 % d i r e c t o w n e r s h i p a n d u n t i l 2 9 N o v e m b e r 2 0 2 1 9 0 % i n d i r e c t o w n e r s h i p ( 9 0 % s h a r e o w n e d b y V a l a m a r A G m b H ) . F r o m 2 9 N o v e m b e r 2 0 2 1 2 2 .0 8 % i n d i r e c t o w n e r s h i p . T h e C o m p a n y ' s s h a r e s w e r e l i s t e d o n t h e P r i m e market of the Zagreb Stock Exchange d.d., and were traded in 2021 in accordance with the relevant regulations on the organized market. Pursuant to the Decision of Imperial Riviera's d.d. General Assembly from 10 September 2021, the share capital of Imperial Riviera d.d. was increased by HRK 689,765,631.10 from HRK 826,668,557.32 to HRK 1,5 1 6 ,4 3 4 ,1 8 8 .4 2 . S h a r e c a p i t a l i n c r e a s e was court registered on 26 November 2021. The participants of the share capital increase are: Valamar Riviera d.d. with investment in real estate in their ownership - land located at Babin Kuk in Dubrovnik, a r e a o f 1 4 8 ,9 4 9 m 2 a n d t o t a l e s t i m a t e d v a l u e o f H R K 3 5 2 ,8 4 4 ,7 0 5 .6 4 , a n d i n t h e a m o u n t o f H R K 3 3 6 ,9 2 0 ,9 2 5 .4 6 A l l i a n z Z B d.o.o. d r u š t v o z a u p r a v l j a n j e o b v e z n i m i dobrovoljnim mirovinskim fondovima acting in its own name and on behalf of AZ Obvezni mirovinski fond kategorije A, personal identification number (OIB): 15220336427, AZ Obvezni mirovinski fond kategorije B, personal identification number (OIB): 59318506371, AZ Profit otvoreni dobrovoljni mirovinski fond, personal identification number (OIB): 22134623145, AZ Benefit otvoreni dobrovoljni mirovinski fond, personal identification number (OIB): 56427866267, AZ A1 zatvoreni dobrovoljni mirovinski fond, personal identification number (OIB): 64811569641, AZ Dalekovod zatvoreni dobrovoljni mirovinski fond, personal identification number ( O I B ) : 49118401443, AZ HKZP zatvoreni dobrovoljni mirovinski fond, personal identification number (OIB): 25137661054, AZ Zagreb zatvoreni dobrovoljni mirovinski fond, personal identification number (OIB): 01774504225, Auto Hrvatska zatvoreni dobrovoljni mirovinski fond, personal identification number (OIB): 24189818978, AZ ZABA zatvoreni dobrovoljni mirovinski fond, personal identification number (OIB): 11641097984, AZ Treći Horizont zatvoreni dobrovoljni mirovinski fond, personal identification number (OIB): 42239479988 (hereinafter: AZ). Upon the completion of the share capital increase, Valamar Riviera d.d. is the holder of 1,054,728 (46.27%) shares, while AZ holds 1,104,665 (48.46%) shares of Imperial Riviera d.d. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 120 NOTE 1 – GENERAL INFORMATION / CONTINUED The method of presenting the Statement of Financial Position and the Statement of Comprehensive Income for the Valamar Riviera Group in the consolidated and separate s t a t e m e n t s i s p r e s e n t e d b e l o w . T h e f o l l o w i n g table shows the effects of business combinations and intra-group mergers on the Company's and the Group's comparative information. GROUP COMPANY Statement of f i n a n c i a l position Statement of comprehensive income Statement of f i n a n c i a l position Statement of comprehensive income Company Note 31.12.2020 31.12.2021 2020 2021 31.12.2020 31.12.2021 2020 2021 Palme turizam d.o.o. a 1.1.-31.12. 1.1.-31.12. - - 8.5.-31.12. Valamar A GmbH b - 1.1.-31.12. 1.1.-29.11. - - - - Valamar Obertauern GmbH b - 1.1.-31.12. 1.1.-29.11. - - - - a) The merger of Palme turizam d.o.o. into the Company was entered in the court register on 7 May 2021, pursuant to the Decision of the Commercial Court in Pazin N o . T t - 2 1 / 2 5 1 0 - 3 . T h e l e g a l e f f e c t o f t h e merger started as of 8 May 2021. After the registration of the merger, Palme turizam d.o.o. ceased to exist and the Company b e c a m e t h e u n i v e r s a l l e g a l s u c c e s s o r o f t h e m e r g e d c o m p a n y : a l l t h e a s s e t s , r i g h t s a n d l i a b i l i t i e s o f P a l m e t u r i z a m d.o.o. w e r e t r a n s f e r r e d t o t h e C o m p a n y . b) On 29 November, 2021, the General Assembly of Valamar A GmbH made a decision to increase the share capital from the amount of EUR 35,000.00 by EUR 107,624.00 to EUR 142,624.00, with the participation of a new member of the W u r m b ö c k B e t e i l i g u n g s G m b H b a s e d i n V i e n n a , A u s t r i a , in the amount of EUR 107,624.00 after which Valamar Riviera d.d. holds 24.54% and Wurmböck B e t e i l i g u n g s G m b H 75.46%. A new member of the company undertook to pay EUR 11,070,000.00 into capital reserves. At the same time, Valamar A GmbH changed its headquarters from Tamsweg to Vienna and a new two-member board was appointed. The members of the company concluded the Articles of Association and the agreement by which they regulated their mutual relations, especially in r e l a t i o n t o i m p o r t a n t decisions that require the approval of Valamar Riviere d.d. for their adoption. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 121 N O T E 2 – S U M M A R Y O F S I G N I F I C A N T ACCOUNTING POLICIES 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. 2.1 Basis of preparation The financial statements of the Company and Group have been prepared in accordance with International Financial Reporting Standards as adopted by the E u r o p e a n U n i o n ( I F R S ) . 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. 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 p o s i t i o n a n d r e s u l t s o f t h e C o m p a n y a n d t h e G r o u p , r e s p e c t i v e l y . 2.2 Consolidation (a) Subsidiaries Subsidiaries are all entities (incl. special purpose companies) in which the Group has c o n t r o l o v e r t h e f i n a n c i a l a n d o p e r a t i n g p o l i c i e s , w h i c h g e n e r a l l y g o e s h a n d i n h a n d with holding more than half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or e x c h a n g e a b l e a r e c o n s i d e r e d w h e n a s s e s s i n g w h e t h e r t h e G r o u p c o n t r o l s a n o t h e r entity. Subsidiaries are fully consolidated from the date on which control is effectively t r a n s f e r r e d t o t h e G r o u p . T h e y a r e d e - c o n s o l i d a t e d from the date such control ceases. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 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 a r e a c c o u n t e d f o r b y t h e G r o u p a s e q u i t y t r a n s a c t i o n s – t h a t i s , a s t r a n s a c t i o n s w i t h 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. (c) Loss of the control over subsidiaries W h e n t h e G r o u p l o s e s c o n t r o l o f a s u b s i d i a r y , t h e G r o u p w i l l d e r e c o g n i s e i t s a s s e t s and liabilities in the statement of financial position, recognize its interest in the subsidiary at fair value and recognize the gain/loss resulting from the loss of control. (d) Joint ventures The Group’s interests in jointly controlled ventures are accounted for under the e q u i t y m e t h o d . U n d e r t h i s m e t h o d , a n i n t e r e s t 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. (e) Associates Associate is a company in which the group has significant influence, but it is not i n c l u d e d i n j o i n t v e n t u r e . T h e s i g n i f i c a n t i n f l u e n c e r e f e r s t o t h e p o w e r t o p a r t i c i p a t e 122 NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES / CONTINUED 2.2 Consolidation / CONTINUED (e) Associates / CONTINUED in the decision making of financial and business policies of the company that is the s u b j e c t o f i n v e s t m e n t , b u t d o e s n o t h a v e t h e c o n t r o l o v e r t h o s e p o l i c i e s . T h e G r o u p ' s s h a r e s a t t h e a s s o c i a t e a r e p r e s e n t e d u s i n g t h e e q u i t y m e t h o d . U n d e r this method, share in an associate is initially recognized by cost and subsequently adjusted by changes related to acquisition of share in net assets of the associate.On a c q u i s i t i o n , a n y d i f f e r e n c e between acquisition cost and the investor's share in net fair value of assets and liabilities is calculates as follows: • goodwill that relates to a company is included in the carrying amount of the acquisition, • every surplus of the investor's share in the net fair value of assets and liabilities above the acquisition cost is included in income. Group's gains or losses include Group's share of the associate's gains and losses. Company's share in the associate is presented at cost less impairment, in separate financial statements. 2.2.1 Subsidiaries in separate financial statements The Company discloses its subsidiaries in the separate financial statements at cost value less impairment (Note: Investment in subsidiaries). 2.3 Merger of entities and transactions with companies under common control 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 i s a c c o u n t e d f o r i n t h e s e f i n a n c i a l s t a t e m e n t s a s a n a d j u s t m e n t t o e q u i t y . NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 2.4 Segment reporting 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. 2.5 Foreign currencies (a) Functional and presentation currency 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 o p e r a t e s (‘f u n c t i o n a l c u r r e n c y ’). T h e f i n a n c i a l s t a t e m e n t s a r e p r e s e n t e d i n C r o a t i a n k u n a ( H R K ) , w h i c h i s t h e C o m p a n y ’s f u n c t i o n a l a n d G r o u p ’s p r e s e n t a t i o n c u r r e n c y . (b) Transactions and balances in foreign currency F o r e i g n c u r r e n c y t r a n s a c t i o n s a r e t r a n s l a t e d i n t o t h e f u n c t i o n a l c u r r e n c y u s i n g t h e e x c h a n g e r a t e s p r e v a i l i n g a t t h e d a t e s o f t h e t r a n s a c t i o n s a n d a s s e t s a n d l i a b i l i t i e s d e n o m i n a t e d i n f o r e i g n c u r r e n c i e s a r e t r a n s l a t e d i n t o t h e f u n c t i o n a l c u r r e n c y a t t h e m i d d l e e x c h a n g e r a t e o f t h e C r o a t i a n N a t i o n a l B a n k v a l i d o n t h e r e p o r t i n g d a t e . F o r e i g n e x c h a n g e g a i n s a n d l o s s e s r e s u l t i n g f r o m t h e s e t t l e m e n t o f s u c h t r a n s a c t i o n s a n d f r o m t h e t r a n s l a t i o n a t y e a r - e n d e x c h a n g e r a t e s o f m o n e t a r y a s s e t s a n d l i a b i l i t i e s d e n o m i n a t e d i n f o r e i g n c u r r e n c i e s a r e r e c o g n i s e d i n t h e s t a t e m e n t o f c o m p r e h e n s i v e i n c o m e . 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’. Middle exchange rate - Croatian National Bank: 31.12.2020: EUR 1 = HRK 7,536898 31.12.2021: EUR 1 = HRK 7,517174 123 NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES / CONTINUED 2.6 Property, plant and equipment P r o p e r t y , p l a n t a n d e q u i p m e n t 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 b e n e f i t s a s s o c i a t e d w i t h t h e i t e m s h a l l f l o w t o t h e C o m p a n y a n d G r o u p a n d t h e c o s t of the item can be measured reliably. All other repairs and maintenance are charged t o t h e s t a t e m e n t o f c o m p r e h e n s i v e i n c o m e d u r i n g t h e f i n a n c i a l p e r i o d i n w h i c h t h e y 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: Buildings /i/ 10-25 years P l a n t a n d e q u i p m e n t 4-10 years F u r n i t u r e , tools and horticulture 3-10 years /i/ except as stated in Note 4 - Critical accounting estimates D e p r e c i a t i o n i s c a l c u l a t e d f o r e a c h asset until the asset is fully depreciated or to its residual values if significant. The residual value of an asset is the estimated amount t h a t t h e C o m p a n y a n d G r o u p w o u l d c u r r e n t l y o b t a i n f r o m d i s p o s a l o f t h e a s s e t l e s s 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 zero if the Company and Group expect to use the asset until the end of its physical life. T h e o p e r a t i n g a s s e t s ’ r e s i d u a l v a l u e s a n d u s e f u l l i v e s a r e r e v i e w e d , a n d a d j u s t e d i f appropriate, at each reporting date. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 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. 2.7 Intangible assets (a) Goodwill 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. Recoverable amount of the cash-generating units is determined on the basis of a calculation of value in use based on an estimate of future income discounted by weighted average cost of capital. 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. (b) Software S e p a r a t e l y a c q u i r e d c o m p u t e r s o f t w a r e l i c e n s e s a r e c a p i t a l i s e d 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. 2.8 Impairment of non-financial assets 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 c o m p a r i n g t h e i n d i v i d u a l p r o p e r t y s e g m e n t ( i d e n t i f i e d as separate cash generating units’ (“CGUs”) carrying values with the gross operating profit (“GOP”). I f t h e d e t e r m i n e d r a t i o s a n d m u l t i p l e s a r e n o t i n l i n e w i t h e x p e c t e d a m o u n t s o r t a r g e t e d l e v e l s ( a t i n d i v i d u a l c a s h g e n e r a t i n g u n i t l e v e l ) , t h e r e c o v e r a b l e a m o u n t i s b a s e d a s t h e higher amount of fair value less the costs of disposal and its value in use. 124 NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES / CONTINUED 2.8 Impairment of non-financial assets / CONTINUED D e t e r m i n a t i o n o f i m p a i r m e n t i n d i c a t o r s , d e t e r m i n a t i o n o f t h e f a i r v a l u e o f a s s e t s ( o r 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 r e m a i n i n g v a l u e s r e q u i r e s i g n i f i c a n t j u d g e m e n t b y t h e m a n a g e m e n t . 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 g r o u p o f assets and liabilities, such as a business. The Company and Group use internal and external valuations. 2.9 Non-current assets classified as held for sale 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 p r i n c i p a l l y t h r o u g h a sale transaction rather than through continuing use. The non- c u r r e n t a s s e t s c l a s s i f i e d a s h e l d f o r s a l e a r e m e a s u r e d a t t h e l o w e r o f t h e i r c a r r y i n g a n d f a i r v a l u e , 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’. 2.1 0 Investment property 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. I n v e s t m e n t p r o p e r t y i s t r e a t e d a s a l o n g - t e r m i n v e s t m e n t u n l e s s i t 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%). NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued Subsequent expenditure is capitalised only when it is probable that the future e c o n o m i c b e n e f i t s a s s o c i a t e d w i t h i t s h a l l f l o w t o t h e C o m p a n y 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 r e c l a s s i f i e d t o p r o p e r t y , p l a n t and equipment and its carrying amount at the date of reclassification becomes its deemed cost to be subsequently depreciated. 2.1 1 Financial assets 2.1 1 .1 Classification T h e C o m p a n y c l a s s i f i e s i t s f i n a n c i a l a s s e t s i n t h e f o l l o w i n g c a t e g o r i e s : financial assets at fair value through profit or loss, financial assets at fair value through other c o m p r e h e n s i v e i n c o m e ( O C I ) , a n d f i n a n c i a l a s s e t s a t a m o r t i s e d c o s t . T h e c l a s s i f i c a t i o n 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. (a) Financial assets at fair value through profit or loss 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. (b) Financial assets at fair value through other comprehensive income (OCI) The Company measures financial assets at fair value through OCI if both of the following conditions are met: • The financial asset is held within a business model with the objective of holding the financial assets to collect and selling contractual cash flows, • The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of the principal and interest on the principal amount outstanding. 125 NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES / CONTINUED 2.1 1 Financial assets / CONTINUED 2.1 1 .1 Classification / CONTINUED For debt instruments at fair value through OCI, interest income, foreign exchange revaluation and impairment losses or reversals are recognised 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 d e r e c o g n i t i o n , t h e c u m u l a t i v e f a i r v a l u e c h a n g e r e c o g n i s e d i n O C I i s r e c l a s s i f i e d t o profit or loss. Changes in the fair value of equity instruments are recognized in other c o m p r e h e n s i v e i n c o m e . After derecognition, the cumulative change in fair value in other comprehensive income is not recycled through profit or loss. (c) Financial assets at amortised cost The Company measures financial assets at amortised cost, if both of the following conditions are met: • The financial asset is held within a business model with the objective of holding financial assets in order to collect contractual cash flows • The contractual terms of the financial asset give rise on specified dates to cash f l o w s t h a t a r e s o l e l y p a y m e n t s o f p r i n c i p a l a n d i n t e r e s t o n t h e p r i n c i p a l a m o u n t outstanding. F i n a n c i a l a s s e t s a t a m o r t i s e d cost are subsequently measured using the effective i n t e r e s t (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. 2.1 1 .2 Measurement and recognition R e g u l a r p u r c h a s e s a n d s a l e s o f f i n a n c i a l a s s e t s a r e r e c o g n i s e d o n t h e t r a d e - d a t e – the date on which the Company committed to purchase or sell the asset. Investments a r e i n i t i a l l y r e c o g n i s e d a t f a i r v a l u e p l u s t r a n s a c t i o n c o s t s f o r a l l f i n a n c i a l a s s e t s n o t 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 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued derecognised when the rights to receive cash flows from the investments have e x p i r e d o r h a v e b e e n t r a n s f e r r e d a n d t h e C o m p a n y h a s t r a n s f e r r e d s u b s t a n t i a l l y a l l 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. For trade receivables and contractual assets, the Company applies a simplified approach in the calculation of expected credit losses. The Company does not monitor c h a n g e s i n c r e d i t r i s k but recognizes impairment based on lifetime expected credit l o s s a t t h e e n d o f e a c h r e p o r t i n g p e r i o d . F i n a n c i a l a s s e t s are written off when there is no reasonable expectation of payment collection. G a i n s o r l o s s e s a r i s i n g f r o m c h a n g e s i n t h e f a i r v a l u e o f t h e f i n a n c i a l a s s e t s a t f a i r v a l u e t h r o u g h p r o f i t o r l o s s c a t e g o r y a r e p r e s e n t e d i n t h e s t a t e m e n t o f c o m p r e h e n s i v e i n c o m e w i t h i n ‘o t h e r ( l o s s e s ) / g a i n s – n e t ’ i n t h e p e r i o d i n w h i c h t h e y a r i s e . 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. T h e f a i r v a l u e s o f q u o t e d i n v e s t m e n t s a r e b a s e d o n c u r r e n t b i d p r i c e s . I f t h e m a r k e t 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 m a r k e t i n p u t s a n d r e l y i n g a s l i t t l e a s p o s s i b l e o n e n t i t y - s p e c i f i c i n p u t s . 2.1 1 .3 Impairment of financial assets 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. 126 NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES / CONTINUED 2.1 1 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). 2.1 2 Derivative financial instruments D e r i v a t i v e f i n a n c i a l i n s t r u m e n t s i n c l u d e f o r w a r d c o n t r a c t s i n f o r e i g n c u r r e n c i e s a n d 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. 2.1 3 Leases At the beginning of the contract, the Company and the Group assess whether the contract contains a lease, that is, whether the contract has the right to control the use of the asset concerned over a specified period in exchange for remuneration, in accordance to IFRS 16 Leases. The Company and the Group as lessees The Company and the Group apply a single recognition and measurement approach for all leases, except for short-term leases, leases of low-value assets and leases that cannot be considered leases under IFRS 16, which includes leases of exchangeable p r o p e r t y , “a d h o c ” l e a s e s (e.g. p r o v i d i n g o n e - d a y h a l l r e n t a l s e r v i c e s ) , l i c e n s e s , e t c . (i) Right-of-use assets The Company and the Group recognize the right-of-use assets on the lease’s c o m m e n c e m e n t ( i .e., t h e d a t e w h e n t h e p r o p e r t y in question is ready for use). Right-of- NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued u s e a s s e t s a r e m e a s u r e d a t c o s t , l e s s a c c u m u l a t e d d e p r e c i a t i o n a n d i m p a i r m e n t l o s s e s , and is reconciled with any remeasurement of the lease liabilities. The cost of right-of- u s e a s s e t s i n c l u d e s t h e a m o u n t o f r e c o g n i z e d l e a s e o b l i g a t i o n s , the initial direct costs, and all lease payment incurred on or before the lease commences, less any received r e n t a l i n c e n t i v e s , i f a n y . R i g h t - o f - u s e a s s e t s a r e d e p r e c i a t e d o n a s t r a i g h t - l i n e b a s i s o v e r t h e l e a s e t e r m . T h e r i g h t - o f - u s e a s s e t s a r e a l s o s u b j e c t to impairment. Refer to the a c c o u n t i n g p o l i c i e s i n N o t e 2.8 I m p a i r m e n t o f n o n - f i n a n c i a l a s s e t s . (i i ) Lease liabilities At the beginning of the lease period, the Company and the Group recognize lease liability, measured at the present value of future lease payments over the period. The lease payments include fixed payments, variable lease payments that depend on the index or rate, and the amount expected to be paid under the residual value guarantee, if any. If included in the contract, lease payments also include the purchase price for which it is reasonably certain that the Company and the Group will use, and the payment of penalties for termination of the lease, if it is reasonably certain that the Company and the Group will exercise the option of terminating the lease. Variable lease payments that do not depend on an index or rate are recognised as expenses in the period in which they are incurred. In calculating the present value of lease payments, the Company and the Group use t h e i r i n c r e m e n t a l b o r r o w i n g rate at the lease’s commencement if the lease interest rate is not easily determined. The carrying amount of lease liabilities is remeasured if a change in the lease term occurs. (i i i ) Short-term leases and leases of low-value assets The Company and the Group apply an exemption for the recognition of short-term l e a s e s f o r s h o r t - t e r m l e a s e s (i.e. l e a s e s t h a t h a v e a l e a s e t e r m o f 1 2 m o n t h s o r l e s s from the commencement date and do not include a purchase option). The Company and the Group also recognize the exemption for the recognition of leases of low value a s s e t s . P a y m e n t s f o r s h o r t - t e r m a n d l o w - v a l u e a s s e t s l e a s e s a r e r e c o g n i s e d a s a n expense on a straight-line basis over the lease term. 127 NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES / CONTINUED 2.1 3 Leases / CONTINUED The Company and the Group as lessors Leases in which the Company and the Group do not transfer substantially all the risks and rewards of asset ownership are classified as operating leases. Rental income is c a l c u l a t e d o n a s t r a i g h t - l i n e b a s i s i n a c c o r d a n c e w i t h l e a s e t e r m s a n d i s i n c l u d e d i n revenue in the Statement of comprehensive income due to its operational nature. 2.1 4 Inventories 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. 2.1 5 Trade receivables T r a d e r e c e i v a b l e s a r e a m o u n t s d u e f r o m t h e c u s t o m e r s f o r t h e s e r v i c e s p r o v i d e d i n 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 a m o r t i s e d c o s t u s i n g t h e e f f e c t i v e i n t e r e s t m e t h o d , l e s s t h e i m p a i r m e n t . 2.1 6 Loans and deposits Provided loans and deposits represent non-derivative financial asset with fixed or determinable payments. It is included in current assets, except for assets with a maturity of more than 12 months after the balance sheet date. Such assets are classified as non-current assets. A discount rate that corresponds to the cost of b o r r o w i n g s t o i n v e s t i n t h e a s s e t o f s a m e t y p e , r i s k a n d m a t u r i t y i s u s e d t o c a l c u l a t e fair value of loans and deposits. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 2.1 7 Cash and cash equivalents C a s h a n d c a s h e q u i v a l e n t s c o m p r i s e c a s h i n h a n d , d e p o s i t s h e l d a t c a l l with banks and other short- term highly liquid instruments with original maturities of three months or less. 2.1 8 Share capital 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 a n d t h e r e l a t e d i n c o m e t a x e f f e c t s , a n d i s i n c l u d e d i n t o t h e e q u i t y a t t r i b u t a b l e t o the Company and Group equity holders. 2.1 9 Borrowings Borrowings are recognised initially at nominal value, net of transaction costs incurred which is fair value. 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 h a v e a n u n c o n d i t i o n a l r i g h t to defer settlement of the liability for at least 12 months after the reporting date. 128 NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES / CONTINUED 2.2 0 Trade payables Trade payables are obligations to pay for goods or services that have been acquired, i.e. p r o v i d e d i n t h e o r d i n a r y c o u r s e o f b u s i n e s s f r o m , i.e. b y t h e s u p p l i e r s . A c c o u n t s 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. 2.2 1 Current and deferred income tax The tax expense for the period comprises current and deferred tax. Tax is recognised in the income or loss, except to the extent in which it refers to items recognised in equity. Management periodically evaluates positions taken in tax returns with respect to s i t u a t i o n s i n w h i c h t h e a p p l i c a b l e t a x r e g u l a t i o n i s s u b j e c t t o i n t e r p r e t a t i o n . I t e s t a b l i s h e s p r o v i s i o n s 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 a c c o u n t e d f o r i f i t a r i s e s f r o m i n i t i a l r e c o g n i t i o n o f a n a s s e t o r l i a b i l i t y i n a t r a n s a c t i o n o t h e r t h a n a b u s i n e s s c o m b i n a t i o n t h a t , a t t h e t i m e o f t h e t r a n s a c t i o n , a f f e c t s n e i t h e r the accounting nor the taxable profit or loss. Deferred income tax is determined using t a x r a t e s ( a n d t a x a c t s ) t h a t h a v e b e e n e n a c t e d o r substantially enacted by the reporting date and are expected to apply when the related deferred income tax asset is realised o r t h e d e f e r r e d i n c o m e t a x l i a b i l i t y i s s e t t l e d . D e f e r r e d i n c o m e t a x a s s e t s a r e r e c o g n i s e d t o t h e e x t e n t t h a t i t i s p r o b a b l e t h a t f u t u r e t a x a b l e p r o f i t s h a l l b e a v a i l a b l e , a g a i n s t w h i c h t h e t e m p o r a r y d i f f e r e n c e s c a n b e u t i l i s e d . D e f e r r e d i n c o m e t a x i s p r o v i d e d o n t e m p o r a r y d i f f e r e n c e s a r i s i n g f r o m i n v e s t m e n t s i n s u b s i d i a r i e s a n d a s s o c i a t e s , e x c e p t w h e r e t h e t i m i n g o f t h e t e m p o r a r y d i f f e r e n c e r e v e r s a l is controlled by the Company and the Group and it is probable that the temporary d i f f e r e n c e s h a l l n o t b e r e v e r s e d i n t h e f o r e s e e a b l e f u t u r e . NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued Investment tax credits I n v e s t m e n t t a x 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 – Income Tax ) 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. 2.2 2 Employee benefits (a) Pension obligations and post-employment benefits 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. (b) Termination 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 labour 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. 129 NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES / CONTINUED 2.2 2 Employee benefits / CONTINUED (c) Short-term employee benefits 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. (d) Long-term employee benefits The Company and the Group recognise the obligation for long-term employee benefits (severance retirement payments and jubilee awards) evenly over the period i n w h i c h t h e b e n e f i t i s r e a l i s e d , b a s e d o n t h e a c t u a l n u m b e r o f y e a r s o f s e r v i c e . T h e 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. 2.2 3 Provisions 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. T h e a m o u n t o f p r o v i s i o n s i s i n c r e a s e d i n e a c h p e r i o d t o r e f l e c t t h e p a s t period. The increase in the provision due to the passage of time is recognised as interest expense. 2.2 4 Revenue recognition 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 r e l i a b l y m e a s u r e d , w h e n i t i s p r o b a b l e t h a t f u t u r e e c o n o m i c b e n e f i t s s h a l l f l o w t o t h e entity and when specific criteria have been met for each of the Company’s and Group’s activities as described below. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued (a) Sales of services R e v e n u e f r o m h o t e l a n d t o u r i s t s e r v i c e s i s r e c o g n i s e d i n t h e p e r i o d in which the services are provided. (b) Rental of services 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 p r e s e n t e d i n S t a t e m e n t o f c o m p r e h e n s i v e i n c o m e w i t h i n ‘S a l e s r e v e n u e ’. (c) Interest income I n t e r e s t i n c o m e i s r e c o g n i s e d o n a t i m e - p r o p o r t i o n b a s i s u s i n g t h e e f f e c t i v e i n t e r e s t method. When a receivable is impaired, the Company and the Group reduce the c a r r y i n g a m o u n t t o i t s r e c o v e r a b l e a m o u n t b e i n g t h e e s t i m a t e d f u t u r e c a s h f l o w d i s c o u n t e d a t t h e o r i g i n a l e f f e c t i v e i n t e r e s t r a t e o f t h e i n s t r u m e n t , a n d c o n t i n u e unwinding the discount as interest income. Interest income on impaired loans is recognised using the original effective interest rate. (d) Dividend income Dividend income is recognised when the right to receive payment is established. 2.2 5 Earnings/(loss) per share E a r n i n g s / ( l o s s ) p e r s h a r e a r e d e t e r m i n e d b y d i v i d i n g t h e p r o f i t o r l o s s a t t r i b u t a b l e t o equity holders of the Group by the weighted average number of participating shares outstanding during the reporting year less ordinary shares purchased by the Company, which are hold as treasury shares. 2.2 6 Value added tax 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. 130 NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES / CONTINUED 2.2 7 Government grants A c c o r d i n g t o t h e I n t e r n a t i o n a l Accounting Standard 20 – Government grants („IAS 20“), government grants are recognised when there is reasonable assurance that the grant will be received and any conditions attached to them have been fulfilled. According to IAS 20, the manner in which a grant is received does not affect the a c c o u n t i n g method to be adopted in regard to the grant. Thus a grant is accounted for in the same manner whether it is received in cash or as a reduction of a liability to the government. Government grants related to income Due to the circumstances caused by the COVID-19 pandemic, the Republic of Croatia h a s a d o p t e d a p a c k a g e o f m e a s u r e s t o p r e s e r v e j o b s i n i n d u s t r i e s that are strongly affected by the pandemic, including government grants in the form of payment and/or liability reduction. The Company is a recipient of certain government grants w i t h i n t h e a b o v e m e n t i o n e d p a c k a g e o f m e a s u r e s i n s i g n i f i c a n t a m o u n t s . H e n c e , a n accounting policy concerning the presentment of government grants has been adopted in accordance with IAS 20. The Company has selected to present the grants related to income as a deducted item of reported related costs in the same period. This approach is consistently applied to all similar government grants. Government grants related to assets (monetary and non-monetary) I n a d d i t i o n t o g r a n t s r e l a t e d t o i n c o m e f o r w h i c h t h e p r e s e n t i n g p o l i c y w a s p r e v i o u s l y d e f i n e d , t h e C o m p a n y i s a r e c i p i e n t o f g r a n t s r e l a t e d t o a s s e t s . T h e C o m p a n y h a s s e l e c t e d t o p r e s e n t g r a n t s r e l a t e d t o a s s e t s , a s a d e f e r r e d c r e d i t t o b e r e l e a s e d t o t h e p r o f i t o r l o s s o v e r t h e p e r i o d s n e c e s s a r y t o m a t c h t h e r e l a t e d d e p r e c i a t i o n c h a r g e s , a c c o r d i n g t o I A S 2 0 . T h i s a p p r o a c h i s c o n s i s t e n t l y a p p l i e d t o a l l s i m i l a r g o v e r n m e n t g r a n t s . Government grants related to costs from previous years and other grants G r a n t s t h a t a r e r e l a t e d t o t h e l i a b i l i t i e s w r i t e - o f f s t h a t a r e p r e s e n t e d i n t h e p r o f i t and l o s s a c c o u n t o f t h e p r e v i o u s y e a r a r e p r e s e n t e d a s r e v e n u e . G r a n t s f o r lost income compensation and all other grants that do not have a related cost in the profit and loss account are also recognized as revenues. 2.2 8 New and amended standards and interpretations 2.2 8 .1 Changes in accounting policies and disclosures T h e a c c o u n t i n g p o l i c i e s a d o p t e d a r e c o n s i s t e n t w i t h those of the previous financial year except for the following amended IFRSs which have been adopted by the G r o u p / C o m p a n y a s o f 1 J a n u a r y 2 0 2 1 : • IFRS 16 Leases-C ο vid 19 Related Rent Concessions (Amendment) The amendment applies, retrospectively, to annual reporting periods beginning on or a f t e r 1 J une 2020. E a r l i e r a pp l i c a t i on i s pe r m i t t e d, i nc l ud i ng i n f i na nc i a l statements not yet authorized for issue at 28 May 2020. IASB amended the standard to provide relief to lessees from applying IFRS 16 guidance on lease modification accounting for rent concessions arising as a direct consequence of the covid-19 pandemic. The amendment provides a practical expedient for the lessee to account for any change in lease payments resulting from the covid-19 related rent concession the same way it would account for the change under IFRS 16, if the change was not a lease modification, only if all of the following conditions are met: • The change in lease payments results in revised consideration for the lease t h a t i s s u b s t a n t i a l l y t h e s a m e a s , o r l e s s t h a n , t h e c o n s i d e r a t i o n f o r t h e l e a s e immediately preceding the change. • Any reduction in lease payments affects only payments originally due on or b e f o r e 3 0 J u n e 2 0 2 1 . • There is no substantive change to other terms and conditions of the lease. Management has assessed that these amendments won’t have significant influence on financial reports of the Company and the Group. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 131 NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES / CONTINUED 2.28 New and amended standards and interpretations / CONTINUED 2.2 8 .2 Standards issued but not yet effective and not early adopted • Amendment in IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures: Sale or Contribution of Assets between an I n v e s t o r a n d i t s A s s o c i a t e o r J o i n t V e n t u r e The amendments address an acknowledged inconsistency between the r e q u i r e m e n t s i n I F R S 1 0 a n d t h o s e i n I A S 2 8 , i n d e a l i n g w i t h t h e s a l e o r c o n t r i b u t i o n of assets between an investor and its associate or joint venture. The main consequence of the amendments is that a full gain or loss is recognized when a t r a n s a c t i o n i n v o l v e s a b u s i n e s s ( w h e t h e r i t i s h o u s e d i n a s u b s i d i a r y o r n o t ) . A p a r t i a l g a i n o r l o s s i s r e c o g n i z e d w h e n a t r a n s a c t i o n i n v o l v e s a s s e t s t h a t d o n o t c o n s t i t u t e a b u s i n e s s , e v e n i f t h e s e a s s e t s a r e h o u s e d i n a s u b s i d i a r y . I n D e c e m b e r 2 0 1 5 t h e I A S B postponed the effective date of this amendment indefinitely pending the outcome of its research project on the equity method of accounting. The amendments have not yet been endorsed by the EU. Management is unable to assess the impact of t h e s e a m e n d m e n t s o n t h e f i n a n c i a l s t a t e m e n t s of the Company and the Group due to the uncertainty of the adoption and application of this standard. • IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current (Amendments) The amendments were initially effective for annual reporting periods beginning o n o r a f t e r J a n u a r y 1 , 2 0 2 2 w i t h e a r l i e r a p p l i c a t i o n p e r m i t t e d . H o w e v e r , i n response to the covid-19 pandemic, the Board has deferred the effective date by o n e y e a r , i . e . 1 J a n u a r y 2 0 2 3 , t o p r o v i d e c o m p a n i e s w i t h m o r e t i m e t o i m p l e m e n t a n y c l a s s i f i c a t i o n c h a n g e s r e s u l t i n g f r o m t h e a m e n d m e n t s . The amendments aim to promote consistency in applying the requirements by helping companies determine whether, in the statement of financial position, debt and other liabilities with an uncertain settlement date should be classified as current or non-current. The amendments affect the presentation of liabilities in the statement of financial position and do not change existing requirements around measurement or timing of recognition of any asset, liability, income or NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued e x p e n s e s , n o r t h e i n f o r m a t i o n t h a t e n t i t i e s d i s c l o s e a b o u t t h o s e i t e m s . A l s o , the amendments clarify the classification requirements for debt which may be settled by the company issuing own equity instruments. I n N o v e m b e r 2 0 2 1 , t h e B o a r d i s s u e d a n e x p o s u r e draft (ED), which clarifies how to treat liabilities that are subject to covenants to be complied with, at a date subsequent to the reporting period. In particular, the Board proposes narrow scope a m e n d m e n t s t o I A S 1 w h i c h e f f e c t i v e l y r e v e r s e t h e 2 0 2 0 a m e n d m e n t s r e q u i r i n g entities to classify as current, liabilities subject to covenants that must only be complied with within the next twelve months after the reporting period, if those c o v e n a n t s a r e n o t m e t a t t h e e n d o f the reporting period. Instead, the proposals would require entities to present separately all non-current liabilities subject to c o v e n a n t s t o b e c o m p l i e d w i t h o n l y w i t h i n t w e l v e m o n t h s a f t e r t h e r e p o r t i n g p e r i o d . F u r t h e r m o r e , i f e n t i t i e s d o n o t c o m p l y w i t h s u c h f u t u r e c o v e n a n t s a t t h e e n d o f t h e r e p o r t i n g p e r i o d , additional disclosures will be required. The proposals will become e f f e c t i v e f o r a n n u a l r e p o r t i n g p e r i o d s b e g i n n i n g o n o r a f t e r 1 J a n u a r y 2 0 2 4 a n d w i l l n e e d b e a p p l i e d r e t r o s p e c t i v e l y i n a c c o r d a n c e w i t h I A S 8, w h i l e e a r l y a d o p t i o n i s permitted. The Board has also proposed to delay the effective date of the 2020 amendments accordingly, such that entities will not be required to change current practice before the proposed amendments come into effect. These Amendments, including ED proposals, have not yet been endorsed by the EU. Management has a s s e s s e d t h a t t h e s e a m e n d m e n t s w o n ’t h a v e s i g n i f i c a n t i n f l u e n c e o n f i n a n c i a l reports of the Company and the Group. • IFRS 3 Business Combinations; IAS 16 Property, Plant and Equipment; IAS 37 Provisions, Contingent Liabilities and Contingent Assets as well as Annual Improvements 2018-2020 (Amendments) T h e a m e n d m e n t s a r e e f f e c t i v e f o r a n n u a l p e r i o d s b e g i n n i n g o n o r a f t e r 1 J a n u a r y 2022 with earlier application permitted. The IASB has issued narrow-scope amendments to the IFRS Standards as follows: 132 NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES / CONTINUED 2.28 New and amended standards and interpretations / CONTINUED 2.28.2 Standards issued but not yet effective and not early adopted / CONTINUED • IFRS 3 Business Combinations (Amendments) update a reference in IFRS 3 to the Conceptual Framework for Financial Reporting without changing the accounting requirements for business combinations. • IAS 16 Property, Plant and Equipment (Amendments) prohibit a company from deducting from the cost of property, plant and equipment amounts received from selling items produced while the company is preparing the asset for its intended use. Instead, a company will recognise such sales proceeds and related cost in profit or loss. • I A S 3 7 P r o v i s i o n s , C o n t i n g e n t L i a b i l i t i e s and Contingent Assets (Amendments) specify which costs a company includes in determining the cost of fulfilling a contract for the purpose of assessing whether a contract is onerous. • Annual Improvements 2018-2020 make minor amendments to IFRS 1 First- time Adoption of International Financial Reporting Standards, IFRS 9 Financial Instruments, IAS 41 Agriculture and the Illustrative Examples accompanying IFRS 16 Leases Management has assessed that these amendments won’t have significant influence on financial reports of the Company and the Group. • I F R S 1 6 L e a s e s - C ο v i d 1 9 R e l a t e d R e n t C o n c e s s i o n s b e y o n d 3 0 J u n e 2 0 2 1 (Amendment) The Amendment applies to annual reporting periods beginning on or after 1 April 2 0 2 1 , w i t h e a r l i e r a p p l i c a t i o n p e r m i t t e d , i n c l u d i n g i n f i n a n c i a l s t a t e m e n t s n o t y e t authorized for issue at the date the amendment is issued. In March 2021, the Board amended the conditions of the practical expedient in IFRS 16 that provides relief to lessees from applying the IFRS 16 guidance on lease modifications to rent concessions arising as a direct consequence of the covid-19 pandemic. Following the amendment, the practical expedient now applies to rent concessions for which any reduction in lease payments affects only payments originally due on or b e f o r e 3 0 J u n e 2 0 2 2 , p r o v i d e d t h e o t h e r c o n d i t i o n s f o r a p p l y i n g t h e p r a c t i c a l expedient are met. Management has assessed that these amendments won’t have significant influence on financial reports of the Company and the Group. • IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting policies (Amendments) T h e A m e n d m e n t s a r e e f f e c t i v e f o r a n n u a l p e r i o d s b e g i n n i n g o n o r a f t e r J a n u a r y 1, 2023 with earlier application permitted. The amendments provide guidance on the application of materiality judgements to accounting policy disclosures. In particular, the amendments to IAS 1 replace the requirement to disclose ‘significant’ accounting policies with a requirement to disclose ‘material’ accounting policies. Also, guidance and illustrative examples are added in the Practice Statement to assist in the application of the materiality concept when making judgements about accounting policy disclosures. The Amendments have not yet been endorsed by the EU. Management has assessed that these amendments won’t have significant influence on financial reports of the Company and the Group. • IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates (Amendments) The amendments become effective for annual reporting periods beginning on or a f t e r J a n u a r y 1 , 2 0 2 3 w i t h e a r l i e r a p p l i c a t i o n p e r m i t t e d a n d a p p l y t o c h a n g e s i n accounting policies and changes in accounting estimates that occur on or after the start of that period. The amendments introduce a new definition of accounting e s t i m a t e s , d e f i n e d a s m o n e t a r y a m o u n t s i n f i n a n c i a l s t a t e m e n t s t h a t a r e s u b j e c t to measurement uncertainty. Also, the amendments clarify what changes in accounting estimates are and how these differ from changes in accounting policies and corrections of errors. The Amendments have not yet been endorsed by the EU. Management has assessed that these amendments won’t have s i g n i f i c a n t i n f l u e n c e o n f i n a n c i a l r e p o r t s o f t h e C o m p a n y a n d t h e G r o u p . NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 133 NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES / CONTINUED 2.28 New and amended standards and interpretations / CONTINUED 2.28.2 Standards issued but not yet effective and not early adopted / CONTINUED • IAS 12 Income taxes: Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments) T h e a m e n d m e n t s a r e e f f e c t i v e f o r a n n u a l p e r i o d s b e g i n n i n g o n o r a f t e r J a n u a r y 1 , 2 0 2 3 w i t h e a r l i e r a p p l i c a t i o n permitted. In May 2021, the Board issued amendments to IAS 12, which narrow the scope of the initial recognition exception under IAS 12 a n d s p e c i f y h o w c o m p a n i e s s h o u l d a c c o u n t f o r d e f e r r e d t a x o n t r a n s a c t i o n s s u c h a s l e a s e s a n d d e c o m m i s s i o n i n g o b l i g a t i o n s . U n d e r t h e a m e n d m e n t s , t h e i n i t i a l r e c o g n i t i o n exception does not apply to transactions that, on initial recognition, give rise to equal taxable and deductible temporary differences. It only applies if the r e c o g n i t i o n o f a l e a s e a s s e t a n d l e a s e l i a b i l i t y ( o r d e c o m m i s s i o n i n g liability and decommissioning asset component) give rise to taxable and deductible temporary d i f f e r e n c e s t h a t a r e not equal. The Amendments have not yet been endorsed by the E U . M a n a g e m e n t h a s a s s e s s e d t h a t t h e s e a m e n d m e n t s w o n ’t h a v e s i g n i f i c a n t influence on financial reports of the Company and the Group. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 134 NOTE 3 – FINANCIAL RISK MANAGEMENT 3.1 Financial risk factors 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 m a r k e t i n s t r u m e n t s . Internal risk management goals and policies aim at protecting t h e f o r e i g n c u r r e n c y inflows during seasonal activity and partial interest hedging of the principal loan amount. (a) Market risk (i) F o r e i g n e x c h a n g e risk 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. M o s t o f t h e s a l e s r e v e n u e g e n e r a t e d 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. A t 3 1 D e c e m b e r 2 0 2 1 , i f t h e E U R h a d w e a k e n e d / s t r e n g t h e n e d b y 1 % a g a i n s t t h e H R K , with all other variables held constant, the net profit of the Group for the year would h a v e b e e n H R K 1 9 ,6 9 2 t h o u s a n d (2020: HRK 22,811 thousand) higher/(lower) mainly as a result of foreign exchange gains/(losses) on translation of EUR denominated trade receivables, borrowings and foreign cash funds. (i i ) I n t e r e s t r a t e r i s k Variable rate loans expose the Company and the Group to cash flow interest rate risk. P e r i o d i c a l l y , the Company and the Group use derivative instruments in order to hedge c a s h f l o w a n d i n t e r e s t r a t e b y a p p l y i n g i n t e r e s t r a t e s w a p s . T h e e c o n o m i c effect of such swaps is the conversion of variable interest rate loans into fixed interest rate loans for a pre-committed 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 w h e n t h e C o m p a n y a n d t h e G r o u p h a v e s i g n i f i c a n t c a s h s u r p l u s e s a t t h e i r d i s p o s a l . T h e C o m p a n y and the Group expect a limited impact of increased interest rate volatility due to the recent Coronavirus pandemic, given that a large part of the Group's loan portfolio ( 8 9 % ) c o n s i s t s o f l o n g - t e r m f i x e d r a t e l o a n s a n d d e r i v a t i v e l o a n s ( I R S ) . At 31 December 2021, if interest rates on currency-denominated borrowings had b e e n h i g h e r / l o w e r b y 1 p e r c e n t a g e p o i n t , w i t h all other variables held constant, the profit of the Group for the year would have been HRK 2,745 thousand (2020: HRK 4,393 thousand) higher/(lower), mainly as a result of higher/(lower) interest expense on variable-rate borrowings. At 31 December 2021, 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 3,698 thousand (2020: HRK 2,101 thousand) higher/(lower), mainly as a result of higher/(lower) interest income on variable rate deposits. (i i i ) Price risk 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. W i t h t h e HRK 897 million invested in acquiring shares of Imperial Riviera d.d., Rab and H R K 4 7 m i l l i o n i n a c q u i r i n g s h a r e s o f H e l i o s F a r o s d.d., t h e C o m p a n y i s e x p o s e d t o the said risk to a certain extent. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 135 NOTE 3 – FINANCIAL RISK MANAGEMENT 3.1 Financial risk factors / CONTINUED (a) Market risk / CONTINUED A s a t 3 1 D e c e m b e r 2 0 2 1 , i f t h e i n d i c e s o f t h e Z S E h a d b e e n h i g h e r / ( l o w e r ) b y - 1 5 .3 % f o r 2021 (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 H R K 2 8 t h o u s a n d h i g h e r / ( l o w e r ) a s a r e s u l t o f g a i n s / ( l o s s e s ) o n e q u i t y s e c u r i t i e s available for sale. (b) Credit risk 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. (c) Liquidity risk 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 2021, the Company has contracted unused credit lines with financial institutions for 2022 in the total amount of HRK 278,135 thousand, and the Group in the total amount of HRK 278,135 thousand. 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. COVID-19 pandemic created uncertain pressures on operating cash flow as an external stressor to the Company and the Group's business activities. In accordance with the sound management of the increased liquidity risk, escalation plans have been developed and activated to minimize costs, preserve liquidity, solvency and maintain business continuity as well as applying for measures of support and assistance in the economy and tourism sector, including immediate deferral of principal payment of long-term loans in accordance with the given possibility of a m o r a t o r i u m o n r e p a y m e n t o f credit obligations. However, as a significant business recovery was achieved in 2021, there was no impact of the COVID-19 pandemic on liquidity risk. After meeting the requirements of working capital management, the surplus is deposited in the treasury. From there the funds are invested in interest-bearing c u r r e n t a c c o u n t s , 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. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 136 NOTE 3 – FINANCIAL RISK MANAGEMENT / CONTINUED 3.1 Financial risk factors / CONTINUED (c) Liquidity risk / CONTINUED The expected contractual cash flows for financial liabilities of the Group and the Company are analysed in the table below. The amounts stated below include interest, if applicable, and represent undiscounted cash GROUP (in thousands of HRK) Less than 3 months As at 31 December 2020 3 months-1 year 1-3 years 3-6 years Over 6 years flows. Trade and other payables 56,281 30,223 75,186 - - NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 137 Borrowings /i/ 141,520 473,785 953,198 1,050,748 1,242,988 /i/ Expected contractual cash flows in 2020 Lease liabilities 400 1,843 2,966 3,489 470 includes also the principal in the amount of Derivative financial instruments 1,455 3,925 7,196 4,103 303 HRK 185,009 thousand presented in Note 29 Total liabilities (contractual maturities) 199,656 509,776 1,038,546 1,058,340 1,243,761 - Borrowings with related interest by m a t u r i t i e s b e c a u s e the Company received As at 31 December 2021 bank waiver after balance sheet date and Trade and other payables 66,919 31,679 58,046 - - c h a n g e s i n e x p e c t e d c o n t r a c t u a l cash flows Borrowings 177,235 469,732 946,774 910,085 902,814 are not expected. Lease liabilities 596 2,084 5,918 3,841 1,513 Derivative financial instruments 982 2,405 3,267 1,086 10 Total liabilities (contractual maturities) 245,732 505,900 1,014,005 915,012 904,337 COMPANY (in thousands of HRK) Less than 3 3 months-1 1-3 years 3-6 years Over 6 years months year As at 31 December 2020 Trade and other payables 44,864 29,128 73,232 - - Borrowings /i/ 134,333 430,420 865,230 943,048 1,117,864 Lease liabilities 427 2,155 3,764 3,258 370 Derivative financial instruments 1,455 3,925 7,196 4,103 303 Total liabilities (contractual maturities) 181,079 465,628 949,422 950,409 1,118,537 As at 31 December 2021 Trade and other payables 50,470 31,679 55,917 - - Borrowings 175,429 424,367 854,294 826,668 817,387 Lease liabilities 647 2,323 6,090 3,633 1,489 Derivative financial instruments 982 2,405 3,267 1,086 10 Total liabilities (contractual maturities) 227,528 460,774 919,568 831,387 818,886 NOTE 3 – FINANCIAL RISK MANAGEMENT / CONTINUED 3.2 Capital management 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. 3.3 Fair value estimation 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 i n s t r u m e n t s t h a t a r e n o t t r a d e d i n t h e a c t i v e m a r k e t i s d e t e r m i n e d b y u s i n g v a l u a t i o n 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. T h e c a r r y i n g v a l u e l e s s i m p a i r m e n t p r o v i s i o n o f t r a d e r e c e i v a b l e s a n d p a y a b l e s a r e 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. Fair value hierarchy 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: • Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities. • Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices). • Level 3 – Inputs for the asset or liability that are not based on observable market data (unobservable inputs). NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 138 NOTE 3 – FINANCIAL RISK MANAGEMENT / CONTINUED 3.3. Fair value estimation / CONTINUED The following table presents assets measured at fair value as at: GROUP (in thousands of HRK) Level 1 Level 2 Level 3 Total As at 31 December 2020 Assets measured at fair value Financial assets - equity securities 317 - - 317 Total assets measured at fair value 317 - - 317 Liabilities measured at fair value Derivative financial instruments - 16,982 - 16,982 Total liabilities measured at fair value - 16,982 - 16,982 As at 31 December 2021 Assets measured at fair value Financial assets - equity securities 391 - - 391 Total assets measured at fair value 391 - - 391 Liabilities measured at fair value Derivative financial instruments - 7,749 - 7,749 Total liabilities measured at fair value - 7,749 - 7,749 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 139 NOTE 3 – FINANCIAL RISK MANAGEMENT / CONTINUED 3.3. Fair value estimation / CONTINUED COMPANY (in thousands of HRK) Level 1 Level 2 Level 3 Total As at 31 December 2020 Assets measured at fair value Financial assets - equity securities 261 - - 261 Total assets measured at fair value 261 - - 261 Liabilities measured at fair value Derivative financial instruments - 16,982 - 16,982 Total liabilities measured at fair value - 16,982 - 16,982 As at 31 December 2021 Assets measured at fair value Financial assets - equity securities 359 - - 359 Total assets measured at fair value 359 - - 359 Liabilities measured at fair value Derivative financial instruments - 7,749 - 7,749 Total liabilities measured at fair value - 7,749 - 7,749 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 140 NOTE 4 – CRITICAL ACCOUNTING ESTIMATES T h e C o m p a n y a n d t h e G r o u p m a k e e s t i m a t e s a n d a s s u m p t i o n s a b o u t u n c e r t a i n e v e n t s , i n c l u d i n g e s t i m a t e s a n d a s s u m p t i o n s a b o u t t h e f u t u r e . S u c h a c c o u n t i n g a s s u m p t i o n s a n d 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 e x i s t i n g c i r c u m s t a n c e s , b u t n e v e r t h e l e s s n e c e s s a r i l y r e p r e s e n t t h e s o u r c e s o f e s t i m a t i o n u n c e r t a i n t y . T h e s e a n d o t h e r k e y s o u r c e s o f e s t i m a t i o n u n c e r t a i n t y , t h a t h a v e a s i g n i f i c a n t risk of causing a material adjustment to the carrying amounts of assets and liabilities w i t h i n t h e n e x t f i n a n c i a l y e a r , a r e d e s c r i b e d b e l o w . (a) Impairment of non-financial assets In general, the Company determines the impairment indicators of property, plants and equipment by applying the multiplicators of segment net book value and operating profit, whereby the net book values of individual property segments (identified as separate cash generating units -“CGUs”) are compared with the operating profit achieved. If the determined ratios are not in line with targeted levels (at individual cash generating unit level), the recoverable amount is determined based on fair value less the costs of disposal or value in use, whichever is greater. Furthermore, the recoverable amount is determined for newly acquired property (including property acquired through business combinations). To determine the recoverable amount, the Company and Group use internal and external valuations. D e t e r m i n a t i o n o f i m p a i r m e n t i n d i c a t o r s , d e t e r m i n a t i o n o f t h e f a i r v a l u e o f a s s e t s ( o r group of assets), and estimation of future cash flows require significant judgement by the management while recognizing and assessing the impairment indicators, e x p e c t e d c a s h f l o w s , f u t u r e i n v e s t m e n t s , a p p l i c a b l e d i s c o u n t r a t e s , u s e f u l l i v e s a n d remaining values. When determining the recoverable amount, the management considers various indicators such as occupancy of properties, revenue per unit, expected market growth in the hotel industry, etc. The calculation 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 business activity segments. Given the significant impact of COVID-19 pandemic on the business of the Company and Group in 2020 and significantly milder impact in 2021, connected with the absence of operating profit or overall business in certain cash generating units, the Company and Group assessed that there are potential indicators of impairment and in accordance with IAS-36, they approached the impairment test of units that generate money, i.e. profit centres (PCGM). PCGM is a group of assets of the lowest organizational unit that generates mostly independent cash inflows and on the basis of which performance is monitored and decisions are made on the acquisition and disposal of related assets, as well as operations. T h e a p p l i c a t i o n o f I A S 3 6 – I m p a i r m e n t T e s t o b s e r v e s t h e r e l a t i o n s h i p between the c a r r y i n g a m o u n t , i.e. b o o k v a l u e o f a n a s s e t a n d i t s r e c o v e r a b l e amount, where the impairment does not exist if the recoverable amount is equal to or greater than the carrying amount. The recoverable amount is determined using the higher of an asset's fair value less costs to dispose and its value in use. The following are significant assumptions applied in determining the recoverable amount: NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 141 NOTE 4 – CRITICAL ACCOUNTING ESTIMATES / CONTINUED S I G N I F I C A N T ASSUMPTION HOW IT IS DETERMINED Calculation of recoverable amount The recoverable amounts of PCGMs were determined based on their value in use. Value in use is determined by discounting future cash flows. For PCGMs depleted by many years of exploitation, which value in use determined by DCF is not greater than recoverable amount, in the absence of significant investment interventions in their reconstruction and modernization, the fair value method less the cost of disposal estimated by a certified expert was used. Cash flow projection period For the purposes of performing the impairment test, the cash flow projection period is 5 years, with the last (5th) year used to calculate the residual value. Cash flow P r o j e c t e d c a s h f l o w s a r e b a s e d o n t h e b e s t k n o w l e d g e a n d b e l i e f s o f t h e C o m p a n y a n d G r o u p i n a c c o r d a n c e w i t h h i s t o r i c a l a n d expected future growth rates. For PCGMs that have not undergone serious reconstruction investments in the past five years with the aim of achieving higher standards of quality of accommodation and services, a growth rate of 3.2% was used for PCGMs located in the Republic of Croatia, in accordance with weighted values of tourism revenues (weight: 15%), overnights from tourism (weight: 15%) and inflation (weight: 70%) in the Republic of Croatia in the last five years before the COVID-19 crisis (2019). For PCGMs which have recently been invested in, thus featuring market-upgraded accommodation and service quality standards, t h e g r o w t h r a t e u s e d f o r c a s h f l o w e x t r a p o l a t i o n i s 6.0 % , b a s e d o n h i s t o r i c a l l y c o m p a r a b l e l o n g - t e r m c o m p o u n d a v e r a g e g r o w t h rates of revenues and EBITDA of companies within the Group, or growth rates based on current feasibility studies. The growth rate o f 6.0 % u s e d d o e s n o t e x c e e d t h e c o m p a r a b l e t h r e e - y e a r , f i v e - y e a r , s e v e n - y e a r a n d t e n - y e a r complex average growth rates of revenue and EBITDA. C a s h o u t f l o w s a l s o i n c l u d e c a p i t a l e x p e n d i t u r e s a n d m a i n t e n a n c e c o s t s of hotels and resorts and camping resorts. These cash outflows do not include capital expenditures that further contribute to the current performance of PCGMs. To calculate the residual value of each individual PCGM the Company and Group used a constant growth rate corresponding to the previously mentioned growth rates. Management considers this assumption reasonable, as it does not exceed the long-term average growth rates of companies in the Group, as explained earlier. When calculating the residual value, the amount of capital investment corresponds to the amount of amortization in the last year of the cash flow projection. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 142 NOTE 4 – CRITICAL ACCOUNTING ESTIMATES / CONTINUED S I G N I F I C A N T ASSUMPTION HOW IT IS DETERMINED I m p a c t o f C O V I D - 1 9 on significant operations As in 2021 a significant business recovery was achieved, the Company and Group assume that in 2022 there will be a further recovery, while a return to 2019 business results is expected in 2023. Given the unpredictable impact of COVID-19 on economic and tourism flows, it is extremely challenging to predict its final volume and duration on business of the Company and Group. Changes in the duration and severity of COVID-19 exposure may alter these assumptions. Discount rate T h e a n n u a l p r e - t a x d i s c o u n t r a t e s u s e d t o d i s c o u n t t h e p r o j e c t e d c a s h f l o w s o f P C G M s a r e 6.9 9 % ( 2 0 2 0 : 6.9 7 % ) f o r V a l a m a r Riviera, 6.77% (2020: 6.71%) for Imperial Riviera and 6.99% (2020: 6.52%) for Helios Faros, and reflect the market estimate of the weighted average cost of capital of each listed company. Sensitivity to significant changes in assumptions The residual year in the impairment test is reported based on the business performance of PCGMs which in the second year of cash flow projections stabilize business results to COVID-19 pre-impact levels (2019) and which in subsequent years include the aforementioned growth rates. The residual year has a significant impact on the determination of the recoverable amount and the resulting positive difference between the recoverable amount and the carrying amount of PCGMs. P o s s i b l e r e a s o n a b l e c h a n g e s , including short-term changes in the expected recovery period and reasonable changes residual value cash flow, are unlikely to result with significant effect on determined results and subsequently with the need to decrease in the value of PCGMs, assuming that overall recovery expectations remain at pre-COVID-19 levels. By performing impairment tests in 2020 and 2021, the Company and Group have p r o v e n t h a t n o n - c u r r e n t tangible and intangible assets (including goodwill) do not have to be impaired, in accordance with the determined values in use and for a part of facilities according to the fair value confirmed by a certified expert. (b) Estimated useful lives 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 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 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. C u r r e n t b u s i n e s s o p e r a t i o n s i n t h e h o t e l i n d u s t r y i m p o s e t h e n e e d f o r m o r e f r e q u e n t 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, e x c e p t w i t h t h e c o m p a n y i n A u s t r i a , t h a t e n d e d b e i n g s u b s i d i a r y f r o m 2 9 N o v e m b e r 2021, where the useful life of buildings is estimated at 40 years. The useful lives of equipment and other assets have also been assessed. 143 NOTE 4 – CRITICAL ACCOUNTING ESTIMATES / CONTINUED The useful life of property, plant and equipment shall be periodically revised to reflect a n y c h a n g e s i n c i r c u m s t a n c e s s i n c e t h e p r e v i o u s assessment. Changes in estimate, if any, shall be reflected prospectively in a revised depreciation charge over the remaining, revised useful life. (c) Recognition of deferred tax assets D e f e r r e d t a x a s s e t s r e p r e s e n t a m o u n t o f c o r p o r a t e i n c o m e t a x t h a t a r e r e c o v e r a b l e based on future deductions of taxable income and are recognized in the statement of f i n a n c i a l p o s i t i o n . Deferred tax assets are recognized to the amount of tax revenue that i s p r o b a b l e t h a t i t w i l l b e r e a l i z e d . I n d e t e r m i n i n g f u t u r e t a x a b l e p r o f i t a n d t h e a m o u n t o f t a x r e v e n u e t h a t i s p r o b a b l e t o be realized in the future, the management makes judgments and estimates based on previous years' taxable profit and expectations of future income that are considered reasonable in the existing circumstances. I n c e n t i v e s f o r i n v e s t m e n t s a r e r e a l i z e d o n t h e b a s i s o f r e g u l a t i o n s o n s t i m u l a t i o n o f i n v e s t m e n t s a n d i m p r o v i n g t h e i n v e s t m e n t e n v i r o n m e n t b a s e d o n t h e a p p l i c a t i o n o f a s p e c i f i c p r o j e c t t o t h e M i n i s t r y o f E c o n o m y , w h i c h i s s u e s a d e c i s i o n o n g a i n i n g t h e s t a t u s o f i n c e n t i v e h o l d e r f o r i n v e s t m e n t s a n d c a l c u l a t i o n o f m a x i m u m i n c e n t i v e a m o u n t w h e n a company meets the required conditions. E a c h p r o j e c t i n v o l v e s i n v e s t m e n t s i n a t h r e e - y e a r c y c l e t h a t b e g i n s w i t h a c q u i r i n g incentive holder status. The competent ministry is informed about the annual i n v e s t m e n t s m a d e , a n d t h e i n c e n t i v e s e n a b l e t h e t a x l i a b i l i t y t o b e r e d u c e d f r o m t h e m o m e n t o f t h e i n v e s t m e n t t o t h e e x p i r y o f 1 0 y e a r s . T a x a s s e t s a n d t a x r e v e n u e a r e r e c o g n i z e d o n t h e i n v e s t m e n t m a d e w h e n t h e c o n d i t i o n s a r e met, and previously r e c o g n i z e d t a x a s s e t s a r e d e r e c o g n i z e d d u r i n g t h e p e r i o d o f t h e i n c e n t i v e m e a s u r e , i.e. u n t i l t h e e x p i r a t i o n o f t h e i n c e n t i v e . E x p l a i n e d d e t a i l e d i n N o t e 1 2 – I n c o m e t a x . (d) Consolidation The Valamar Riviera Group consists of Valamar Riviera d.d. (parent company) and its s u b s i d i a r i e s ( t h e G r o u p ) a s i t i s p r e s e n t e d i n N o t e 1 – G e n e r a l i n f o r m a t i o n . T h e assets and liabilities of subsidiaries are fully included in the consolidated statement of financial position of the Group as at 31 December 2021, eliminating the parent company’s share in subsidiaries and the position of capital and reserves of subsidiaries and mutual receivables and liabilities. Mutual transactions are excluded f r o m t h e c o n s o l i d a t e d s t a t e m e n t o f f i n a n c i a l p o s i t i o n a n d t h e c o n s o l i d a t e d s t a t e m e n t of comprehensive income. During 2020, there was no changes in the structure of the Group. On 7 May, 2021, the subsidiary Palme turizam d.o.o. was merged with the parent company Valamar Riviera d.d. Explained detailed in Note 37 – Merger of subsidiary . Pursuant to the General Assembly decision of Imperial Riviera d.d. from 10 S e p t e m b e r 2 0 2 1 t h e s h a r e c a p i t a l w a s i n c r e a s e d f r o m H R K 8 2 6 ,6 6 8 ,5 5 7 .3 2 f o r t h e amount of HRK 689,765,631.10 to the amount of 1,516,434,188.42, in which the Company contributed with the amount of HRK 352,844,705,64. A f t e r t h e i n c r e a s e o f s h a r e c a p i t a l V a l a m a r R i v i e r a d.d. i s a h o l d e r o f 1,0 5 4 ,7 2 8 ( 4 6 .2 7 % of voting rights) shares and the Company retained control of Imperial Riviera d.d. V a l a m a r R i v i e r a d.d. h a s s i g n i f i c a n t s h a r e o f 4 6 .2 7 % v o t i n g r i g h t s , h a s t h e p o w e r t o manage financial and business policies of Imperial Riviera d.d., and in order to benefit f r o m i t s a c t i v i t i e s , p r i m a r i l y though Board, but also key management of Imperial Riviera d.d. Valamar Riviera d.d. has to right to appoint, relocate and recall key management, t h a t i s , p e r s o n s w h o a r e a u t h o r i s e d a n d r e s p o n s i b l e for strategic and ongoing business planning and direction, and current or former employees of Valamar Riviera d.d. were a p p o i n t e d t o t h e B o a r d o f I m p e r i a l Riviera d.d. and have the ability to manage business i n a c c o r d a n c e w i t h t h e p r o v i s i o n s o f Z T D . I m p e r i a l R i v i e r a d.d. i n a s i g n i f i c a n t p a r t o f b u s i n e s s d e p e n d s o n Valamar Riviera d.d., which is in charge of managing core b u s i n e s s , a n d d e p e n d s o n i n t e l l e c t u a l property rights, including trademarks and brands o f V a l a m a r R i v i e r a d.d. V a l a m a r R i v i e r a d.d. s i g n i f i c a n t l y i n f l u e n c e s t h e b u s i n e s s o f Imperial Riviera d.d. through the operational management of hotel and tourist facilities, a n d i n a d d i t i o n t o d i v i d e n d r i g h t s , i t i s a l s o e n t i t l e d t o m a n a g e m e n t f e e s a n d t h e r e f o r e t h e e x p o s u r e o f V a l a m a r R i v i e r a d.d. t o r e t u r n s i s s i g n i f i c a n t l y h i g h e r t h a n t h e r e t u r n r e l a t e d t o v o t i n g r i g h t s . A c o m b i n a t i o n o f a l l o f t h e a b o v e f a c t o r s i n d i c a t e s c o n t r o l o f Valamar Riviera d.d. over a subsidiary in accordance to IFRS 10. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 144 NOTE 4 – CRITICAL ACCOUNTING ESTIMATES / CONTINUED (e) Loss of the control over subsidiaries On 29 November, 2021, the General Assembly of Valamar A GmbH made a decision t o i n c r e a s e t h e s h a r e c a p i t a l f r o m t h e a m o u n t o f E U R 3 5 ,0 0 0 .0 0 b y E U R 1 0 7 ,6 2 4 .0 0 to EUR 142,624.00, with the participation of a new member of the Wurmböck Beteiligungs GmbH based in Vienna, Austria, in the amount of EUR 107,624.00 after w h i c h V a l a m a r R i v i e r a d.d. h o l d s 2 4 .5 4 % a n d W u r m b ö c k B e t e i l i g u n g s GmbH 75.46%. As a result of these changes, the Company lost control of Valamar A and Valamar Obertauern, but retained significant influence. The share of 24.54% in Valamar A and the share in Valamar Obertauern GmbH in which it has a direct 10% share and 22.08% through Valamar A GmbH will be stated according to the share method in the consolidated reports of the Group. Described in more detail in Notes 18b - Interest in a s s o c i a t e s V a l a m a r A G m b H a n d V a l a m a r O b e r t a u e r n G m b H a n d 3 8 - Loss of the control over subsidiaries. f) Leases New significant evaluations are related to the introduction of IFRS 16 Leases and mostly relate to estimates of lease term, discount rate and whether contract includes a lease. Determining the lease term of contracts with renewal and termination options – Group as lessee The Company and the Group determine the lease term as the non-cancellable term o f t h e l e a s e , t o g e t h e r w i t h a n y p e r i o d s c o v e r e d b y a n o p t i o n to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised. The Company and the Group have several lease contracts that include extension and termination options. The Company and the Group apply judgement in evaluating whether it is reasonably certain whether or not to exercise the option to renew or terminate the lease. That is, consider all relevant factors that create an economic incentive for it to exercise either the renewal or termination. After the commencement date, the Company and the Group reassess the lease term if there is a significant event or c h a n g e i n c i r c u m s t a n c e s t h a t i s w i t h i n i t s c o n t r o l a n d a f f e c t s i t s a b i l i t y t o e x e r c i s e o r NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued n o t t o e x e r c i s e t h e o p t i o n t o r e n e w o r t o t e r m i n a t e ( e .g., s i g n i f i c a n t c u s t o m i s a t i o n t o the leased asset) The Company and the Group have several leases that are expected to be extended, however the Company and the Group do not expect to terminate the contracts before the lease term expiry. The Company and the Group have included the extension term in the lease term for term that have shorter non-cancellable term (e.g. 2-3 years). The Company and the Group mainly expect to extend the leases that would have negative effect on business if a replacement asset is not readily available. Refer to Note 30 - Rights-of-use assets and lease liabilities for information on potential future rental payments relating to periods following the exercise date of extension and termination options that are not included in the lease term. Property lease classification – the Company and the Group as lessor The Company and the Group have entered into commercial property leases on its investment property portfolio. The Company and the Group have determined, based on an evaluation of the terms and conditions of the arrangements, such as the lease term not constituting a major part of the economic life of the commercial property and the present value of the minimum lease payments not amounting to substantially all of the fair value of the commercial property, that it retains substantially all the risks and rewards incidental to ownership of these properties and accounts for the contracts as operating leases. Leases – Estimating the incremental borrowing rate The Company and the Group cannot readily determine the interest rate implicit in the l e a s e , t h e r e f o r e , t h e y u s e t h e i r s i n c r e m e n t a l b o r r o w i n g r a t e ( I B R ) t o m e a s u r e l e a s e liabilities. The IBR is the rate of interest that the Company and the Group would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic e n v i r o n m e n t . T h e I B R t h e r e f o r e r e f l e c t s w h a t t h e Group ‘would have to pay’, which requires estimation when no observable rates are available or when they need to be adjusted to reflect the terms and conditions of the lease. 145 NOTE 4 – CRITICAL ACCOUNTING ESTIMATES / CONTINUED The Company and the Group estimate the IBR based on several inputs. Interest rate that is applied on lease contract presents the lessee’s credit rating, lease term, security and economic environment. Interest rate is calculated based on comparable transactions. Information used by the Company to determine the IBR are changed annually at least or in the event of significant changes in the Company’s credit rating. The Company and the Group, as the lessees as regards the tourist land D u e t o t h e t r a n s i t i o n f r o m p u b l i c t o p r i v a t e o w n e r s h i p , e.g. i n t h e t r a n s f o r m a t i o n a n d p r i v a t i s a t i o n p r o c e s s a n d t h e f a c t t h a t t h e p r o p e r t i e s o f t h e C o m p a n y a n d t h e G r o u p that w e r e u s e d i n t h e t r a n s f o r m a t i o n p r o c e s s w e r e a p p r a i s e d i n t h e share capital of the C o m p a n y , a n d a p a r t w a s n o t a p p r a i s e d , t h e r e a r e c e r t a i n a m b i g u i t i e s a n d p r o c e e d i n g s r e g a r d i n g t h e o w n e r s h i p o f a p a r t o f t h e l a n d w i t h i n t h e m a j o r i t y o f t o u r i s t c o m p a n i e s , a s w e l l a s C o m p a n y a n d t h e G r o u p . T h e C o m p a n y h a s a p p r o x i m a t e l y 1.7 7 m i l l i o n m 2 o f l a n d i n c l e a r a n d u n d i s p u t e d o w n e r s h i p , t h e G r o u p h a s 2.0 7 m i l l i o n m 2 , a n d l a n d w h i c h i s subject to determining the status of co-ownership or ownership in accordance with the r e g u l a t i o n s o f t h e A c t o n u n a p p r a i s e d l a n d ( „ t h e Z N G Z “), t h a t came into force on 2 May 2 0 2 0 a m o u n t s t o a p p r o x i m a t e l y 3.24 million m 2 for Company and 3.54 million m 2 for G r o u p . A m o r e d e t a i l e d d e s c r i p t i o n o f p r o c e e d i n g s a n d u n s o l v e d s i t u a t i o n s f o r p r o p e r t i e s o f t h e C o m p a n y a r e d i s c l o s e d i n t h e N o t e 3 4 - C o n t i n g e n c i e s a n d c o m m i t m e n t s . W i t h t h e Z N G Z e n t e r e d i n t o f o r c e , A c t o n T o u r i s t a n d O t h e r C o n s t r u c t i o n L a n d n o t a p p r a i s e d i n t h e t r a n s f o r m a t i o n a n d p r i v a t i s a t i o n p r o c e s s (“t h e Z O T Z ”) b e c a m e o u t o f f o r c e , w h i c h w a s i n f o r c e f r o m 1 A u g u s t 2 0 1 0 a n d the proceedings on requests for o b t a i n i n g c o n c e s s i o n u n d e r t h e Z O T Z a r e s u s p e n d e d . T h e Z N G Z p r e s c r i b e s t h e o b l i g a t i o n t o d e t e r m i n e a n d f o r m b u i l d i n g s o n a p p r a i s e d p a r t s o f c a m p s , h o t e l s , t o u r i s t r e s o r t s a n d other construction land as ownership of the Company and the Group and buildings on u n a p p r a i s e d p a r t s o f c a m p s , h o t e l s , t o u r i s t r e s o r t s a n d o t h e r c o n s t r u c t i o n land as o w n e r s h i p o f R e p u b l i c o f C r o a t i a o r l o c a l g o v e r n m e n t s . F o r p a r t s o f a l a n d o w n e d b y t h e R e p u b l i c o f C r o a t i a o r l o c a l g o v e r n m e n t s , t h e C o m p a n y a n d t h e G r o u p w i l l e n t e r i n t o l e a s e a g r e e m e n t s f o r a p e r i o d o f 5 0 y e a r s . U n t i l t h e f i n a l s e t t l e m e n t o f p r o p e r t y r e l a t i o n s o n t o u r i s t l a n d a n d the conclusion of lease agreements with property owners, the C o m p a n y a n d t h e G r o u p w i l l c o n t i n u e t o b e c h a r g e d t h e c o m p e n s a t i o n f o r u n a p p r a i s e d NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued p a r t s o f c a m p s , h o t e l s , t o u r i s t r e s o r t s a n d o t h e r c o n s t r u c t i o n l a n d a c c o r d i n g t o t h e a r e a s i n r e l a t i o n t o w h i c h t h e s o - c a l l e d a d v a n c e p a y m e n t o f t h e c o n c e s s i o n f e e u n t i l t h e d a y o f e n t r y i n t o f o r c e o f t h e Z N G Z f o r a p p r o x i m a t e l y 2.2 8 m i l l i o n m 2 f o r t h e C o m p a n y a n d 2.3 8 m i l l i o n m 2 f o r t h e G r o u p o f l a n d i n c a m p s i n favour of the Republic of Croatia and for a p p r o x i m a t e l y 0.9 6 m i l l i o n m 2 o f l a n d i n t o u r i s t r e s o r t s a n d h o t e l s i n f a v o u r o f l o c a l g o v e r n m e n t s f o r t h e C o m p a n y a n d 1.0 4 m i l l i o n m 2 f o r t h e G r o u p . The unit amount of the r e n t a n d t h e m a n n e r o f a n d d e a d l i n e s f o r t h e p a y m e n t w i l l b e l a i d d o w n b y a r e g u l a t i o n a d o p t e d b y t h e G o v e r n m e n t . T h e r e g u l a t i o n has not been adopted yet; therefore it has n o t b e e n p o s s i b l e t o d e t e r m i n e r i g h t - o f - u s e a s s e t s a n d l i a b i l i t i e s s i n c e t h e e n t r y i n t o f o r c e o f t h e A c t , i.e. s i n c e 2 May 2020. After the adoption of the regulation on prices, the C o m p a n y a n d t h e G r o u p w i l l r e v i s e t o t a l s u r f a c e a r e a s t h a t will be the subject matter of t h e l e a s e a g r e e m e n t a n d t h e y w i l l a s s e s s t h e v a l u e o f t h e r i g h t - o f - u s e a s s e t s a n d l i a b i l i t i e s in accordance with the provisions of IFRS 16. In 2020 and 2021, the Company and the G r o u p w e r e n o t a b l e t o d e t e r m i n e t h e o b j e c t o f t h e l e a s e a n d t h e v a l u e o f t h e l e a s e . D u e t o c i r c u m s t a n c e s a r i s i n g f r o m t h e C o v i d 1 9 p a n d e m i c , t h e R e p u b l i c o f Croatia a d o p t e d a r e g u l a t i o n o n e x e m p t i o n f r o m t h e p a y m e n t o f t h e v a r i a b l e p a r t o f t h e f e e f o r t h e y e a r 2 0 1 9 . F o r t h e p e r i o d f r o m J a n u a r y t o A p r i l 2 0 2 0 , w h e n Z O T Z w a s i n f o r c e , t h e C o m p a n y a n d t h e G r o u p d i d n o t r e c e i v e a n y f e e s for compensation for concessions for t o u r i s t l a n d . C o n s i d e r i n g t h a t n o r e g u l a t i o n o n p r i c e s h a s b e e n p a s s e d b y t h e e n d o f 2 0 2 1 , n o r h a s a w a i v e r o f o b l i g a t i o n s b e e n e n a c t e d b y l a w , a s a p r e c a u t i o n a r y p r i n c i p l e , t h e C o m p a n y a n d t h e G r o u p r e s e r v e d t h e c o s t o f l e a s e f o r t o u r i s t l a n d f o r t h e p e r i o d from the entry into force of the ZNGZ, i.e. from 1 May, 2020 to the end of 2021 on the b a s i s o f t h e c a l c u l a t i o n o f c o m p e n s a t i o n under the old regulations in the amount of H R K 2 4 ,8 2 8 t h o u s a n d f o r t h e C o m p a n y a n d H R K 2 6 ,2 8 2 t h o u s a n d f o r t h e G r o u p . Under the assumption of the lowest/highest price spread reaching HRK 6/12/m 2 , lowest/highest discount rate reaching 4/8% and with the correction of surface areas t h a t w i l l b e s u b j e c t t o t h e l e a s e + / - 1 0 % , t h e C o m p a n y a n d the Group assessed the value of the right-of-use assets and liabilities on the day of the entry into force of the Act, which would amount to a range from cca HRK 212,522 thousand to cca HRK 921,895 thousand for the Company, while the assessment for the Group would range from cca HRK 224,536 thousand to cca HRK 974,010 thousand. 146 NOTE 5 – SEGMENT INFORMATION 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 r e p o r t a b l e s e g m e n t s a n d a s s e s s i n g i t s p e r f o r m a n c e . T h e G r o u p r e c o r d s o p e r a t i n g r e v e n u e s and expenses by types of services rendered in t h r e e b a s i c s e g m e n t s : h o t e l s a n d a p a r t m e n t s , c a m p i n g a n d o t h e r b u s i n e s s s e g m e n t s . R e v e n u e w a s d i v i d e d b e t w e e n s e g m e n t s a c c o r d i n g t o t h e o r g a n i s a t i o n a l p r i n c i p l e , w h e r e a l l o f t h e i n c o m e g e n e r a t e d f r o m c a m p i n g p r o f i t c e n t r e s w a s r e p o r t e d i n t h e c a m p i n g segment, and all of the income generated from hotel and apartment profit centres was r e p o r t e d i n t h a t s e g m e n t . O t h e r b u s i n e s s s e g m e n t s i n c l u d e r e v e n u e f r o m l a u n d r y s e r v i c e s , o t h e r r e n t a l s o f p r o p e r t i e s , r e v e n u e g e n e r a t e d f r o m t h e c e n t r a l s e r v i c e s a n d c e n t r a l k i t c h e n s , a g e n c y r e v e n u e a n d r e v e n u e f r o m t h e a c c o m m o d a t i o n o f e m p l o y e e s . The segment information related to r e p o r t a b l e s e g m e n t s f o r t h e y e a r e n d e d 3 1 D e c e m b e r 2 0 2 0 i s a s f o l l o w s : GROUP (in thousands of HRK) Hotels and apartments Camps Other business segments Total Total sales 338,572 292,000 53,849 684,422 Inter-segment revenue (681) (29) (41,233) (41,943) Revenue from external customers 337,891 291,971 12,616 642,479 Depreciation and amortisation 314,882 127,271 54,291 496,444 Net finance income/(expense) (55,805) (26,786) (22,050) (104,641) Write-off of fixed assets 1,119 208 205 1,532 Profit/(loss) of segment 128,074 209,664 (158,407) 179,331 Total assets 3,537,741 1,515,516 714,073 5,767,330 Total liabilities 2,275,139 1,020,575 508,117 3,803,831 All hotels, apartments and camping resorts (operating assets) are located in the Republic of Croatia, except the hotel owned by the company Valamar Obertauern GmbH located in Austria. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 147 NOTE 5 – SEGMENT INFORMATION / CONTINUED The segment information related to r e p o r t a b l e s e g m e n t s f o r t h e y e a r e n d e d 3 1 D e c e m b e r 2 0 2 1 i s a s f o l l o w s : GROUP (in thousands of HRK) H o t e l s and apartments Camps Other business segments Total Total sales 1,001,646 550,115 147,603 1,699,364 Inter-segment revenue (1,382) (28) (92,826) (94,236) Revenue from external customers 1,000,264 550,087 54,777 1,605,128 Depreciation and amortisation 318,544 131,942 56,850 507,336 Net finance income/(expense) (23,424) (14,373) 1,895 (35,902) Write-off of fixed assets 3,389 99 404 3,892 Profit/(loss) of segment 534,766 390,233 (211,953) 713,046 Total assets 3,207,710 1,383,094 722,119 5,312,923 Total liabilities 1,977,090 934,627 473,878 3,385,595 All hotels, apartments and camps (operating assets) are located in the Republic of Croatia, except the hotel owned by the company Valamar Obertauern GmbH located in Austria that ended being subsidiary from 29 November 2021. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 148 NOTE 5 – SEGMENT INFORMATION / CONTINUED Reconciliation of the profit per segment with profit/(loss) before tax is as follows: NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 149 GROUP (in thousands of HRK) 2020 2021 Revenue Revenue from segments 684,422 1,699,364 Inter-segment revenue elimination (41,943) (94,236) Total revenue 642,479 1,605,128 Profit Profit from segments 179,331 713,046 Other unallocated expenses (553,841) (550,126) Profit/(loss) from financial and extraordinary activities (126,539) (61,444) Total profit/(loss) before tax (501,049) 101,476 NOTE 5 – SEGMENT INFORMATION / CONTINUED T h e r e c o n c i l i a t i o n o f s e g m e n t a s s e t s a n d l i a b i l i t i e s w i t h t h e Group’s assets and liabilities is as follows: T h e G r o u p ’s h o s p i t a l i t y services are provided in Croatia and Austria (till 29 November 2021) to domestic and foreign customers. The Group’s sales r e v e n u e s a r e classified according to the customers’ origin. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 150 GROUP 2020 2021 (in thousands of HRK) Assets Liabilities Assets Liabilities Segment assets/liabilities 5,767,330 3,803,832 5,312,923 3,385,595 Hotels and apartments segment 3,537,741 2,275,139 3,207,710 1,977,090 Camps segment 1,515,516 1,020,575 1,383,094 934,627 Other business segment 714,073 508,118 722,119 473,878 Unallocated 1,112,253 211,894 1,600,624 216,893 Investments in associate 46,024 - 76,503 - Other financial assets 317 - 391 - Loans and deposits 702 - 43,179 - Cash and cash equivalents 665,933 - 1,115,258 - Income tax receivable 733 - 2 - Other receivables 67,134 - 36,198 - Deferred tax assets/liabilities 331,410 58,292 329,093 51,765 Other liabilities - 65,206 - 80,551 Liabilities for investments in associate - 13,994 - - Derivative financial assets/liabilities - 16,982 - 7,749 Provisions - 57,420 - 76,828 Total 6,879,583 4,015,726 6,913,547 3,602,488 GROUP (in thousands of HRK) 2020 2021 Revenue from sales to domestic customers 82,721 173,626 Revenue from sales to foreign customers 559,758 1,431,502 642,479 1,605,128 NOTE 5 – SEGMENT INFORMATION / CONTINUED Foreign sales revenues can be classified according to the number of overnights based on the customers’ origin, as follows: GROUP Sales to foreign customers 2020 % 2021 % EU members 503,445 89.94 1,274,469 89.03 Other 56,313 10.06 157,033 10.97 559,758 100.00 1,431,502 100.00 N O T E 6 – OTHER INCOME GROUP COMPANY (in thousands of HRK) 2020 2021 2020 2021 Income from donations and other /i/ 5,840 7,713 1,541 2,104 Income from concession fee liability write-off /ii/ 6,415 - 5,965 - Income from provision release 1,650 14,027 233 14,004 Reimbursed costs 2,055 1,492 2,140 2,470 Income from insurance and legal claims 2,798 8,118 1,829 4,531 Income from own consumption 461 326 209 234 Collection of receivables previously written-off 1,111 53 925 34 Other income 8,025 5,330 6,835 4,363 28,355 37,060 19,677 27,740 /i/ In relation to Covid-19 pandemic, in 2021 subsidiary Valamar Obertauern in Austria (subsidiary till 29 November 2021) received grants in the amount of HRK 5,3 million (2020: HRK 3 million). /ii/ In relation to Covid-19 pandemic, in 2020 the liability for the variable part of the fee for the concession on tourist land for 2019 has been changed. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 151 NOTE 7 – COST OF MATERIALS AND SERVICES cards) Marketing, promotion and fairs 21,079 28,498 20,859 28,180 Communal fees /iii/ 11,885 26,545 10,115 23,943 Telecommunication and transport /ii/ 8,478 13,088 7,395 11,528 Rent /iv/ 7,897 12,207 7,257 11,423 Recreation services 3,778 6,897 3,105 5,327 Laundry services 3,143 5,490 3,005 7,733 Services of arrangement and other contents 1,300 3,044 1,106 2,776 Other services /v/ 12,052 15,600 10,092 15,138 127,251 213,359 113,431 189,145 254,644 458,262 223,981 396,120 /i/ Cost of materials and services of the Company is comprised of raw materials and supplies used of HRK 21,134 thousand (2020: HRK 11,462 thousand), food and beverage costs of HRK 89,614 thousand (2020: HRK 35,081 thousand) and other materials and supplies used of HRK 15,228 thousand (2020: HRK 6,377 thousand). /ii/ Subsidiary Valamar Obertauern in Austria (subsidiary 29 November 2021) received Covid-19 grants for compensation for fixed costs in the amount of HRK 345 thousand (2020: HRK 475 thousand). /iii/ Communal fees are related to sewage water disposal services, disposal and collection of bio-waste, communal waste and similar. /iv/ Expenses related to Company's and Group's short-term leases and low-value asset leases (exemptions according to IFRS 16) are included in Rent in the amount of HRK 173 thousand (2020: HRK 52 thousand), variable leases as well as leases that do not meet the classification criteria according to IFRS 16. Subsidiary Valamar Obertauern in Austria (subsidiary till 29 November 2021) received Covid-19 grants for compensation for leases costs in the amount of HRK 113 thousand. /v/ Other services comprise informatics services costs of HRK 3,432 thousand (2020: HRK 2,092 thousand), protection services costs of HRK 3,639 thousand (2020: HRK 2,548 thousand) and provision costs of HRK 1,822 thousand (2020: HRK 1,395 thousand). NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 152 GROUP COMPANY (in thousands of HRK) 2020 2021 2020 2021 Raw materials and supplies Raw materials and supplies used /i/ 60,890 148,037 52,920 125,976 Energy and water used /ii/ 51,574 83,664 44,855 70,021 Small inventory 14,929 13,202 12,775 10,978 127,393 244,903 110,550 206,975 External services Maintenance Commission fees (tourist agencies and credit 43,807 13,832 61,055 40,935 39,433 11,064 52,616 30,481 NOTE 8 – STAFF COSTS GROUP COMPANY (in thousands of HRK) 2020 2021 2020 2021 Net salaries /i/ 122,043 218,087 103,705 185,544 Pension contributions /i/ 36,138 66,349 30,087 53,978 Health insurance contributions /i/ 24,606 46,430 21,802 39,419 Other (contributions and taxes) /i/ 7,163 22,310 7,163 22,310 Termination benefits 466 471 329 277 Provisions for staff /ii/ 13,591 9,405 10,710 9,293 Other staff costs /iii/ 23,044 76,479 20,471 65,225 227,051 439,531 194,267 376,046 Number of employees at 31 December 2,620 2,989 2,121 2,442 /i/ T o t a l C o v i d - 1 9 g r a n t s r e l a t e d t o n e t s a l a r i e s c o m p e n s a t i o n w i t h r e l a t e d t a x a n d c o n t r i b u t i o n w r i t e - o f f s d u e t o r e v e n u e d e c l i n e a r e i n c l u d e d i n t h e s t a f f c o s t o f t h e G r o u p i n t h e a m o u n t o f H R K 1 0 2 .1 m i l l i o n ( 2 0 2 0 : H R K 1 6 4 .4 m i l l i o n ) , f o r t h e C o m p a n y H R K 8 4 .6 m i l l i o n ( 2 0 2 0 : H R K 1 4 1 .3 m i l l i o n ) . / i i / P r o v i s i o n s f o r s t a f f a r e r e l a t e d t o l o n g - t e r m e m p l o y e e b e n e f i t s ( t e r m i n a t i o n b e n e f i t s and jubilee awards). / i i i / O t h e r s t a f f c o s t s c o m p r i s e n o n - t a x a b l e r e c e i p t s ( a c c o m m o d a t i o n a n d m e a l s f o r e m p l o y e e s , C h r i s t m a s b o n u s e s , r e g r e s s , a w a r d s a n d s i m i l a r ) in the amount of HRK 40.6 million (2020: HRK 7.4 million) for the Group and HRK 33.2 million for the Company (2020: HRK 6.1 million), r e m u n e r a t i o n s f o r s t u d e n t t e m p o r a r y s e r v i c e s i n t h e a m o u n t o f H R K 1 5 .6 m i l l i o n ( 2 0 2 0 : H R K 2.4 m i l l i o n ) f o r t h e G r o u p a n d H R K 1 3 .6 m i l l i o n f o r t h e C o m p a n y ( 2 0 2 0 : H R K 2 m i l l i o n ) , t r a n s p o r t a t i o n c o s t s i n t h e a m o u n t o f H R K 1 7 .3 m i l l i o n ( 2 0 2 0 : H R K 1 1 m i l l i o n ) f o r t h e G r o u p a n d H R K 16 million for the Company (2020: HRK 10.4 million) and other. T h e C o m p a n y c a p i t a l i s e d n e t s a l a r i e s c o s t i n t h e a m o u n t o f H R K 4.8 2 m i l l i o n ( 2 0 2 0 : H R K 3 m i l l i o n ) , c o s t o f c o n t r i b u t i o n s a n d t a x f r o m s a l a r i e s i n t h e a m o u n t o f H R K 1.9 1 m i l l i o n ( 2 0 2 0 : H R K 1.4 m i l l i o n ) a n d c o s t o f c o n t r i b u t i o n s o n s a l a r i e s i n t h e a m o u n t o f H R K 0.8 7 m i l l i o n ( 2 0 2 0 : H R K 0.6 million). During the year the Company’s average number of employees is 3,211 (2020: 2,836). T h e G r o u p c a p i t a l i s e d n e t s a l a r i e s c o s t i n t h e a m o u n t o f H R K 5.2 m i l l i o n ( 2 0 2 0 : H R K 4.6 m i l l i o n ) , c o s t o f c o n t r i b u t i o n s a n d t a x f r o m s a l a r i e s i n t h e a m o u n t o f H R K 2 m i l l i o n ( 2 0 2 0 : H R K 2 m i l l i o n ) a n d c o s t o f c o n t r i b u t i o n s o n s a l a r i e s i n t h e a m o u n t o f H R K 0.9 m i l l i o n ( 2 0 2 0 : H R K 0.9 m i l l i o n ) . During the year the Group’s average number of employees is 3,900 (2020: 3,364). NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 153 NOTE 9 – OTHER OPERATING EXPENSES GROUP COMPANY (in thousands of HRK) 2020 2021 2020 2021 Municipal charges, concessions and other 38,689 25,624 32,959 21,697 Professional services /i/ 15,543 19,261 11,872 15,324 Insurance premiums 7,043 6,805 6,075 5,492 Write-off of property, plant and equipment /ii/ 1,532 3,892 1,202 2,511 Entertainment 2,199 3,706 2,023 3,490 Bank charges 880 1,093 574 778 Provisions for legal proceedings 9,623 2,744 9,356 2,488 Provisions for termination benefits 5,500 - 5,500 - Provisions for tourist land lease and other /iii/ - 28,164 - 24,828 Value adjustment of assets Membership fee to associations and other 1,510 1,233 1,670 1,012 1,394 1,069 1,646 877 /i/ P r o f e s s i o n a l a n d o t h e r s e r v i c e s o f t h e G r o u p a n d t h e C o m p a n y a r e m o s t l y r e l a t e d t o c o n s u l t i n g s e r v i c e s i n t h e a m o u n t o f H R K 3.5 m i l l i o n ( 2 0 2 0 : H R K 1.6 m i l l i o n ) f o r t h e G r o u p a n d H R K 3 m i l l i o n f o r t h e C o m p a n y ( 2 0 2 0 : H R K 1.4 m i l l i o n ) , S u p e r v i s o r y B o a r d f e e s i n t h e a m o u n t o f H R K 4.7 m i l l i o n ( 2 0 2 0 : H R K 3 m i l l i o n ) f o r t h e G r o u p a n d H R K 2.7 m i l l i o n f o r t h e C o m p a n y ( 2 0 2 0 : H R K 1.3 m i l l i o n ) , s t u d e n t s a n d s c h o l a r s h i p s f e e s i n t h e a m o u n t o f H R K 2.9 m i l l i o n ( 2 0 2 0 : H R K 3 m i l l i o n ) f o r t h e G r o u p a n d H R K 2.3 m i l l i o n f o r t h e C o m p a n y ( 2 0 2 0 : H R K 2.5 m i l l i o n ) , l a w y e r f e e s i n t h e a m o u n t o f H R K 2 m i l l i o n ( 2 0 2 0 : H R K 2.2 m i l l i o n ) f o r t h e G r o u p a n d H R K 1.8 m i l l i o n f o r t h e C o m p a n y ( 2 0 2 0 : H R K 1.9 m i l l i o n ) a n d a u d i t f e e s i n t h e a m o u n t o f H R K 1 m i l l i o n ( 2 0 2 0 : H R K 1 m i l l i o n ) f o r t h e G r o u p a n d H R K 0.6 m i l l i o n f o r t h e C o m p a n y ( 2 0 2 0 : H R K 0.6 m i l l i o n ) . /ii/ Write-off of property, plant and equipment relates to demolition of parts of buildings as a part of new investments. Demolition of buildings amounts to HRK 3,3 million (2020: HRK 856 thousand) for the Group and HRK 2 million (2020: HRK 856 thousand) for the Company, and other write-offs amounts to HRK 0.6 million (2020: HRK 676 thousand) for the Group and HRK 449 thousand (2020: HRK 346 thousand) for the Company. /iii/ Provisions for tourist land lease and other on the Group and the Company mainly consists of costs for tourist land lease explained in the Note 4 - Critical accounting estimates - (f) Leases. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 154 administrative expenses Other 8,484 7,934 7,996 6,435 92,236 101,905 80,020 85,566 NOTE 10 – OTHER GAINS/(LOSSES) – NET equipment /i/ /i/ In 2020 and 2021, the Company sold several properties. The most significant Company’s transaction in 2021 relates to the entry into t h e s h a r e c a p i t a l o f I m p e r i a l R i v i e r a d.d. r e a l e s t a t e ( l a n d ) l o c a t e d a t B a b i n K u k i n D u b r o v n i k w i t h a n a r e a o f 1 4 8 ,9 4 9 m 2 , e s t i m a t e d value of HRK 352.84 million. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 155 GROUP COMPANY (in thousands of HRK) 2020 2021 2020 2021 Net gains on sale of property, plant and 4,777 1,820 5,180 281,702 4,777 1,820 5,180 281,702 N O T E 1 1 – F I N A N C E I N C O M E / ( E X P E N S E ) – N E T forwards and interest rate swaps Changes in fair value of forwards and interest rate swap - 4,504 - 4,504 Loss of the control over subsidiaries /i/ - 13,316 - - Income from cassa sconto 1,957 818 1,709 743 Dividend income - 4 - 4 Other financial gains 160 225 130 225 Total financial income 21,291 35,355 19,931 21,059 Interest expense (66,170) (71,257) (59,591) (64,980) Net foreign exchange gains from financing activities (41,918) - (38,603) - Changes in fair value of forwards and interest rate swaps (17,844) - (16,833) - Total financial expense (125,932) (71,257) (115,027) (64,980) Financial expense - net (104,641) (35,902) (95,096) (43,921) /i/ E x p l a i n e d d e t a i l e d i n N o t e 3 8 – L o s s o f t h e c o n t r o l o v e r s u b s i d i a r i e s . NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 156 GROUP COMPANY (in thousands of HRK) 2020 2021 2020 2021 Interest income 514 83 508 67 Net foreign exchange gains from financing activities - 8,096 - 7,475 Net foreign exchange gains - other Realised net gains/(losses) from changes in value of 890 17,770 3,580 4,729 825 16,759 3,312 4,729 N O T E 1 2 – I N C O M E TAX Income tax comprise: GROUP COMPANY (in thousands of HRK) 2020 2021 2020 2021 Current tax 48 22 - - Deferred tax (142,291) (7,254) (104,982) 66,518 Tax (income)/expense (142,243) (7,232) (104,982) 66,518 Reconciliation of the effective tax rate: GROUP COMPANY (in thousands of HRK) 2020 2021 2020 2021 Profit/(loss) before tax (501,049) 101,476 (413,532) 371,124 Income tax (90,065) 19,103 (74,436) 66,802 Tax exempt income (30,579) (21,484) (26,585) (15,372) Non-deductible expenses 865 1,081 759 953 Investment tax credits (22,464) (5,932) (4,720) - Effect of temporary differences not utilised - - - 14,135 Tax (income)/expense (142,243) (7,232) (104,982) 66,518 Effective tax rate - - - 17.92% C r o a t i a n t a x l e g i s l a t i o n d o e s n o t a l l o w t a x l o s s e s t o b e transferred among group c o m p a n i e s . I n a c c o r d a n c e w i t h t h e r e g u l a t i o n s o f t h e R e p u b l i c o f C r o a t i a , t h e T a x A u t h o r i t y m a y a t a n y t i m e i n s p e c t t h e G r o u p C o m p a n y ’s b o o k s a n d r e c o r d s w i t h i n t h r e e y e a r s f o l l o w i n g t h e y e a r i n w h i c h t h e t a x l i a b i l i t y w a s r e p o r t e d , a n d m a y impose additional tax a s s e s s m e n t s a n d p e n a l t i e s . T h e C o m p a n y h a s n o c a s h o u t f l o w s b a s e d o n t a x p a y m e n t s . Incentives in Valamar Riviera d.d. Pursuant to the Investment Promotion and Investment Environment Improvement Act of 2012 (NN 111/12), the amendment of the 2013 Act (NN 111/12, 28/13) and the Investment Promotion and Investment Environment Improvement Regulation of 2013 (NN 40/13), in 2014, the Company acquired the status of incentive measure for investments holder according to the submitted project at Valamar Isabella Resort and investments in Family Life Bellevue Resort and Valamar Girandella Village in Rabac for the period from 18 March 2014 until 17 March 2017. D u r i n g t h e p e r i o d o f t h e h o l d e r o f i n c e n t i v e m e a s u r e s , t h e C o m p a n y r e a l i z e d a t o t a l of HRK 145,953 thousand of tax incentives for investments made according to the above mentioned application, which was fully used as of 31 December, 2021. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 157 NOTE 12 – INCOME TAX / CONTINUED Pursuant to the Investment Promotion Act of 2015 (NN 102/15), amendments to the 2 0 1 8 A c t ( N N 1 0 2 / 1 5 , 2 5 / 1 8 , 1 1 4 / 1 8 ) a n d t h e 2 0 2 0 ( N N 102/15, 25/18, 114/18, 32/20), and the Investment Promotion Regulation of 2016 (NN 31/16), the amendment of the 2019 Regulation (NN 31/16, 2/19), the Company has submitted a new project for the reconstruction and repositioning of accommodation properties (Camp Istra 5, V a l a m a r C o l l e c t i o n M a r e a S u i t e s 5 * a n d V a l a m a r C o l l e c t i o n P i n e a R e s o r t 4 * / 5 * ) f o r the period from 22 September 2017 and acquired the status of investment incentive holder. The Company concluded its second three-year investment cycle on 21 September 2020. D u r i n g t h e p e r i o d o f t h e h o l d e r o f i n c e n t i v e m e a s u r e s , t h e C o m p a n y r e a l i z e d a t o t a l of HRK 139,441 thousand of tax incentives for investments made according to above m e n t i o n e d a p p l i c a t i o n a n d u s e d H R K 9 5 ,1 4 0 t h o u s a n d t i l l 3 1 D e c e m b e r , 2 0 2 1 . F o r the made investments the Company disclosed deferred tax assets. D u r i n g 2 0 2 1 t h e C o m p a n y u s e d H R K 4 1 ,2 0 5 t h o u s a n d ( 2 0 2 0 : 0 ) t a x i n c e n t i v e s and the b a l a n c e o f t a x a s s e t s o n b e h a l f of incentives as at 31 December 2021 amounts to HRK 44,301 thousand (2020: 85,505 thousand). Incentives in subsidiary Imperial Riviera d.d., Rab B a s e d o n t h e a p p l i c a t i o n t o t h e M i n i s t r y o f E c o n o m y o f t h e R e p u b l i c o f C r o a t i a f o r a three-year investment cycle 2019-2021, for the reconstructions and repositioning of accommodation properties Valamar Carolina Hotel & Villas 4, Valamar Meteor Hotel 4, Padova Camping Resort by Valamar and Dalmatia Sunny Hotel with the aim of achieving 4 categorization and on the basis of the Investment Incentives Act (NN 1 0 2 / 1 5 , 2 5 / 1 8 , 1 1 4 / 1 8 , 3 2 / 20 ) , i n J a n u a r y 2 0 2 0 t h e c o m p a n y I m p e r i a l R i v i e r a d . d . received a confirm on the basis of which it is able to use tax incentives in the next ten years in the amount of up to HRK 80,000 thousand. For investments made by 31 December 2021, the company Imperial Riviera d.d. disclosed in its books deferred tax assets in the name of tax incentives in the amount o f H R K 6 3 ,6 8 2 t h o u s a n d a n d u s e d H R K 2,0 1 0 thousand. The balance of tax assets on b e h a l f o f i n c e n t i v e s a s a t 3 1 D e c e m b e r 2 0 2 1 a m o u n t s to HRK 61,672 thousand (2020: HRK 55,740 thousand). NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 158 NOTE 13 – EARNINGS/(LOSS) PER SHARE Basic Basic earnings/(loss) 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 Diluted earnings/(loss) per share are equal to basic, since the Group/Company did not have any convertible instruments and share options outstanding during both years. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 159 GROUP 2020 2021 Profit/(loss) attributable to equity holders (in thousands of HRK) (329,594) 104,375 Weighted average number of shares 121,887,907 121,887,907 Basic/diluted earnings/(loss) per share (in HRK) (2.70) 0.86 NOTE 14 – PROPERTY, PLANT AND EQUIPMENT GROUP (in thousands of HRK) Land Buildings Plant and equipment Furniture, tools and horticulture Assets under construction Total As at 1 January 2020 Cost 977,452 6,708,506 1,054,139 445,889 250,218 9,436,204 Accumulated depreciation and impairment - (3,121,239) (537,535) (241,200) - (3,899,974) Carrying amount 977,452 3,587,267 516,604 204,689 250,218 5,536,230 Year ended 31 December 2020 Opening carrying amount 977,452 3,587,267 516,604 204,689 250,218 5,536,230 Exchange rate differences from foreign business 46 694 - 68 - 808 Transfer within the assets - 299,371 73,260 16,847 (389,478) - Additions 94 1,518 445 2 583,265 585,324 Disposals and write-offs (1,163) (1,540) (730) (393) - (3,826) Depreciation - (326,846) (100,836) (43,543) - (471,225) Carrying amount at year end 976,429 3,560,464 488,743 177,670 444,005 5,647,311 As at 31 December 2020 Cost 976,429 7,003,881 1,114,422 455,479 444,005 9,994,216 Accumulated depreciation and impairment - (3,443,417) (625,679) (277,809) - (4,346,905) Carrying amount 976,429 3,560,464 488,743 177,670 444,005 5,647,311 Year ended 31 December 2021 Opening carrying amount 976,429 3,560,464 488,743 177,670 444,005 5,647,311 Transfer within the assets - 187,584 49,706 19,565 (256,855) - Additions - 403 68 27 101,427 101,925 Disposals and write-offs (745) (4,054) (475) (553) - (5,827) Depreciation - (335,054) (102,935) (44,767) - (482,756) Loss of the control over subsidiaries (3,751) (52,190) (2,865) (99) - (58,905) Carrying amount at year end 971,933 3,357,153 432,242 151,843 288,577 5,201,748 As at 31 December 2021 Cost 971,933 7,108,584 1,144,902 454,290 288,577 9,968,286 Accumulated depreciation and impairment - (3,751,431) (712,660) (302,447) - (4,766,538) Carrying amount 971,933 3,357,153 432,242 151,843 288,577 5,201,748 As at 31 December 2021, the carrying amount of land and buildings of the Group pledged as collateral for borrowings amounted to HRK 2,319,645 thousand (2020: HRK 2,010,351 thousand). NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 160 NOTE 14 – PROPERTY, PLANT AND EQUIPMENT / CONTINUED equipment COMPANY (in thousands of HRK) Land Buildings Plant and Furniture, tools and horticulture Assets under construction Total As at 1 January 2020 Cost 630,175 5,645,570 944,140 410,328 218,982 7,849,195 Accumulated depreciation and impairment - (2,879,603) (502,913) (241,731) - (3,624,247) Carrying amount 630,175 2,765,967 441,227 168,597 218,982 4,224,948 Year ended 31 December 2020 Opening carrying amount 630,175 2,765,967 441,227 168,597 218,982 4,224,948 Transfer within the assets - 202,337 53,301 17,080 (272,718) - Additions - 704 13 1 420,473 421,191 Disposals and write-offs (1,163) (732) (597) (230) - (2,722) Depreciation - (246,209) (84,698) (36,378) - (367,285) Carrying amount at year end 629,012 2,722,067 409,246 149,070 366,737 4,276,132 As at 31 December 2020 Cost 629,012 5,843,630 987,979 422,664 366,737 8,250,022 Accumulated depreciation and impairment - (3,121,563) (578,733) (273,594) - (3,973,890) Carrying amount 629,012 2,722,067 409,246 149,070 366,737 4,276,132 Year ended 31 December 2021 Opening carrying amount 629,012 2,722,067 409,246 149,070 366,737 4,276,132 Transfer within the assets - 123,731 31,855 9,606 (165,192) - Additions - - - - 66,435 66,435 Merger of subsidiary 25,753 - - - - 25,753 Disposals and write-offs (69,950) (6,347) (415) (446) - (77,158) Depreciation - (252,756) (84,709) (36,758) - (374,223) Carrying amount at year end 584,815 2,586,695 355,977 121,472 267,980 3,916,939 As at 31 December 2021 Cost 584,815 5,921,565 1,007,700 418,382 267,980 8,200,442 Accumulated depreciation and impairment - (3,334,870) (651,723) (296,910) - (4,283,503) Carrying amount 584,815 2,586,695 355,977 121,472 267,980 3,916,939 As at 31 December 2021, the carrying amount of land and buildings of the Company pledged as collateral for borrowings amounted to HRK 1,861,945 thousand (2020: HRK 1,616,678 thousand). NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 161 NOTE 14 – PROPERTY, PLANT AND EQUIPMENT / CONTINUED Assets under construction of the Group in the amount of HRK 288,576 thousand mainly refer to the investment in hotels and a p a r t m e n t s o f H R K 2 6 2 ,6 6 8 t h o u s a n d , i n v e s t m e n t i n c a m p i n g of HRK 17,359 thousand and the reconstruction, extension and adaptation of other buildings of HRK 8,506 thousand. Out of the Group's total value of equipment, leased equipment under operating leases is as follows: (in thousands of HRK) 2020 2021 Cost 115,464 124,741 A cc u m u l at e d d e p r e c i at i on as at 1 J anuar y (80,982) (90,331) Depreciation charge for the year (3,761) (3,597) Carrying amount 30,722 30,813 The operating lease mostly relates to the lease of hospitality facilities and shops to third parties, and other relates to service a c t i v i t i e s , s p o r t a n d r e c r e a t i o n a n d s i m i l a r . D u r i n g 2 0 2 1 , t h e G r o u p r e a l i s e d r e n t a l i n c o m e o f H R K 3 6 ,3 4 9 t h o u s a n d ( 2 0 2 0 : H R K 2 4 ,1 1 3 t h o u s a n d ) , w h e r e f i x e d a m o u n t i s H R K 3 0 ,8 1 6 t h o u s a n d ( 2 0 2 0 : H R K 2 3 ,7 4 7 t h o u s a n d ) , w h i l e v a r i a b l e i s H R K 5,5 3 2 t h o u s a n d (2020: 366 thousand). All lease agreements are renewable, usually for period of 1 to 3 years and there is no purchase option. In the contracts, the Group obliges the lessees to submit the subject of the operating lease in the condition in which it was received. Undiscounted future payments on 31 December 2021: (in thousands of HRK) Up to 1 year More than 1, but l e s s t h a n 5 y e a r s More than 5 years Company 13,214 12,488 1,370 Group 19,170 17,497 2,163 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 162 NOTE 15 – INVESTMENT PROPERTY (in thousands of HRK) GROUP COMPANY As at 31 December 2020 Cost 8,671 8,671 Accumulated depreciation (4,729) (4,729) Carrying amount 3,942 3,942 Year ended 31 December 2021 Opening carrying amount 3,942 3,942 Disposals and write-offs (475) (475) Depreciation (287) (287) Carrying amount at year end 3,180 3,180 As at 31 December 2021 Cost 7,990 7,990 Accumulated depreciation (4,810) (4,810) Carrying amount 3,180 3,180 As at 31 December 2021, Company and Group do not have properties pledged as collateral for loans (2020: HRK 0). NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 163 NOTE 16 – INTANGIBLE ASSETS GROUP (in thousands of HRK) Goodwill /i/ Software Total As at 1 January 2020 Cost 6,568 107,285 113,853 Accumulated amortisation - (57,664) (57,664) Carrying amount 6,568 49,621 56,189 Year ended 31 December 2020 Opening carrying amount 6,568 49,621 56,189 Exchange rate differences from foreign business - 8 8 Transfer within the assets - 9 9 Additions - 10,540 10,540 Amortisation - (20,345) (20,345) Disposals and write-offs - (1) (1) Carrying amount at year end 6,568 39,833 46,400 As at 31 December 2020 Cost 6,568 117,361 123,929 Accumulated amortization - (77,528) (77,528) Carrying amount 6,568 39,833 46,400 Year ended 31 December 2021 Opening carrying amount 6,568 39,833 46,400 Additions - 13,431 13,431 Disposals and write-offs - (20,280) (20,280) Loss of the control over subsidiaries - (464) (464) Carrying amount at year end 6,568 32,520 39,087 As at 31 December 2021 Cost 6,568 129,567 136,134 Accumulated amortisation - (97,047) (97,047) Carrying amount 6,568 32,520 39,087 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 164 NOTE 16 – INTANGIBLE ASSETS / CONTINUED COMPANY (in thousands of HRK) Goodwill /i/ Software Total As at 1 January 2020 Cost 6,568 109,368 115,936 Accumulated amortisation - (61,832) (61,832) Carrying amount 6,568 47,536 54,104 Year ended 31 December 2020 Opening carrying amount 6,568 47,536 54,104 Additions - 7,644 7,644 Amortisation - (19,473) (19,473) Carrying amount at year end 6,568 35,707 42,275 As at 31 December 2020 Cost 6,568 116,534 123,102 Accumulated amortisation - (80,828) (80,828) Carrying amount 6,568 35,707 42,275 Year ended 31 December 2021 Opening carrying amount 6,568 35,707 42,275 Additions - 11,122 11,122 Amortisation - (18,757) (18,757) Carrying amount at year end 6,568 28,072 34,640 As at 31 December 2021 Cost 6,568 127,443 134,011 Accumulated amortisation - (99,371) (99,371) Carrying amount 6,568 28,072 34,640 /i/ Impairment tests for goodwill Goodwill is allocated to the cash-generating unit (CGUs) Camping Brioni, Pula. The recoverable amount of the cash-generating unit is determined based on the value-in-use calculations. More details on significant assumptions used in determining recoverable amount are presented in Note 4 – Critical accounting estimates - (a) Impairment of non-financial assets. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 165 N O T E 1 7 – I N V E S T M E N T IN SUBSIDIARIES COMPANY (in thousands of HRK) 2020 2021 At beginning of the year 727,328 727,328 Acquisition of subsidiaries /i/ - 352,845 Merger of subsidiary /i/ - (115,448) Loss of the control over subsidiary Valamar A GmbH /i/ - (20,414) Loss of the control over subsidiary Valamar Obertauern GmbH /i/ - (2,507) At year end 727,328 941,804 (in thousands of HRK) 2020 2021 Palme turizam d.o.o., Dubrovnik /i/ 115,448 - Magi č ne stijene d.o.o., Dubrovnik 5,577 5,577 Bugenvilia d.o.o., Dubrovnik 38,542 38,542 Imperial Riviera d.d., Rab /i/ 544,840 897,685 Valamar A GmbH, Tamsweg/Vienna /i/ 20,414 - Valamar Obertauern GmbH, Obertauern /i/ 2,507 - 727,328 941,804 /i/ Explained detailed in Note 1 – General information . The subsidiaries Bugenvilia d.o.o. and Palme turizam d.o.o. (subsidiary till the merger to Company on 7 May 2021) generate revenue from rent of property to the Company, while Magične stijene d.o.o. and Valamar A GmbH (subsidiary till 29 November 2021) do not have business activity. Subsidiary Imperial Riviera d.d. generate revenues from performing their registered activities, primarily from hospitality activities (services of accommodation, food and drinks in hotels, tourist resorts and campings). Valamar Obertauern GmbH (subsidiary till 29 November 2021) performs seasonal hospitality activity in its only hotel (during winter period). NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 166 NOTE 18A – INTEREST IN ASSOCIATE HELIOS FAROS D.D. A c c o r d i n g t o t h e B a n k r u p t c y p l a n , determined following the investment and capital i n c r e a s e o f f e r f o r H e l i o s F a r o s d.d., i n b a n k r u p t c y , w h i c h h a s b e e n s u b m i t t e d j o i n t l y by the Company and PBZ Croatia osiguranje dioničko društvo za upravljanje obveznim mirovinskim fondovima, Zagreb on 15 May 2017, and according to the D e c i s i o n o n i n c r e a s i n g s h a r e capital of Helios Faros d.d. in bankruptcy from 6 May 2 0 1 9 , i n 2 0 1 9 t h e C o m p a n y h a s p a i d HRK 22,800,000.00 and has obtained 2,280,000 shares with the nominal amount of HRK 10, which makes the stake of 23.61%. On 22 July 2019 the Commercial Court in Split rendered a Decision on Closing the Bankruptcy Proceedings related to the Helios Faros d.d., with registered office in Stari Grad. By closing the bankruptcy, the Company acquired full membership rights as a 23.61% shareholder. In accordance with the decision of the General Assembly of the company Helios Faros d.d. on increasing the share capital from 26 November 2019, the Company is obliged to participate in the further increase of Helios Faros d.d.’s share capital in the total a m o u n t o f H R K 2 4 ,3 9 1 ,5 3 0 .0 0 t o a c q u i r e 2,4 3 9 ,1 5 3 s h a r e s , o u t o f w h i c h i t h a s p a i d the 25% of the total amount in 2019, in 2020 the 17.6% of the total amount and the remaining amount is set to be paid until 31 December 2021. Upon the implementation of the share capital increase the Company holds 20% shares (voting rights) of Helios Faros d.d., while the PBZ Croatia osiguranje dioničko društvo za upravljanje obveznim mirovinskim fondovima from Zagreb holds 77.73% shares (voting rights). In accordance with IAS 28, the Company has a significant influence as it holds 20% of voting rights and participates in policy making, which includes participation in dividend decisions or other distributions. O n 3 1 J a n u a r y 2 0 2 0 a t t h e C o m m e r c i a l C o u r t i n S p l i t t h e i n c r e a s e o f H e l i o s F a r o s ' share capital was registered, from the amount of HRK 96,566,140, for the amount HRK 139,391,520, on the amount HRK 235,957,660, with the issue of 13,939,152 of new stocks with the nominal amount of HRK 10 each, according to the General Assembly Decision from 26 November 2019. GROUP (in thousands of HRK) 2020 2021 At beginning of period at acquisition cost 47,668 46,024 Share in net profit/(loss) at 31 December (1,644) 548 At end of year 46,024 46,572 Adjustment of share and share in net asset on 31 December Net asset at the beginning of the period 230,889 222,671 Profit/(loss) before tax (8,218) 2,740 Net asset at the end of the period 222,671 225,411 Share in net asset at the end of the period (20%) 44,534 45,082 Adjustment for goodwill (20%) 1,490 1,490 At the end of the period 46,024 46,572 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 167 NOTE 18A – INTEREST IN ASSOCIATE HELIOS FAROS D.D. / CONTINUED HELIOS FAROS d.d. 100% (in thousands of HRK) 31 December 2020 31 December 2021 Assets: Non-current assets 157,685 201,925 Current assets 6,426 36,902 164,111 238,827 Liabilities: Provisions 12,301 - Long-term liabilities 930 1,020 Short-term liabilities 4,953 12,396 18,184 13,416 Net assets 145,927 225,411 Income 9,755 44,004 Expenses 17,973 41,264 Profit/(loss) before tax (8,218) 2,740 Income tax - - Profit/(loss) after tax (8,218) 2,740 Share in profit/(loss) by equity method (20%) (1,644) 548 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 168 N O T E 1 8 B – I N T E R E S T I N A S S O C I A T E V A L A M A R A G M B H A N D VALAMAR OBERTAUERN GMBH Valamar Obertauern GmbH /i/ (in thousands of HRK) 31 December 2021 Share at beginning of period 3,007 Share in net profit/(loss) 1 to 31 December 2021 (27) Total share at the end of the period 2,980 Net asset at the end of the period 29,805 Share in net asset (direct ownership 10%) 2,980 Share in net asset (indirect ownership 24.54% from 90%) 6,582 Total share in net asset at the end of the period 9,562 Valamar A GmbH /i/ (in thousands of HRK) 31 December 2021 Share at beginning of period 27,068 Share in net profit/(loss) 1 to 31 December 2021 /ii/ (118) Total share at the end of the period 26,950 Net asset at the end of the period 82,998 Share in net asset (24.54%) 20,368 Valamar Obertauern and Valamar A /i/ (in thousands of HRK) 31 December 2021 Share in Valamar A at the end of the period 26,950 Share in Valamar Obertauern at the end of the period 2,980 Total share at the end of the period 29,930 Share in net asset Valamar A 24.54% 20,368 Share in net asset Valamar Obertauern (indirect and direct) /i/ 9,562 Total share in net asset at the end of the period 29,930 /i/ Explained detailed in Note 1 – General information . /ii/ The share in the result consists of the share in the result of Valamar Obertauern GmbH (reduced by 10% for minority interest) and in the result of Valamar A GmbH. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 169 NOTE 18B – INTEREST IN ASSOCIATE VALAMAR A GMBH AND VALAMAR OBERTAUERN GMBH / CONTINUED Valamar Obertauern GmbH Valamar A GmbH (in thousands of HRK) 31 December 2021 31 December 2021 Assets: Non-current assets 77,374 146,014 Current assets 9,171 5,318 86,546 151,332 Liabilities: Long-term liabilities 48,516 63,889 Short-term liabilities 8,225 4,445 56,741 68,334 Net assets 29,805 82,998 Income from 1 to 31 December 2021 2,212 - Expenses from 1 to 31 December 2021 (2,565) (235) Profit/(loss) before tax from 1 to 31 December 2021 (353) (235) Income tax from 1 to 31 December 2021 83 - Profit/(loss) after tax from 1 to 31 December 2021 (270) (235) Minority interest 10% (27) - Profit/(loss) after tax from 1 to 31 December 2021 which belongs to Valamar A (243) (235) Share in profit/(loss) in Valamar A by equity method (24.54%) /i/ (60) (58) /i/ The share in the result consists of the share in the result of Valamar Obertauern GmbH (reduced by 10% for minority interest) and the result of Valamar A GmbH. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 170 NOTE 19A – FINANCIAL INSTRUMENTS BY CATEGORY GROUP (in thousands of HRK) Cash, loans and receivables Financial assets Total 31 December 2020 Assets at the reporting date Financial assets not measured at fair value Trade receivables 26,133 - 26,133 Loans and deposits 702 - 702 Cash and cash equivalents 665,933 - 665,933 Financial assets measured at fair value Financial assets - 317 317 Total 692,768 317 693,085 (in thousands of HRK) Cash, loans and receivables Financial assets Total 31 December 2021 Assets at the reporting date Financial assets not measured at fair value Trade receivables 29,205 - 29,205 Loans and deposits 43,180 - 43,180 Cash and cash equivalents 1,115,258 - 1,115,258 Financial assets measured at fair value Financial assets - 391 391 Total 1,187,643 391 1,188,034 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. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 171 NOTE 19A – FINANCIAL INSTRUMENTS BY CATEGORY / CONTINUED COMPANY (in thousands of HRK) Cash, loans and receivables Financial assets Total 31 December 2020 Assets at the reporting date Financial assets not measured at fair value Trade receivables 24,462 - 24,462 Loans and deposits 666 - 666 Cash and cash equivalents 522,973 - 522,973 Financial assets measured at fair value Financial assets - 261 261 Total 548,101 261 548,363 (in thousands of HRK) Cash, loans and receivables Financial assets Total 31 December 2021 Assets at the reporting date Financial assets not measured at fair value Trade receivables 46,098 - 46,098 Loans and deposits 5,622 - 5,622 Cash and cash equivalents 582,141 - 582,141 Financial assets measured at fair value Financial assets - 359 359 Total 633,861 359 634,220 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 172 NOTE 19A – FINANCIAL INSTRUMENTS BY CATEGORY / CONTINUED GROUP COMPANY (in thousands of HRK) 2020 2021 2020 2021 Liabilities at reporting date Financial liabilities – at amortised cost: Trade and other payables 161,691 156,644 147,224 138,066 Borrowings 3,508,641 3,112,631 3,168,553 2,827,504 3,670,332 3,269,275 3,315,778 2,965,570 Financial liabilities at fair value through profit or loss: Derivative financial instruments 16,982 7,749 16,982 7,749 3,687,314 3,277,024 3,332,760 2,973,319 NOTE 19B – CREDIT QUALITY OF FINANCIAL ASSETS GROUP COMPANY (in thousands of HRK) 2020 2021 2020 2021 Loans and deposits Loans and deposits 702 582 639 494 702 582 639 494 The credit quality of other financial assets is stated in the following notes. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 173 NOTE 20 – FINANCIAL ASSETS GROUP COMPANY (in thousands of HRK) 2020 2021 2020 2021 Listed equity securities /i/ 147 221 121 219 Other 170 170 140 140 317 391 261 359 /i/ Investments in securities represent less than 3% ownership interests and are presented at fair value. GROUP COMPANY (in thousands of HRK) 2020 2021 2020 2021 At beginning of year 391 317 335 261 Change in fair value recognised in other comprehensive income (74) 98 (74) 98 Loss of the control over subsidiaries - (24) - - At end of year 317 391 261 359 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 174 N O T E 2 1 – L O A N S A N D D E P O S I T S GROUP COMPANY (in thousands of HRK) 2020 2021 2020 2021 Loans and Deposits /i/ 702 43,180 667 5,622 Less: non-current part (89) (5,178) (89) (5,178) Current portion 613 38,002 578 444 /i/ The most significant item of loans and deposits of the Group in the amount of HRK 43,102 thousand relates to time deposits. The carrying amounts of short-term loans and deposits approximate their fair value. NOTE 22 – INVENTORIES GROUP COMPANY (in thousands of HRK) 2020 2021 2020 2021 Raw materials and supplies 14,260 18,890 11,937 16,911 Trade goods, small inventory and packaging material 16,076 7,420 15,359 6,707 30,336 26,310 27,296 23,618 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 175 NOTE 23 – TRADE AND OTHER RECEIVABLES GROUP COMPANY (in thousands of HRK) 2020 2021 2020 2021 Domestic receivables /i/ 29,006 23,178 27,059 21,558 Foreign receivables 1,185 1,338 1,045 979 Related parties receivables 1,599 7,294 492 27,006 Provision for impairment of trade receivables (6,415) (6,520) (4,946) (5,870) Trade receivables – net 25,375 25,289 23,650 43,673 Accrued income 715 3,889 769 2,398 Interest receivables 43 27 43 27 Total trade receivables 26,133 29,205 24,462 46,098 Prepaid expenses and accrued income /ii/ 54,600 19,837 45,889 18,818 VAT receivable 4,900 8,002 3,482 2,235 Advances to suppliers 2,304 668 1,698 457 Receivables from employees 298 739 277 626 Receivables from state institutions 4,529 1,113 1,313 834 Other receivables 2,047 2,591 1,967 2,422 Total other receivables 68,678 32,950 54,627 25,392 Total trade and other receivables 94,811 62,155 79,088 71,490 /i/ In 2021, Company’s trade receivables in the amount of HRK 5.4 million (2020: HRK 21.5 million) relate to the re-invoicing of a joint investment in the Business Centre in Dubrovnik. /ii/ In 2021, the Company calculated loan fees in the amount of HRK 10.5 million (2020: HRK 17.2 million) and the Group in the amount of HRK 11.2 million (2020: HRK 18 million). In 2020, the Company and the Group booked grants for net salaries and related contributions for which the Company and the Group meet the criteria for receiving the grants but was not received in 2020, in the amount of HRK 18.8 million for the Company and HRK 24.1 million for the Group. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 176 NOTE 23 – TRADE AND OTHER RECEIVABLES / CONTINUED M o v e m e n t o f p r o v i s i o n s f o r i m p a i r m e n t o f t r a d e a n d o t h e r r e c e i v a b l e s : GROUP COMPANY (in thousands of HRK) 2020 2021 2020 2021 At 1 January 6,254 6,415 4,969 4,946 Increase of impairment 1,635 3,022 1,409 2,997 Collected receivables (1,010) (392) (968) (380) Receivables written-off (464) (2,525) (464) (1,693) At 31 December 6,415 6,520 4,946 5,870 GROUP COMPANY (in thousands of HRK) 2020 2021 2020 2021 Trade receivables: Neither past due nor impaired 11,750 18,091 11,606 36,972 Past due, but not impaired 13,625 7,198 12,044 6,701 25,375 25,289 23,650 43,673 As at 31 December 2021, the maturities of the trade receivables, which are past due, but not impaired are as follows: GROUP COMPANY (in thousands of HRK) 2020 2021 2020 2021 Up to one month 11,121 965 10,956 802 One to two months 78 281 34 155 Two to three months 357 303 40 132 Over three months up to 1 year 2,069 5,649 1,014 5,613 13,625 7,198 12,044 6,701 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 177 NOTE 23 – TRADE AND OTHER RECEIVABLES / CONTINUED The carrying amounts of trade and other receivables are denominated in the following currencies: GROUP COMPANY (in thousands of HRK) 2020 2021 2020 2021 EUR 226 817 188 536 HRK 25,149 24,472 23,462 43,137 25,375 25,289 23,650 43,673 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, bank guarantees 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. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 178 N O T E 2 4 – D E R I V A T I V E F I N A N C I A L I N S T R U M E N T S GROUP AND COMPANY 2020 2021 Receivables Liabilities Receivables Liabilities Fair value of interest rate swap - 16,982 - 7,749 Total - 16,982 - 7,749 Less the non-current portion: - (11,602) - (4,362) Fair value of interest rate swap - 5,380 - 3,387 Current portion - 5,380 - 3,387 Interest rate swaps and foreign currency forwards A s a t 3 1 D e c e m b e r 2 0 2 1 , t h e c o n t r a c t e d v a l u e o f o u t s t a n d i n g interest rate swaps amounts to HRK 444,485 thousand (2020: HRK 563,830 thousand). As at 31 December 2021, there is no contracted value of foreign currency forwards amounts (2020: HRK 0 thousand). As at 31 December 2021, the weighted average base interest rate fixed by the interest rate swap contract for a loan in EUR is 0.49%, while t h e b a s e v a r i a b l e i n t e r e s t r a t e ( E U R I B O R ) i s - 0 .5 7 % . F a i r v a l u e g a i n s a n d l o s s e s o n i n t e r e s t r a t e s w a p s a r e r e c o g n i s e d d i r e c t l y in the Statement of comprehensive income within the finance costs until the repayment of borrowings with a final maturity as at 30 September 2028. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 179 NOTE 25 – DEFERRED TAX ASSET / LIABILITY D E F E R R E D TAX ASSET loss related to inter-group transaction Loss of the control over subsidiaries (407) - - - (4,688) - - (5,095) Credited to the income 18 - - 6,959 149 5,932 - 13,058 Debited to the income (15,921) (1,662) - (2,826) (840) (41,205) (12,121) (74,575) As at 31 December 2021 33,260 1,882 3,265 18,488 95,521 176,677 - 329,093 COMPANY (in thousands of HRK) Property, plant Financial Trade Provisions Tax losses Tax incentive Exceeding Total and equipment assets receivables and inventories for investment borrowing costs As at 1 January 2020 15,338 4,566 3,682 5,986 - 80,786 - 110,359 Credited to the income 19 1,072 - 6,708 81,468 4,720 12,121 106,108 Debited to the income (82) (1,084) (418) (412) - - - (1,996) As at 31 December 2020 15,275 4,554 3,264 12,282 81,468 85,506 12,121 214,471 Merger of subsidiary 16,141 - - - - - - 16,141 Credited to the income 18 - - 6,301 - - - 6,319 Debited to the income (15,921) (1,662) - (2,798) - (41,205) (12,121) (73,707) As at 31 December 2021 15,513 2,892 3,264 15,785 81,468 44,301 - 163,224 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 180 GROUP (in thousands of HRK) Property, plant Financial Trade Provisions Tax losses Tax incentive Exceeding Total and equipment assets receivables and for investment borrowing inventories costs As at 1 January 2020 33,717 3,555 3,683 7,449 4,641 140,787 - 193,832 Other changes 4 - - - 59 - - 63 Adjustment of deferred tax assets in profit and loss related to inter-group transaction - - - - - (160) - (160) Credited to the income 93 1,073 - 7,568 96,603 22,463 12,121 139,921 Debited to the income (82) (1,084) (418) (662) - - - (2,246) As at 31 December 2020 33,732 3,544 3,265 14,355 101,303 163,090 12,121 331,410 Other changes (1) - - - (11) - - (12) Adjustment of deferred tax assets in profit and 15,839 - - - (392) 48,860 - 64,307 NOTE 25 – DEFERRED TAX ASSET / LIABILITY / CONTINUED DEFERRED TAX LIABILITY GROUP (in thousands of HRK) Financial assets Fair value of land and buildings Total As at 1 January 2021 15 58,277 58,292 Other changes (5) - (5) Loss of the control over subsidiaries - (2,075) (2,075) Credited/(debited) to the income - (4,465) (4,465) Credited/(debited) to the other comprehensive income 18 - 18 As at 31 December 2021 28 51,737 51,765 COMPANY (in thousands of HRK) Financial assets Fair value of land and buildings Total As at 1 January 2021 (7) 13,314 13,307 Credited/(debited) to the income - (870) (870) Credited/(debited) to the other comprehensive income 18 - 18 As at 31 December 2021 11 12,444 12,455 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 181 NOTE 26 – CASH AND CASH EQUIVALENTS GROUP COMPANY (in thousands of HRK) 2020 2021 2020 2021 Giro-accounts and current accounts 381,428 490,033 260,239 30,769 Cash in hand 15 82 - - Foreign currency accounts 28,235 174,113 6,480 100,340 Time deposits up to one month 256,255 451,030 256,255 451,032 665,933 1,115,258 522,974 582,141 The interest rate on cash and cash equivalents is up to 0.02% (2020: up to 0.10%). The carrying amounts of cash and cash equivalents are denominated in the following currencies: GROUP COMPANY (in thousands of HRK) 2020 2021 2020 2021 HRK 401,606 511,339 280,417 51,994 EUR 261,984 602,489 240,768 529,374 CHF 429 2 429 2 Other 1,913 1,428 1,360 771 665,933 1,115,258 522,974 582,141 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 182 NOTE 27 – SHARE CAPITAL The authorised and registered share capital of the Company in 2021 amounts to HRK 1,672,021 t h o u s a n d ( 2 0 2 0 : HRK 1,672,021 thousand) and comprises 126,027,542 ordinary shares (2020: 1 2 6 ,0 2 7 ,5 4 2 ) w i t h n o p r e s c r i b e d n o m i n a l v a l u e . A l l the shares are fully paid. The ownership structure as at 31 December is as follows: 5,587,788 4.43 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 183 2020 Number of shares % Goldscheider Keramik Gesellschaft M.B.H., Vienna 25,017,698 19.85 Wurmbock Beteiligungs GMBH, Vienna 25,017,698 19.85 Satis d.o.o., Zagreb 6,524,904 5.18 Raiffeisenbank Austria d.d./Cumulative custodian account - for 5,587,788 4.43 SF/Custodian, Zagreb OTP Banka d.d./AZ OMF kategorije B/Custodian, Split 2,895,219 2.30 Enitor d.o.o., Zagreb 2,720,950 2.16 CERP, Zagreb 2,431,271 1.93 HPB d.d./Kapitalni fond d.d./Custodian, Zagreb 1,699,550 1.35 OTP Banka d.d./Erste plavi OMF kategorije B/Custodian, Split 1,371,093 1.09 Privredna banka Zagreb d.d./Cumulative custodian client 1,327,484 1.05 account/Custodian, Zagreb Treasury shares 4,139,635 3.28 Other shareholders - free float 47,294,252 37.53 Total 126,027,542 100.00 2021 Number of shares % Goldscheider Keramik Gesellschaft M.B.H., Vienna 25,017,698 19.85 Wurmbock Beteiligungs GMBH, Vienna 25,017,698 19.85 Satis d.o.o., Zagreb 6,524,904 5.18 Raiffeisenbank Austria d.d./Cumulative custodian account - for SF/Custodian, Zagreb OTP Banka d.d./AZ OMF kategorije B/Custodian, Split 2,895,219 2.30 Enitor d.o.o., Zagreb 2,720,950 2.16 CERP, Zagreb 2,210,408 1.75 OTP Banka d.d./Erste plavi OMF kategorije B/Custodian, Split 1,566,042 1.24 HPB d.d./Kapitalni fond d.d./Custodian, Zagreb 1,419,657 1.13 Privredna banka Zagreb d.d./Skrbni č ki zbirni ra č un klijenta/Custodian, 1,331,424 1.06 Zagreb Treasury shares 4,139,635 3.28 Other shareholders - free float 47,596,119 37.77 Total 126,027,542 100.00 NOTE 27 – SHARE CAPITAL / CONTINUED In 2021, there were no changes in share/equity capital of the Company. A s p r e v i o u s l y r e p o r t e d , b a s e d o n t h e d e c i s i o n a d o p t e d b y t h e C o m p a n y ’ s G e n e r a l A s s e m b l y h e l d o n 2 4 J u l y 2 0 1 3 , t h e r e g i s t e r e d c a p i t a l w a s i n c r e a s e d b y a c o n v e r s i o n o f t h e r e i n v e s t e d p r o f i t o f t h e y e a r 2 0 1 2 b y H R K 5 2 ,2 0 0 t h o u s a n d . T h e d i s t r i b u t i o n o f t h e reinvested profit of HRK 52,200 thousand in future periods may result in tax obligations given it is based on a tax incentive. T h e C o m p a n y d i d n o t a c q u i r e a n d r e l e a s e t r e a s u r y s h a r e s d u r i n g 2 0 2 1 . A s a t 3 1 D e c e m b e r 2 0 2 1 , t h e C o m p a n y o w n e d 4,1 3 9 ,6 3 5 o f t h e i r t r e a s u r y s h a r e s ( 2 0 2 0 : 4,1 3 9 ,6 3 5 ) , w h i c h r e p r e s e n t s 3.2 8 % ( 2 0 2 0 : 3.2 8 % ) of the Company’s registered capital. NOTE 28 – RESERVES AND RETAINED EARNINGS a) C a p i t a l reserves A s a t 3 1 D e c e m b e r 2 0 2 1 , t h e c a p i t a l r e s e r v e s o f t h e G r o u p a m o u n t e d t o H R K 5,2 2 4 t h o u s a n d ( 2 0 2 0 : H R K 5,2 2 4 t h o u s a n d ) . A s a t 3 1 D e c e m b e r 2 0 2 1 , t h e c a p i t a l r e s e r v e s o f t h e C o m p a n y a m o u n t e d t o H R K 5,7 1 1 t h o u s a n d ( 2 0 2 0 : H R K 5,7 1 1 t h o u s a n d ) . NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 184 NOTE 28 – RESERVES AND RETAINED EARNINGS / CONTINUED b) Reserves and retained earnings GROUP (in thousands of HRK) 2020 2021 Legal reserves 83,601 83,601 Fair value reserves 1 81 Other reserves 161,993 163,749 Retained earnings 363,625 467,737 609,220 715,167 Changes in reserves: Legal reserves At beginning of the year 83,601 83,601 At year end 83,601 83,601 Fair value reserves At beginning of the year 61 1 Change in fair value financial assets (60) 80 At year end 1 81 Other reserves At beginning of the year 160,851 161,993 Return of uncollected dividend from other reserves 1,142 1,756 At year end 161,993 163,749 Retained earnings At beginning of the year 690,708 363,625 Result for the year (329,594) 104,375 Return of uncollected dividend from retained earnings 2,248 - Exchange rate differences from foreign business 263 (263) At year end 363,625 467,737 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 185 NOTE 28 – RESERVES AND RETAINED EARNINGS / CONTINUED b) Reserves and retained earnings / CONTINUED COMPANY (in thousands of HRK) 2020 2021 Legal reserves 83,601 83,601 Fair value reserve 1 81 Other reserves 176,476 105,846 Retained earnings 571,832 876,438 831,910 1,065,966 Changes in reserves: Legal reserves At beginning of the year 83,601 83,601 At year end 83,601 83,601 Fair value reserves At beginning of the year 61 1 Change in fair value financial assets (60) 80 At year end 1 81 Other reserves At beginning of the year 175,334 176,476 Return of uncollected dividend from other reserves 1,142 1,756 Merger of subsidiary - (72,386) At year end 176,476 105,846 Retained earnings At beginning of the year 878,134 571,832 Result for the year (308,550) 304,606 Return of uncollected dividend from retained earnings 2,248 - At year end 571,832 876,438 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 186 NOTE 28 – RESERVES AND RETAINED EARNINGS / CONTINUED Legal reserves T h e l e g a l r e s e r v e i s r e q u i r e d u n d e r C r o a t i a n l a w a n d s h a l l b e b u i l t u p a t a m i n i m u m o f 5 % o f t h e p r o f i t f o r t h e y e a r u n t i l t h e total legal reserve together with capital reserves reach 5% of the Company’s share capital. As at 31 December 2021, the legal reserves of the Group and the Company amounted to HRK 83,601 thousand or 5.00% of the share capital (2020: HRK 83,601 thousand or 5.00% of the share capital). This reserve is not distributable. Other reserves 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 2021, treasury share reserves amounted to HRK 136,815 thousand. As at 31 December 2021, other reserves of the Group amounted to HRK 163,749 thousand, which comprise of treasury shares in t h e a m o u n t o f H R K 1 3 6 ,8 1 5 t h o u s a n d a n d t h e r e s t a r e e f f e c t s o f c o n s o l i d a t i o n . As at 31 December 2021, other reserves of the C o m p a n y a m o u n t e d t o H R K 1 0 5 ,8 4 5 t h o u s a n d , w h i c h c o n s i s t o f treasury shares in the amount of HRK 136,815 thousand and losses from the merger of subsidiaries. The Company did not pay out a dividend in 2020 and 2021. Fair value reserves As at 31 December 2021, the fair value reserves of the Company and the Group amounted to HRK 81 thousand. These reserves are not distributable and relate to the fair value of financial assets. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 187 N O T E 2 9 – BORROWINGS balance sheet date /i/ Finance lease 38 - - - 738,366 565,524 693,967 523,631 Non-current Bank borrowings 2,770,276 2,547,107 2,474,586 2,303,873 2,770,276 2,547,107 2,474,586 2,303,873 Total borrowings 3,508,641 3,112,631 3,168,553 2,827,504 /i/ Current borrowings in 2020 comprise of the part of non-current borrowings in the amount of HRK 185,009 thousand for which the Company and the Group received waivers for 2020 after the balance sheet date, in accordance with IAS 1. Non-current bank borrowings are secured with a pledge over Group’s property facilities and movable property with a net book value of HRK 2,319,645 thousand (2020: HRK 2,010,351 thousand) (Note 14 - Property, plant and equipment ). Current bank borrowings are secured with promissory notes in the amount of HRK 217,998 thousand (2020: HRK 297,614). Non-current bank borrowings are secured with a pledge over Company’s property facilities and movable property with a net book value of HRK 1,861,945 thousand (2020: HRK 1,616,678 thousand) (Note 14 - Property, plant and equipment ). Current bank borrowings are secured with promissory notes in the amount of HRK 217,998 thousand (2020: HRK 297,614). A s a t 3 1 D e c e m b e r 2 0 2 1 , t h e C o m p a n y h a d u n u s e d l i n e s o f c r e d i t c o n t r a c t e d w i t h f i n a n c i a l institutions for 2021 in the total amount of HRK 278,135 thousand, and the Group in the total amount of HRK 278,135 thousand. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 188 GROUP COMPANY (in thousands of HRK) 2020 2021 2020 2021 Current Bank borrowings Non-current part of borrowings - waivers after 553,319 185,009 565,524 - 508,958 185,009 523,631 - NOTE 29 – BORROWINGS / CONTINUED The carrying amount of borrowings is denominated in EUR. Effective interest rates at the reporting date were as follows: GROUP 2020 2021 Borrowings: (in thousands of HRK) % (in thousands of HRK) % EUR 3,409,331 0% - 3% 2,994,019 0.93% - 3% HRK 99,310 0% - 2.95% 118,612 0% - 2.95% 3,508,641 3,112,631 COMPANY 2020 2021 Borrowings: (in thousands of HRK) % (in thousands of HRK) % EUR 3,156,241 0.76% - 3% 2,817,273 0.93% - 3% HRK 12,312 2% - 2.05% 10,231 2.0% 3,168,553 2,827,504 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 189 NOTE 29 – BORROWINGS / CONTINUED M a t u r i t i e s o f n o n - c u r r e n t b o r r o w i n g s a r e a s f o l l o w s : GROUP COMPANY (in thousands of HRK) 2020 2021 2020 2021 1-3 years 784,381 862,999 706,497 778,346 3-6 years 884,057 830,510 786,304 754,378 Over 6 years 1,101,838 853,598 981,785 771,149 2,770,276 2,547,107 2,474,586 2,303,873 The carrying amounts and fair value of non-current borrowings are as follows: BORROWINGS Carrying amounts Fair value (in thousands of HRK) 2020 2021 2020 2021 Group 2,770,276 2,547,107 2,716,086 2,501,401 Company 2,474,586 2,303,873 2,427,136 2,264,500 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 1.97% (2020: 1.98%). The carrying amounts of current portion of non-current borrowings approximate their fair value due to short term maturity. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 190 NOTE 30 – RIGHT-OF-USE ASSETS AND LEASE LIABILITIES T h e C o m p a n y a n d t h e G r o u p h a v e l e a s e s f o r properties, motor vehicles and land used for their business within the scope of IFRS 16 Leases. The lease term for most contracts is between 3 and 5 years, with the exception of several leases with a tenancy of more than 10 years. The Company and the Group have a restriction regarding the lease of certain lease subjects to sublease them. Recognised right-of-use assets and the movements during the period: GROUP (in thousands of HRK) Property Land Motor vehicles Total As at 1 January 2020 1,760 10,070 3,694 15,524 Additions 134 933 173 1,240 Depreciation (809) (2,571) (1,021) (4,401) Modifications and other (premature termination) (336) (191) (172) (699) As at 31 December 2020 749 8,241 2,674 11,664 Additions 6,168 3,174 - 9,342 Depreciation (679) (2,393) (943) (4,015) Modifications and other (premature termination) (254) (41) (56) (351) As at 31 December 2021 5,984 8,981 1,675 16,640 COMPANY (in thousands of HRK) Property Land Motor vehicles Total As at 1 January 2020 2,240 10,241 3,358 15,839 Additions 950 827 173 1,950 Depreciation (1,151) (2,679) (986) (4,816) Modifications and other (premature termination) (336) (191) - (527) As at 31 December 2020 1,703 8,198 2,545 12,446 Additions 6,321 3,274 - 9,595 Depreciation (1,040) (2,381) (908) (4,329) Modifications and other (premature termination) (255) (535) (56) (846) As at 31 December 2021 6,729 8,554 1,582 16,866 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 191 NOTE 30 – RIGHT-OF-USE ASSETS AND LEASE LIABILITIES / CONTINUED Lease liabilities and the movements during the period: GROUP COMPANY (in thousands of HRK) 2020 2021 2020 2021 As at 1 January 12,006 9,169 12,359 9,973 Additions 1,238 8,643 1,958 8,875 Accretion of interest 305 346 340 364 Payments (3,676) (3,857) (4,142) (4,196) Modifications and other (premature termination) (705) (348) (542) (835) As at 31 December 9,168 13,953 9,973 14,181 Current liabilities 2,243 2,680 2,582 2,969 Non-current liabilities 6,925 11,273 7,391 11,212 Leases in profit and loss: GROUP COMPANY (in thousands of HRK) 2020 2021 2020 2021 Depreciation expense of right-of use assets 4,406 4,015 4,816 4,328 Interest expense on lease liabilities 305 346 340 364 Expense relating to short-term leases 52 173 52 173 Variable lease payments 118 1,814 118 1,814 Total 4,881 6,348 5,326 6,679 Depreciation expense of right-of-use assets are included in Depreciation and amortization within the Statement of comprehensive income, while the Interest expense on lease liabilities is included in Note 11 - Interest expense. Expense relating to short-term leases are included in Note 7 – Rent. Variable lease payments are included in Note 7 – Rent and Note 9 - Municipal charges, concessions and other. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 192 NOTE 30 – RIGHT-OF-USE ASSETS AND LEASE LIABILITIES / CONTINUED In 2021 total cash outflows for amounted to HRK 6,059 thousand (2020: HRK 4,312 thousand) for the Company and HRK 5,709 thousand (2020: HRK 3,846 thousand) for the Group (including cash outflows for short-term leases and variable lease payments). U n d i s c o u n t e d f u t u r e c a s h o u t f l o w s f o r t h e l e a s e s o n 3 1 D e c e m b e r 2 0 2 1 t o w h i c h t h e C o m p a n y a n d t h e G r o u p a r e p o t e n t i a l l y e x p o s e d that are not reflected in the measurement of lease liabilities (not included in calculation of the assets and liabilities present value): (in thousands of HRK) GROUP COMPANY Extension – not certain 3,748 3,194 Variable lease payments 1,417 1,417 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 193 NOTE 31 – TRADE AND OTHER PAYABLES GROUP COMPANY (in thousands of HRK) 2020 2021 2020 2021 Trade payables 61,725 67,447 49,910 51,095 Trade payables – related parties 84 63 220 131 Interest payable 33,727 29,168 32,895 29,002 Bills of exchange liabilities 6,625 - 6,625 - Concession fees payable 59,529 59,966 57,575 57,838 161,690 156,644 147,225 138,066 Minus: non-current part /i/ (57,609) (58,046) (55,656) (55,917) Current part 104,081 98,598 91,569 82,149 Liabilities for dividend 389 380 10 - Liabilities to employees 19,187 28,794 15,921 24,805 Liabilities for calculated vacation and redistribution hours Liabilities for taxes and contributions and similar charges Accrued VAT liabilities in unrealized income 121 483 121 295 Advances received 69,609 40,344 61,768 36,065 Liabilities for calculated costs 28,673 22,605 23,340 19,853 Other liabilities 10,707 10,698 10,310 8,685 Total current liabilities 241,390 229,319 209,237 195,893 Total trade payables and other liabilities 298,999 287,365 264,893 251,810 /i/ S e p a r a t e d l o n g - t e r m o b l i g a t i o n p a r t f o r a c o n c e s s i o n f e e f o r t o u r i s t l a n d . NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 194 2,496 10,908 1,533 9,379 6,129 16,509 4,665 14,662 NOTE 31 – TRADE AND OTHER PAYABLES / CONTINUED The carrying amount of financial liabilities for trade payables, interest and concessions are denominated in the following currencies: GROUP COMPANY (in thousands of HRK) 2020 2021 2020 2021 EUR 35,632 32,311 34,759 32,276 GBP 23 87 23 87 USD 17 107 17 107 HRK 126,018 124,139 112,426 105,596 161,690 156,644 147,224 138,066 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 195 N O T E 3 2 – P R O V I S I O N S A N D O T H E R A C C R U E D E X P E N S E S GROUP (in thousands of HRK) Termination Legal proceedings Bonuses Other provisions Total benefits and jubilee awards /i/ As at 1 January 2021 32,477 57,420 19,751 - 109,648 Additional provisions 9,739 2,193 - 28,164 40,096 Used during year (350) - - - (350) Reversed during year (10,809) (9,496) - - (20,305) Loss of the control over subsidiaries (64) - - - (64) As at 31 December 2021 30,993 50,117 19,751 28,164 129,025 2021 Current part 1,164 - 19,751 - 20,914 Non-current part 29,829 50,117 - 28,164 108,111 COMPANY (in thousands of HRK) Termination benefits and Legal proceedings Bonuses Other provisions /i/ Total jubilee awards As at 1 January 2021 27,204 36,379 17,563 - 81,146 Additional provisions 9,317 1,936 - 24,828 36,081 Used during year (85) - - - (85) Reversed during year (10,653) (9,472) - - (20,125) As at 31 December 2021 25,783 28,843 17,563 24,828 97,017 2021 Current part 818 - 17,563 - 18,381 Non-current part 24,965 28,843 - 24,828 78,636 /i/ Other provisions for the Group and the Company mostly relate to the lease of tourist land explained in the Note 4 – Critical accounting estimates . NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 196 NOTE 32 – PROVISIONS AND OTHER ACCRUED EXPENSES / CONTINUED Legal cases of the Company P r o v i s i o n s f o r l i t i g a t i o n m o s t l y r e l a t e t o : 1. Real estate in Dubrovnik, as follows: a) on the sold construction land from 1996 with a total area of 10,441 m 2 which was not included in the estimated value during the transformation and privatization of the company Dubrovnik - Babin kuk d.d. Due to the impossibility of registering ownership, some buyers filed a lawsuit with the Municipal Court in Dubrovnik with a request to terminate the sales contract, so a reservation was made for future payments according to the sale prices of land from sales contracts and interest; b) a d i s p u t e o v e r d a m a g e s i n t h e n a m e o f s o l d b u s i n e s s p r e m i s e s i n D u b r o v n i k from 1999 for which the buyer/plaintiff is still not registered in the land register. 2. Real estate on the island of Krk, as follows: a) in relation to the sold land, which in part was not assessed in the process of t r a n s f o r m a t i o n a n d p r i v a t i z a t i o n o f t h e c o m p a n y Z l a t n i o t o k d.d., s o t h e b u y e r r e c o u r s e c l a i m s t h e a m o u n t p a i d t o t h e R e p u b l i c o f C r o a t i a f o r t h e u n v a l u e d p a r t ; b) i n r e l a t i o n t o t h e r e q u e s t o f t h e o w n e r s o f r e a l e s t a t e t h a t a r e t o a l e s s e r e x t e n t w i t h i n t h e K r k c a m p , f o r t h e p a y m e n t o f c o m p e n s a t i o n f o r t h e b e n e f i t s f o r t h e use of someone else's real estate; c) to the property-legal claims of the book and/or non-book owners of a part of the real estate in the Bunculuka camp in Baška, and d) dispute over the real estate in the Bunculuka camp and the land of the administrative building of the Krk Branch. Legal cases of the Group Legal cases of the Group include Company’s land ownership disputes and legal proceedings of Imperial Riviera d.d. The increase in the Group’s legal cases provision during 2021 is the result of a d d i t i o n a l provisions made on the basis of legal advisors, Management Board and legal affairs department estimations regarding the land ownership disputes and outcomes of ongoing legal cases. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 197 N O T E 3 3 – C O N S O L I D A T E D S U B S I D I A R I E S OWNERSHIP AT 31 DECEMBER Country 2020 2021 Palme turizam d.o.o. /i/ Croatia 100.00% - Magi č ne stijene d.o.o. Croatia 100.00% 100.00% Bugenvilia d.o.o. Croatia 100.00% 100.00% Imperial Riviera d.d. /i/ Croatia 43.68% 46.27% Valamar A GmbH /i/ Austria 100.00% - Valamar Obertauern GmbH /i/ Austria 100.00% - /i/ Explained detailed in Note 1 – General information . NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 198 NOTE 34 – CONTINGENCIES AND COMMITMENTS Legal proceedings In the ordinary course of business, the Company is plaintiff and defendant in various l e g a l a c t i o n s . I n t h e f i n a n c i a l s t a t e m e n t s f o r t h e y e a r e n d e d on 31 December 2021, provisions for certain legal proceedings have been made for which the Company a n t i c i p a t e s o u t f l o w s o f H R K 2 8 ,8 4 3 t h o u s a n d . T h e C o m p a n y and the Group do not anticipate other contingent liabilities based on legal disputes. Transformation and privatisation audit and land ownership A transformation and privatisation audit were carried out for the Company during 2002 a n d 2 0 0 3 , w i t h a s e p a r a t e a u d i t f o r R i v i e r a P o r e č d.d. ( f o r m e r l y R i v i e r a H o l d i n g d.d., Riviera Adria d.d., now Valamar Riviera d.d.) and for companies merged into Valamar R i v i e r a d.d.: R a b a c d.d., Z l a t n i O t o k d.d. a n d D u b r o v n i k B a b i n k u k d.d. T h e r e p o r t s c l a i m t h a t t h e t r a n s f o r m a t i o n a n d p r i v a t i s a t i o n p r o c e s s h a d n o t b e e n p e r f o r m e d e n t i r e l y i n 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 e q u i t y , b u t h a v e n o t y e t b e e n r e c o r d e d i n t h e l a n d r e g i s t r y . T h e C o m p a n y , a s w e l l 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 r e s p e c t t o t h e o b j e c t i o n o f t h e C o m p a n y 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 a d m i n i s t r a t i v e p r o c e d u r e s , w h i c h p r i m a r i l y r e f e r t o l a n d e x c l u d e d f r o m t h e v a l u a t i o n i n t h e p r o c e s s o f t r a n s f o r m a t i o n a n d p r i v a t i s a t i o n , b u t partially registered by the Company a n d t o a p o r t i o n o n w h i c h c a t e r i n g a n d o t h e r f a c i l i t i e s h a v e b e e n b u i l t o r a r e i n f u n c t i o n ( i n t h e L a n t e r n a a n d S o l a r i s r e s o r t s a n d t h e L a n t e r n a , S o l a r i s , I s t r a , J e ž e v a c , K r k a n d Š k r i l a c a m p i n g g r o u n d s ) a s w e l l a s p r o c e d u r e s i n r e l a t i o n t o l a n d i n D u b r o v n i k , w h i c h w a s a p p r a i s e d , b u t n o t r e g i s t e r e d , a n d l a n d w h i c h h a s b e e n s o l d , b u t w a s n o t a p p r a i s e d . T h e o u t c o m e a n d t h e r e s u l t o f t h e legal and other proceedings cannot be predicted with any d e g r e e o f c e r t a i n t y , b u t a r e s o l u t i o n w a s e x p e c t e d i n a c c o r d a n c e w i t h t h e A c t o n T o u r i s t a n d O t h e r C o n s t r u c t i o n L a n d n o t A p p r a i s e d in Transformation and Privatisation NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued P r o c e s s e s (“t h e ZOTZ”), and in relation to land in the area of Dubrovnik, through s e t t l e m e n t . O n 1 A u g u s t 2 0 1 0 , t h e Z O T Z e n t e r e d i n t o f o r c e , o n t h e b a s i s o f t h e p r o v i s i o n s o f w h i c h t h e o w n e r s h i p a n d c o - o w n e r s h i p o v e r l a n d n o t a p p r a i s e d i n t h e t r a n s f o r m a t i o n a n d p r i v a t i s a t i o n p r o c e s s e s s h o u l d h a v e b e e n f i n a l l y b e d e t e r m i n e d , and in the spirit of t h e p r o v i s i o n s o f w h i c h a l l d i s p u t e s t h a t w e r e o n g o i n g i n r e l a t i o n t o u n a p p r a i s e d t o u r i s t l a n d , p r i m a r i l y t h e l a n d i n t h e a r e a o f P o r e č , R a b a c a n d K r k , s h o u l d h a v e b e e n r e s o l v e d . T h e C o m p a n y i n i t i a t e d p r o c e d u r e s i n a c c o r d a n c e w i t h t h e p r o v i s i o n s o f t h e Z O T Z w i t h i n t h e p r e s c r i b e d p e r i o d , t h r o u g h s u b m i s s i o n o f a r e q u e s t o n 3 1 J a n u a r y 2 0 1 1 f o r c o n c e s s i o n s o n t o u r i s t l a n d i n c a m p i n g g r o u n d s a n d t o u r i s t l a n d i n t o u r i s t r e s o r t s , a s w e l l a s r e q u e s t s f o r v e r i f i c a t i o n o f p l o t s / l a n d g r o u n d - p l a n s u r f a c e a r e a o f a p p r a i s e d b u i l d i n g s ( h o t e l s , a p a r t m e n t s a n d o t h e r a p p r a i s e d b u i l d i n g s ) a n d o t h e r p r e s c r i b e d r e q u e s t s . T h e o w n e r s h i p a n d / o r c o - o w n e r s h i p b y t h e C o m p a n y o f t h e p o r t i o n o f l a n d n o t a p p r a i s e d i n t h e t r a n s f o r m a t i o n a n d p r i v a t i s a t i o n p r o c e d u r e s s h o u l d h a v e b e e n d e t e r m i n e d b y t h e o u t c o m e o f t h e s e p r o c e d u r e s . With the Act on unappraised land („the Z N G Z “) e n t e r e d i n t o f o r c e o n 2 M a y 2 0 2 0 , t h e p r o c e d u r e s f o r o b t a i n i n g a c o n c e s s i o n i n i t i a t e d u n d e r t h e p r o v i s i o n s o f t h e Z O T Z h a v e b e e n s u s p e n d e d a n d f u r t h e r a s s e s s m e n t of the court and administrative proceedings related to unappraised land can be p r e d i c t e d o n l y a f t e r r e s o l v i n g p r o p e r t y r e l a t i o n s a d d e t e r m i n i n g t h e a c t u a l o w n e r s o f t o u r i s t l a n d , a c c o r d i n g t o p r o v i s i o n s o f t h e Z N G Z . 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. Capital commitments The contracted capital commitments of the Company in respect to investments in tourism facilities at 31 December 2021 amount to HRK thousand 544,910 thousand (2020: HRK 515,432 thousand). The contracted capital commitments of the Group in respect to investments in tourism facilities at 31 December 2021 amount to HRK 597,391 thousand (2020: HRK 535,627 thousand). The company is the guarantor of the loan related-party Valamar Obertauern GmbH. The estimated maximum amount of the guarantee that can be realized is HRK 48,647 thousand. The loan of the related-party is secured by mortgages on the real estate of Valamar Obertauern GmbH. The Company estimates the very low probability of incurring an actual obligation under the guarantee. 199 NOTE 35 – CASH GENERATED FROM OPERATIONS (4,777) (1,820) (5,180) (281,702) Provision for impairment of trade and other receivables - net 625 2,631 441 2,617 Finance costs - net 110,017 63,074 100,130 57,419 Loss of the control over subsidiaries - (13,316) - - Fair value gains/(loss) from financial instruments - net 74 (9,233) 74 (9,233) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 200 A d j u s t m e n t o f p r o f i t w i t h c a s h g e n e r a t e d f r o m o p e r a t i o n s : GROUP COMPANY (in thousands of HRK) 2020 2021 2020 2021 Profit/(loss) before taxation (501,049) 101,476 (413,532) 371,124 Adjustment for: Depreciation and amortisation 496,444 507,336 391,987 397,597 Net gains on sale of property, plant and equipment and intangible assets Write-off of property, plant and equipment 1,532 3,892 1,202 2,511 and financial assets Share in net profit/(loss) of associates 1,644 (404) - - Increase in provisions - net 22,152 25,063 20,421 21,539 Changes in: - Trade and other receivables (46,516) 20,098 (41,213) 861 - Inventories (4,511) 3,782 (4,911) 3,678 - Trade and other payables (82,313) (22,602) (58,985) (28,430) Cash generated from operations (6,678) 679,977 (9,566) 537,981 NOTE 36 – RELATED PARTY TRANSACTIONS Related parties are those companies, which have the power to exercise control over t h e o t h e r p a r t y o r a r e u n d e r c o m m o n c o n t r o l o r w h i c h h a v e a s i g n i f i c a n t i n f l u e n c e o n 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 2020 and 2021 are: Epic Goldscheider & Wurmböck Unternehmensberatungsgesellschaft m.b.H, Vienna, Wurmböck Beteiligungs GmbH, Vienna, Bugenvilia d.o.o., Dubrovnik, Satis d.o.o., Zagreb, Casatis d.o.o., Z a g r e b , E l a d c o I n v e s t G m b H , K r a u b a t h a n d e r M u r ( A u s t r i a ) , I.Q.M. d.o.o., P o r e č , E n i t o r d.o.o., Z a g r e b ( u n t i l 1 5 J u n e , 2 0 2 1 , w h e n t h e m e m b e r m a n d a t e o f t h e C o m p a n y ’s S u p e r v i s o r y B o a r d , M r . V i c k o F e r i ć , e n d e d ) , M a g i č n e stijene d.o.o., D u b r o v n i k , P a l m e t u r i z a m d.o.o., Dubrovnik (until 7 May 2021 when it was merged w i t h P a r e n t C o m p a n y V a l a m a r R i v i e r a d.d.), I m p e r i a l R i v i e r a d.d., R a b , with subsidiary Praona d.o.o., Makarska, Valamar A GmbH, Tamsweg/Vienna with subsidiaries WBVR B e t e i l i g u n g s G m b H , V i e n n a a n d C o n t i E s t a t e s A G , Z u g ( S w i t z e r l a n d ) , V a l a m a r Obertauern GmbH, Obertauern, Helios Faros d.d., Stari Grad, Kamenolom Pridraga d.o.o., P r i d r a g a , F l e x i O s c a r d.o.o., Z a g r e b ( s i n c e M a r c h 2, 2 0 2 1 , w h e n t h e D e p u t y C h a i r m a n o f t h e S u p e r v i s o r y B o a r d , M r . Mladen Markoč, became a member of the c o m p a n y ) , D P N J E D A N d.o.o. Z a g r e b ( s i n c e O c t o b e r 2 0 , 2 0 2 1 , w h e n t h e D e p u t y Chairman of the Supervisory Board, Mr. Mladen Markoč, founded the company), A g r o - k a p i t a l d . o . o . , G r o ž n j a n ( f r o m 1 6 J u n e 2 0 2 1 w h e n t h e m a n d a t e o f t h e m e m b e r of the Supervisory Board Mr. Boris Galić began to 30 November 2021 when he sold a l l s h a r e s i n t h i s c o m p a n y ) , B 1 0 I s t r i a n f u s i o n d . o . o . , G r o ž n j a n ( f r o m 1 6 J u n e 2 0 2 1 w h e n t h e m a n d a t e o f t h e m e m b e r o f t h e S u p e r v i s o r y B o a r d M r . B o r i s G a l i ć b e g a n ) , YES International AG, Lachen, Switzerland and yes.com AG, Lachen, Switzerland (from 1 6 J u n e 2 0 2 1 w h e n t h e m a n d a t e o f t h e m e m b e r o f t h e S u p e r v i s o r y B o a r d M r . D a n i e l Goldscheider began). Related party are also lawyers Mladen Markoč i Relja Pećina, Z a g r e b a n d O b r t z a p o d u k u B u c o l a j , N o v i g r a d ( f r o m 1 6 J u n e 2 0 2 1 w h e n t h e m a n d a t e of the member of the Supervisory Board Mr. Ivan Ergović began). Management Agreement A s o f 2 8 N o v e m b e r 2 0 1 9 , a n e w A g r e e m e n t w a s c o n c l u d e d b e t w e e n I m p e r i a l R i v i e r a d.d. a n d V a l a m a r R i v i e r a d.d. i n r e l a t i o n t o t h e m a n a g e m e n t o f h o t e l a n d t o u r i s t f a c i l i t i e s , b a s e d o n t h e D e c i s i o n o f t h e G e n e r a l A s s e m b l y o f I m p e r i a l R i v i e r a d.d. o f 2 9 O c t o b e r 2 0 1 9 ( h e r e i n a f t e r t h e C o n t r a c t ) . T h e s u b j e c t o f t h e C o n t r a c t i s t h e p r o v i s i o n o f m a n a g e m e n t a n d b u s i n e s s a c t i v i t i e s r e l a t e d t o h o t e l s , a p a r t m e n t s , r e s o r t s a n d / o r c a m p i n g g r o u n d s , a n d o t h e r i m m o v a b l e o r m o v a b l e p r o p e r t y . A c o m m o n n a m e f o r t h i s t y p e o f c o n t r a c t i s a h o t e l m a n a g e m e n t a g r e e m e n t o r h o t e l m a n a g e m e n t c o n t r a c t . F o r t h e m a n a g e m e n t s e r v i c e s p r o v i d e d , V a l a m a r R i v i e r a d.d. i s e n t i t l e d t o c o m p e n s a t i o n f o r m a n a g e m e n t s e r v i c e s c o n s i s t i n g o f b a s i c a n d i n c e n t i v e f e e s , a n d f e e s f o r a d v i s o r y i n r e s p e c t o f t h e m a n a g e m e n t a n d i m p l e m e n t a t i o n o f i n v e s t m e n t s ( C A P E X f e e ) , r e s e r v a t i o n c e n t r e f e e s , w h i c h a r e d e t e r m i n e d a s a s p e c i f i e d a m o u n t ( p e r c e n t a g e ) o f t h e t o t a l v a l u e o f r e a l i s e d r e s e r v a t i o n s . A d d i t i o n a l l y , f o r t h e i n i t i a l a n d " p r e - o p e n i n g " s e r v i c e s e x e c u t e d b e f o r e t h e o p e n i n g o f f u l l y r e n o v a t e d a n d r e b r a n d e d f a c i l i t i e s , V a l a m a r R i v i e r a d.d. i s e n t i t l e d t o a c o m p e n s a t i o n t h e a m o u n t o f w h i c h d e p e n d s o n t h e a c c o m m o d a t i o n t y p e a n d s i z e . T h e c o n t r a c t w a s c o n c l u d e d f o r a p e r i o d o f 2 5 y e a r s w i t h t h e p o s s i b i l i t y o f t e r m i n a t i o n o r e x t e n s i o n . A s o f 1 F e b r u a r y 2 0 1 9 t h e A g r e e m e n t b e t w e e n V a l a m a r R i v i e r a d.d. a n d V a l a m a r O b e r t a u e r n G m b H i n r e l a t i o n t o t h e m a n a g e m e n t o f t h e h o t e l a n d t o u r i s t f a c i l i t i e s a n d a m e n i t i e s i s v a l i d . T h e c o n t r a c t w a s c o n c l u d e d f o r a p e r i o d o f 2 5 y e a r s . A s o f 2 S e p t e m b e r 2 0 1 9 t h e A g r e e m e n t b e t w e e n V a l a m a r R i v i e r a d.d. a n d H e l i o s F a r o s d.d. i n r e l a t i o n t o t h e m a n a g e m e n t o f t h e h o t e l a n d t o u r i s t f a c i l i t i e s a n d a m e n i t i e s i s v a l i d . T h e c o n t r a c t w a s c o n c l u d e d f o r a p e r i o d o f 1 0 y e a r s . T h e s u b j e c t o f t h e s e C o n t r a c t s i s t h e p r o v i s i o n o f m a n a g e m e n t a n d b u s i n e s s a c t i v i t i e s c o n c e r n i n g h o t e l s , a p a r t m e n t s a n d / o r r e s o r t s a n d o t h e r i m m o v a b l e o r m o v a b l e p r o p e r t y . A c o m m o n n a m e f o r t h i s t y p e o f c o n t r a c t i s a h o t e l m a n a g e m e n t a g r e e m e n t o r h o t e l m a n a g e m e n t c o n t r a c t . F o r t h e m a n a g e m e n t s e r v i c e s p r o v i d e d , V a l a m a r R i v i e r a d.d. i s e n t i t l e d t o c o m p e n s a t i o n f o r m a n a g e m e n t s e r v i c e s c o n s i s t i n g o f b a s i c a n d i n c e n t i v e f e e s , a n d f e e s f o r a d v i s o r y s e r v i c e s i n r e s p e c t o f t h e c o n c e p t u a l i s a t i o n a n d s t r u c t u r a t i o n o f i n v e s t m e n t s t o i m p l e m e n t V A L A M A R b r a n d ( s ) C A P E X f e e ) . T h e c o n t r a c t a l s o s t i p u l a t e s r e s e r v a t i o n c e n t r e f e e s , w h i c h a r e d e t e r m i n e d a s a s p e c i f i e d a m o u n t ( p e r c e n t a g e ) o f t h e t o t a l v a l u e o f r e a l i s e d r e s e r v a t i o n s . A d d i t i o n a l l y , f o r t h e i n i t i a l a n d " p r e - o p e n i n g " s e r v i c e s e x e c u t e d b e f o r e t h e o p e n i n g o f f u l l y r e n o v a t e d a n d r e b r a n d e d f a c i l i t i e s , V a l a m a r R i v i e r a d.d. i s e n t i t l e d t o a c o m p e n s a t i o n t h e a m o u n t o f w h i c h d e p e n d s o n t h e a c c o m m o d a t i o n t y p e a n d s i z e . A f e e h a s a l s o b e e n a g r e e d . NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 201 NOTE 36 – RELATED PARTY TRANSACTIONS / CONTINUED Related party transactions were as follows: GROUP (in thousands of HRK) 2020 2021 Sale of goods and services Other parties related to the owners and corporate governance bodies 1 1 Associate with participating interest 1,918 8,601 Purchase of services 1,919 8,602 Other parties related to the owners and corporate governance bodies 217 480 Associate with participating interest 18 239 235 719 Trade and other receivable Associate with participating interest 331 7,294 Liabilities 331 7,294 Other parties related to the owners and corporate governance bodies 84 23 Associate with participating interest - 39 84 63 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 202 NOTE 36 – RELATED PARTY TRANSACTIONS / CONTINUED COMPANY (in thousands of HRK) 2020 2021 Sale of goods and services Subsidiaries /i/ 6,829 312,947 Associate with participating interest 1,918 8,601 Other parties related to the owners and corporate governance bodies 1 1 8,748 321,549 Purchase of services Subsidiaries 1,136 3,830 Associate with participating interest 18 239 Other parties related to the owners and corporate governance bodies 217 430 1,371 4,499 Trade and other receivable Subsidiaries 161 19,712 Associate with participating interest 331 7,294 492 27,006 Other receivables Subsidiaries 26 26 26 26 Trade and other payables Subsidiaries 136 70 Associate with participating interest - 39 Other parties related to the owners and corporate governance bodies 84 22 220 131 Loans given Subsidiaries 28 28 28 28 /i/ E x p l a i n e d d e t a i l e d i n N o t e 1 0 – O t h e r g a i n s / ( l o s s e s ) – n e t . NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 203 NOTE 36 – RELATED PARTY TRANSACTIONS / CONTINUED B o a r d p e r s o n n e l c o m p e n s a t i o n Pension contributions Health insurance contribution Other costs (contribution and taxes) 5,230 6,164 3,139 3,944 (2020: HRK 1,294 thousand). NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 204 GROUP CO MPANY I n 2 0 2 1 , Board personnel compensation (in thousands of HRK) 2020 2021 2020 2021 are related to 6 Group Board members Salaries 2,799 3,472 1,717 2,293 (2020: 9 Board members), and for the 593 699 263 338 Company 2 members (2020: 2 members). 732 938 444 553 C o m p a n y ’s S u p e r v i s o r y B o a r d fees during 1,105 1,054 715 759 2021 amounted to HRK 2,734 thousand NOTE 37 – MERGER OF A SUBSIDIARY The merger of Palme turizam d.o.o. into the Company was entered in the court register on 7 May 2 0 2 1 . T h e l e g a l e f f e c t o f t h e m e r g e r started as of 8 May 2021. After the registration of the merger, Palme turizam d.o.o. ceased to exist and the C o m p a n y b e c a m e t h e u n i v e r s a l l e g a l s u c c e s s o r o f the merged company: all the assets, rights and liabilities of Palme turizam d.o.o. were transferred to the Company. Statement of comprehensive income of the Group includes the results of the merged companies for the whole current year. Statement of comprehensive income of the Company includes the results of the merged companies from the merger date. Assets and liabilities in 2021 at merger date are: NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 205 PALME TURIZAM d.o.o. (in thousands of HRK) 7 May 2021 ASSETS Property, plant and equipment (Note 14) 25,753 Deferred tax assets (Note 25) 16,141 Trade and other receivables 72 Cash and cash equivalents 1,110 LIABILITIES Payables and other liabilities (14) Net assets acquired 43,062 Less: elimination of the Company’s share in subsidiary (115,448) Net effect on equity at merger (72,386) NOTE 38 – LOSS OF THE CONTROL OVER SUBSIDIARIES The Group lost control of its subsidiaries Valamar A GmbH and Valamar Obertauern GmbH and ceased to disclose the assets and liabilities of these companies in the consolidated financial statements. According to IFRS 10, the income and expenses of V a l a m a r A G m b H a n d V a l a m a r O b e r t a u e r n G m b H are recognized in the consolidated statement of the Group's comprehensive income until 29 November, 2021. As of 1 December, 2021, the Group has significant influence in Valamar A GmbH and V a l a m a r O b e r t a u e r n G m b H a n d i s d i s c l o s e d i n t h e c o n s o l i d a t e d financial statements using the equity method. LOSS OF THE CONTROL OVER SUBSIDIARIES Valamar A Gmbh and Valamar Obertauern GmbH (in thousands of HRK) 29 November 2021 ASSETS Non-current assets Intangible assets 464 Property, plant and equipment 58,905 Financial assets 24 Deferred tax assets Current assets 5,095 Inventories 243 Trade and other receivables 3,512 Loans and deposits 22 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 206 Cash and cash equivalents 3,203 The Group did not receive any compensation for the 71,468 loss of control over its subsidiaries Valamar A GmbH a n d V a l a m a r O b e r t a u e r n G m b H , d u e t o t h e d i l u t e d LIABILITIES Non-current liabilities ownership through capital increase of the Borrowings (46,249) companies concerned as described in Note 1 – Deferred tax liabilities (2,075) General information . Current liabilities Gains from the loss of control over subsidiaries are included in financial revenues of 2021. Borrowings Trade and other payables (4,511) (1,676) (54,511) An overview of assets and liabilities in 2021 over Net assets of subsidiaries over which control is lost 16,957 w h i c h t h e G r o u p l o s t c o n t r o l a n d the effect of the Exchange rate differences from foreign business (198) l o s s o f c o n t r o l o v e r s u b s i d i a r i e s i s p r e s e n t e d i n t h e table: Share fair value 30,075 Less: Net assets of subsidiaries over which control is lost and exchange rate differences from foreign business Gains from the loss of the control over subsidiaries (16,759) 13,316 NOTE 39 – AUDIT FEES The fees for audit of the financial statements of the Group amounted to HRK 898 thousand (2020: HRK 866 thousand), while the fees for other services amounted to HRK 143 thousand (2020: HRK 121 thousand). Other services in 2020 and 2021 are related to audit of Report on Board and Supervisory Board personnel compensation. NOTE 40 – SUBSEQUENT EVENTS On 31 J a nu a r y 2022 t h e C o m p a n y c on c l ud ed l ega l t r a n s a c t i on w i t h s ub s i d i a r y I m p e r i a l R i v i e r a d . d . on t r a n s f er of t h r ee ho t e l with total of 947 accommodation units, being precisely Valamar Lacroma Dubrovnik Hotel, Club Dubrovnik Sunny Hotel by Valamar and Tirena Sunny Hotel by Valamar of acquisition value of HRK 717,766 thousand. Considering the interests of the acquirer of the mentioned hotels, the financing of this transaction is ensured by taking over the Company’s loan obligations, while rest of the amount shall be paid in cash. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 / continued 207 Valamar Riviera d.d. Stancija Kaligari 1 52440 Poreč, Hrvatska T +385 (52) 408 002 F +385 (52) 451 608 E [email protected] W www.valamar.com I n v e s t o r Relations Stancija Kaligari 1 52440 Poreč, Hrvatska T +385 (52) 408 159 F +385 (52) 451 608 E [email protected] W www.valamar-riviera.com 529900DUWS1DGNEK4C682020-12-31529900DUWS1DGNEK4C682021-12-31529900DUWS1DGNEK4C682020-01-012020-12-31529900DUWS1DGNEK4C682021-01-012021-12-31529900DUWS1DGNEK4C682019-12-31ifrs-full:SeparateMember529900DUWS1DGNEK4C682020-12-31ifrs-full:SeparateMember529900DUWS1DGNEK4C682021-12-31ifrs-full:SeparateMember529900DUWS1DGNEK4C682020-01-012020-12-31ifrs-full:SeparateMember529900DUWS1DGNEK4C682021-01-012021-12-31ifrs-full:SeparateMember529900DUWS1DGNEK4C682019-12-31529900DUWS1DGNEK4C682019-12-31ifrs-full:IssuedCapitalMember529900DUWS1DGNEK4C682019-12-31ifrs-full:TreasurySharesMember529900DUWS1DGNEK4C682019-12-31ifrs-full:CapitalReserveMember529900DUWS1DGNEK4C682019-12-31ifrs-full:StatutoryReserveMember529900DUWS1DGNEK4C682019-12-31ifrs-full:ReserveOfGainsAndLossesOnFinancialAssetsMeasuredAtFairValueThroughOtherComprehensiveIncomeMember529900DUWS1DGNEK4C682019-12-31ifrs-full:OtherReservesMember529900DUWS1DGNEK4C682019-12-31ifrs-full:RetainedEarningsMember529900DUWS1DGNEK4C682019-12-31ifrs-full:EquityAttributableToOwnersOfParentMember529900DUWS1DGNEK4C682019-12-31ifrs-full:NoncontrollingInterestsMember529900DUWS1DGNEK4C682020-01-012020-12-31ifrs-full:RetainedEarningsMember529900DUWS1DGNEK4C682020-01-012020-12-31ifrs-full:EquityAttributableToOwnersOfParentMember529900DUWS1DGNEK4C682020-01-012020-12-31ifrs-full:NoncontrollingInterestsMember529900DUWS1DGNEK4C682020-01-012020-12-31ifrs-full:ReserveOfGainsAndLossesOnFinancialAssetsMeasuredAtFairValueThroughOtherComprehensiveIncomeMember529900DUWS1DGNEK4C682020-01-012020-12-31ifrs-full:OtherReservesMember529900DUWS1DGNEK4C682020-12-31ifrs-full:IssuedCapitalMember529900DUWS1DGNEK4C682020-12-31ifrs-full:TreasurySharesMember529900DUWS1DGNEK4C682020-12-31ifrs-full:CapitalReserveMember529900DUWS1DGNEK4C682020-12-31ifrs-full:StatutoryReserveMember529900DUWS1DGNEK4C682020-12-31ifrs-full:ReserveOfGainsAndLossesOnFinancialAssetsMeasuredAtFairValueThroughOtherComprehensiveIncomeMember529900DUWS1DGNEK4C682020-12-31ifrs-full:OtherReservesMember529900DUWS1DGNEK4C682020-12-31ifrs-full:RetainedEarningsMember529900DUWS1DGNEK4C682020-12-31ifrs-full:EquityAttributableToOwnersOfParentMember529900DUWS1DGNEK4C682020-12-31ifrs-full:NoncontrollingInterestsMember529900DUWS1DGNEK4C682021-01-012021-12-31ifrs-full:RetainedEarningsMember529900DUWS1DGNEK4C682021-01-012021-12-31ifrs-full:EquityAttributableToOwnersOfParentMember529900DUWS1DGNEK4C682021-01-012021-12-31ifrs-full:NoncontrollingInterestsMember529900DUWS1DGNEK4C682021-01-012021-12-31ifrs-full:ReserveOfGainsAndLossesOnFinancialAssetsMeasuredAtFairValueThroughOtherComprehensiveIncomeMember529900DUWS1DGNEK4C682021-01-012021-12-31ifrs-full:OtherReservesMember529900DUWS1DGNEK4C682021-12-31ifrs-full:IssuedCapitalMember529900DUWS1DGNEK4C682021-12-31ifrs-full:TreasurySharesMember529900DUWS1DGNEK4C682021-12-31ifrs-full:CapitalReserveMember529900DUWS1DGNEK4C682021-12-31ifrs-full:StatutoryReserveMember529900DUWS1DGNEK4C682021-12-31ifrs-full:ReserveOfGainsAndLossesOnFinancialAssetsMeasuredAtFairValueThroughOtherComprehensiveIncomeMember529900DUWS1DGNEK4C682021-12-31ifrs-full:OtherReservesMember529900DUWS1DGNEK4C682021-12-31ifrs-full:RetainedEarningsMember529900DUWS1DGNEK4C682021-12-31ifrs-full:EquityAttributableToOwnersOfParentMember529900DUWS1DGNEK4C682021-12-31ifrs-full:NoncontrollingInterestsMember 529900DUWS1DGNEK4C68 2019-12-31 ifrs-full:IssuedCapitalMember ifrs-full:SeparateMember 529900DUWS1DGNEK4C68 2019-12-31 ifrs-full:StatutoryReserveMember ifrs-full:SeparateMember 529900DUWS1DGNEK4C68 2019-12-31 ifrs-full:TreasurySharesMember ifrs-full:SeparateMember 529900DUWS1DGNEK4C68 2019-12-31 ifrs-full:CapitalReserveMember ifrs-full:SeparateMember 529900DUWS1DGNEK4C68 2019-12-31 ifrs-full:RetainedEarningsMember ifrs-full:SeparateMember 529900DUWS1DGNEK4C68 2019-12-31 ifrs-full:NoncontrollingInterestsMember ifrs-full:SeparateMember 529900DUWS1DGNEK4C68 2020-01-01 2020-12-31 ifrs-full:RetainedEarningsMember ifrs-full:SeparateMember 529900DUWS1DGNEK4C68 2020-01-01 2020-12-31 ifrs-full:NoncontrollingInterestsMember ifrs-full:SeparateMember 529900DUWS1DGNEK4C68 2020-01-01 2020-12-31 ifrs-full:StatutoryReserveMember ifrs-full:SeparateMember 529900DUWS1DGNEK4C68 2020-12-31 ifrs-full:IssuedCapitalMember ifrs-full:SeparateMember 529900DUWS1DGNEK4C68 2020-12-31 ifrs-full:StatutoryReserveMember ifrs-full:SeparateMember 529900DUWS1DGNEK4C68 2020-12-31 ifrs-full:TreasurySharesMember ifrs-full:SeparateMember 529900DUWS1DGNEK4C68 2020-12-31 ifrs-full:CapitalReserveMember ifrs-full:SeparateMember 529900DUWS1DGNEK4C68 2020-12-31 ifrs-full:RetainedEarningsMember ifrs-full:SeparateMember 529900DUWS1DGNEK4C68 2020-12-31 ifrs-full:NoncontrollingInterestsMember ifrs-full:SeparateMember 529900DUWS1DGNEK4C68 2021-01-01 2021-12-31 ifrs-full:RetainedEarningsMember ifrs-full:SeparateMember 529900DUWS1DGNEK4C68 2021-01-01 2021-12-31 ifrs-full:NoncontrollingInterestsMember ifrs-full:SeparateMember 529900DUWS1DGNEK4C68 2021-01-01 2021-12-31 ifrs-full:IssuedCapitalMember ifrs-full:SeparateMember 529900DUWS1DGNEK4C68 2021-12-31 ifrs-full:IssuedCapitalMember ifrs-full:SeparateMember 529900DUWS1DGNEK4C68 2021-12-31 ifrs-full:StatutoryReserveMember ifrs-full:SeparateMember 529900DUWS1DGNEK4C68 2021-12-31 ifrs-full:TreasurySharesMember ifrs-full:SeparateMember 529900DUWS1DGNEK4C68 2021-12-31 ifrs-full:CapitalReserveMember ifrs-full:SeparateMember 529900DUWS1DGNEK4C68 2021-12-31 ifrs-full:RetainedEarningsMember ifrs-full:SeparateMember 529900DUWS1DGNEK4C68 2021-12-31 ifrs-full:NoncontrollingInterestsMember ifrs-full:SeparateMember 529900DUWS1DGNEK4C68 2020-01-01 2020-12-31 ifrs-full:IssuedCapitalMember ifrs-full:SeparateMember 529900DUWS1DGNEK4C68 2019-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember ifrs-full:SeparateMember 529900DUWS1DGNEK4C68 2020-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember ifrs-full:SeparateMember 529900DUWS1DGNEK4C68 2021-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember ifrs-full:SeparateMember 529900DUWS1DGNEK4C68 2020-01-01 2020-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember ifrs-full:SeparateMember 529900DUWS1DGNEK4C68 2021-01-01 2021-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember ifrs-full:SeparateMember 529900DUWS1DGNEK4C68 2019-12-31 ifrs-full:OtherReservesMember ifrs-full:SeparateMember 529900DUWS1DGNEK4C68 2020-12-31 ifrs-full:OtherReservesMember ifrs-full:SeparateMember 529900DUWS1DGNEK4C68 2021-12-31 ifrs-full:OtherReservesMember ifrs-full:SeparateMember 529900DUWS1DGNEK4C68 2020-01-01 2020-12-31 ifrs-full:OtherReservesMember ifrs-full:SeparateMember 529900DUWS1DGNEK4C68 2021-01-01 2021-12-31 ifrs-full:OtherReservesMember ifrs-full:SeparateMember 529900DUWS1DGNEK4C68 2019-12-31 ifrs-full:ReserveOfGainsAndLossesOnFinancialAssetsMeasuredAtFairValueThroughOtherComprehensiveIncomeMember ifrs-full:SeparateMember 529900DUWS1DGNEK4C68 2020-12-31 ifrs-full:ReserveOfGainsAndLossesOnFinancialAssetsMeasuredAtFairValueThroughOtherComprehensiveIncomeMember ifrs-full:SeparateMember 529900DUWS1DGNEK4C68 2021-12-31 ifrs-full:ReserveOfGainsAndLossesOnFinancialAssetsMeasuredAtFairValueThroughOtherComprehensiveIncomeMember ifrs-full:SeparateMember 529900DUWS1DGNEK4C68 2020-01-01 2020-12-31 ifrs-full:ReserveOfGainsAndLossesOnFinancialAssetsMeasuredAtFairValueThroughOtherComprehensiveIncomeMember ifrs-full:SeparateMember 529900DUWS1DGNEK4C68 2021-01-01 2021-12-31 ifrs-full:ReserveOfGainsAndLossesOnFinancialAssetsMeasuredAtFairValueThroughOtherComprehensiveIncomeMember ifrs-full:SeparateMember 529900DUWS1DGNEK4C68 2019-12-31 ifrs-full:StatutoryReserveMember ifrs-full:SeparateMember iso4217:HRKiso4217:HRKxbrli:shares
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.