Ilirija d.d. — Audit Report / Information 2019

Apr 29, 2020

ILIRIJA d.d.

Annual business report 2019

Biograd na Moru, April 2020

CONTENT

TABLE OF CONTENTS:

• Key informations of Ilirija d.d. for the year 2019 3
• Financial indicators of Ilirija d.d. 2019 6
• Financial indicators hotel sector 2019 7
• Financial indicators nautics 2019 8
• Financial indicators camping 2019 9
• Financial indicators real-estate 2019 10
• Analysis of growth by segments 11
• Physical indicators by segments 12
• Overview of key indicators in 2019 15
• Financial report of the company in year 2019 and comparison with years 2017 and 2018 16
• Cumulative comparative overview of fundamental indicators 17
• Balance sheet as at 31/12/2019 18
• Synthetic balance sheet as at 31/12/2019 19
• Cash flows in year 2019 and comparison with year 2018 20
• Long-term loan liabilities 22
• Investments in the year 2019 24

KEY INFORMATIONS FOR THE YEAR 2019

• In 2019 we continued to create the expected and planned added value for all key groups of our stakeholders, with a particular emphasis on shareholders and our employees and also our guests as a key customer of our services and products.
• The fiscal year 2019 for the Company in terms of generating operating revenues is by far the best at the level of all its sectors, thus continuing the Company's continuous business growth in terms of revenue generation.
• The circumstances in which the fiscal year took place was challenging and demanding due to the circum stances in which the sales took place, primarily due to increased demand for destinations in the Eastern Mediterranean, delayed and late booking, and the stay of guests from Western and Northern Europe in their tourist destinations.
• The Company's targeted and continuous policy as a system with corporate social responsibility aimed at creating value for its key stakeholders in 2019 was most reflected in the improvement of the financial position of the employees as a key owner of the development and growth of the Company, and the development of the year-round business and new products and services as a strategic goal of the Company and consequently and thus the need for hiring a higher number of employees, which was ultimately reflected in operating profitability indicators in 2019.
• Total revenues were generated in the amount of HRK 167.797.556,86 with a growth rate of 4,19% compared to 2018.
• Revenues grew at a rate of 5% in the key tourism sectors of the Company (hotel, camping and nautical), while the Ilirija Travel achieved revenue growth of over 16%, the revenues also grew by 1% in the Company's real estate sector compared to 2018.

• The Company's own funding sources account for 71.46% of total sources of funds (capital and reserves) compared to 70.15% in 2018, while foreign funding sources as of 31/12/2019 have a proportion of 28.54% compared to those in the previous fiscal year when they amounted to 29.85%.

• The balance sheet position of the Company at the end of the reporting period indicates a stable and strengthened financial position indicated through further growth of assets, reduction of long-term liabilities and increased ability of self-financing.

• In 2019, the Company provided 96.19% of cash inflows from operating activities, while only 3.31% of inflows were provided through the banks.
• The value of the assets amounts to HRK 485,278,090.92 and increased by HRK 22,886,179.97 or by 4.95% compared to that in the same period of the previous fiscal year when it amounted to HRK 462,391,910.95.
• Capital increased by 6.91% or HRK 22,407,961.30 or from the amount of HRK 324,375,413.08 as much as it amounted in 2018, to the amount of HRK 346,783,374.38, which we find an extraordinary success for the Company.
• Total expenses amount to HRK 136,463,643.20 and rose by 10.04% compared to those in the last year, when they amounted to HRK 124,013,712.83 as a result of growth in operating expenses by 9.97%, depreciation by 12.37% and financial expenditures by 4.85%.
• Expenditures in the absolute amount increased the most in the segment of operating expenses by HRK 10,654,676.77. The most significant growth in expenditures was recorded in the segment of the gross pay cost with a growth rate of 10% or HRK 3,693,606.79 compared to those in the previous fiscal year.
• In 2019, EBITDA was realized in the amount of HRK 50,310,254.21 and fell by 7.20% compared to that in 2018.
• The Company distributed a dividend to the shareholders in the amount of HRK 8,417,962.00 or HRK 3.50 per share.
• The average price per share amounts to HRK 187,78 in the capital market, which compared to the previous fiscal year the growth of 3,18% was achieved, when the average price of share amounted to HRK 182,00.
• In 2018 the Company invested HRK 24.249.604,35.

Financial and physical indicators

FINANCIAL INDICATORS OF ILIRIJA d.d. 2019

TOTAL REVENUES		EBITDA			PROFIT
167.797.556,86 (+4,19%)			50.310.254,21 (-7,20%)		31.333.913,66 (-15,39%)
		2019			2018
	TOTAL REVENUES	EBITDA	PROFIT	TOTAL REVENUES	EBITDA	PROFIT
ILIRIJA d.d.	167.797.556,86	50.310.254,21	31.333.913,66	161.048.880,05	54.216.254,17	37.035.167,22
HOTEL SECTOR	59.784.757,62	20.086.287,07	15.781.003,88	57.104.655,63	20.263.454,47	16.281.104,16
NAUTICS	48.610.599,64	27.241.353,01	24.483.340,43	46.219.488,46	25.832.134,95	23.230.797,99
CAMPING	35.305.818,53	16.771.049,80	12.049.624,43	33.542.041,42	17.571.170,37	13.667.471,94
OTHER SECTORS	24.096.381,07	-13.788.435,67	-20.980.055,08	24.182.694,54	-9.450.505,62	-16.144.206,87
	ILIRIJA d.d.			Hotel sector		Nautics
HRKm 161,1 160 140 120 100	167,8		HRKm 57,1 50 40 30 20,3 20 16,3 10 0 2018	59,8 20,1 15,8 2019	HRKm 50 46,2 40 30 25,8 23,2 20 10 0 2018	48,6 27,2 24,5 2019
80 54,2 60 37,1 40 20	50,3	31,3	HRKm 50 40 33,5 30 20	Camping 35,3	HRKm 50 2017. 40 30 24,2 20	Other sectors 2018. 24,1
0 2018	2019		17,6 13,7 10 0 2018	16,8 12,1 2019	10 -9,5 -16,1 0 -10	-13,8 -20,9

6

Total revenues EBITDA Profit

2018 2019

FINANCIAL INDICATORS - HOTEL SECTOR 2019

HOTEL SECTOR - ILIRIJA d.d.	2019	2018	2019/2018
Operating revenues	59.784.757,62 kn	57.104.655,63 kn	4,69%
Revenue from the board service	49.489.726,53 kn	47.314.357,08 kn	4,60%
TRevPAR*	134.954,31 kn	128.904,41 kn	4,69%
Operating costs	39.698.470,55 kn	36.841.201,16 kn	7,76%
GOP**	20.086.287,07 kn	20.263.454,47 kn	-0,87%
GOP per accommodation unit	45.341,51 kn	45.741,43 kn	-0,87%
GOP margin	33,6%	35,5%	-5,32%
Capital investments	4.981.655,88 kn	14.448.259,16 kn	-65,52%

*TRevPAR means the total operating revenues of hotel divided by the number of physical units

**GOP means the gross operating profit of hotel before cost allocation of common services, and is calculated as follows:

operating income - operating expenses (before allocation, excluding depreciations and fixed costs)

FINANCIAL INDICATORS - NAUTICS 2019

TOTAL NAUTICS	2019	2018	2019/2018
Operating revenues	48.610.539,64 kn	46.219.397,68 kn	5,17%
Operating revenue per berth	60.385,76 kn	57.415,40 kn	5,17%
Operating costs	21.369.246,63 kn	20.387.353,51 kn	4,82%
GOP*	27.241.293,01 kn	25.832.044,17 kn	5,46%
GOP per berth	33.840,12 kn	32.089,50 kn	5,46%
GOP margin	56,0%	55,9%	0,27%
Capital investments	1.441.883,06 kn	3.323.681,04 kn	-56,62%

*GOP (Gross Operating Profit) denotes a gross operating profit of the nautics before the allocation of costs of common services, and is calculated in the following way: operating revenues – operating expenses (before allocation, without depreciation and fixed costs).

FINANCIAL INDICATORS - CAMPING 2019

TOTAL CAMPING	2019	2018	2019/2018
Operating revenues	35.305.818,53 kn	33.542.041,42 kn	5,26%
TRevPAR*	28.939,20 kn	27.493,48 kn	5,26%
Operating costs	18.534.768,73 kn	15.970.871,05 kn	16,05%
GOP**	16.771.049,80 kn	17.571.170,37 kn	-4,55%
GOP per accommodation unit	13.746,76 kn	14.402,60 kn	-4,55%
GOP margin	47,5%	52,4%	-9,32%
Capital investments	14.745.262,56 kn	16.035.642,84 kn	-8,05%

*TRevPAR - Total revenue per camp unit denotes total operating revenue of the camping (or the campsite) divided by a number of physical camp units.

**GOP (Gross Operating Profit) denotes a gross operating profit of the camping/campsite/restaurant before the allocation of costs of common services, and is calculated in the following way: operating revenues – operating expenses (before allocation, without depreciation and fixed costs).

FINANCIAL INDICATORS - REAL ESTATE 2019

REAL ESTATE SECTOR - CITY GALLERIA	2019	2018	2019/2018
Operating revenues	14.255.205,21 kn	14.167.392,27 kn	0,62%
Operating costs	6.068.418,99 kn	6.006.657,57 kn	1,03%
GOP*	8.186.786,22 kn	8.160.734,70 kn	0,32%
GOP margin	57,4%	57,6%	-0,30%
Capital investments	407.143,91 kn	451.734,04 kn	-9,87%

*GOP (Gross Operating Profit) denotes a gros operating profit of the real estate sector before the allocation of costs of common services, and is calculated in the following way: operating revenues - operating expenses (before the allocation, without depreciation and fixed costs).

ANALYSIS OF GROWTH BY SEGMENTS

EBITDA growth

PHYSICAL INDICATORS BY SEGMENTS

Hotel sector	2019	2018	index 2019/2018
Number of accomodation units	443	443	100,00
Overnight stays of tourists	146.815	144.745	101,43
Occupancy days	165	165	100,00
Annual occupancy	45,30%	45,12%	100,40

Nautics	2019	2018	index 2019/2018
Number of berths	805	805	100,00
Contracted vessels	740	741	99,87
Transit berth, overnight stays of vessels	11.227	10.639	105,53
Transit berth, inbound sail of vessels	3.418	3.263	104,75
Port service, number of operations	3.688	3.682	100,16
Days of work	365	365	100,00

	Aliniin	d. $\mathbf{d}$
HOTELS	NAUTICA	CAMPING

Ilirija Travel	2019	2018	index 2019/2018
Number of events	609	561	108,56
Number of person (events)	54.749	58.023	94,36

PHYSICAL INDICATORS BY SEGMENTS

Camping	2019	2018	index 2019/2018
Number of accomodation units	1.220	1.220	100,00
Days of work	275	224	122,77
Occupancy days	149,72	125,15	119,63
Mobile homes	94,45	104,44	90,43
Individuals	45,36	48,81	92,93
Fixed lease	275,00	224,00	122,77
Lump sum	275,00	224,00	122,77
Occupancy	54,44%	55,87%	97,44
Mobile homes	34,35%	46,63%	73,67
Individuals	16,49%	21,79%	75,68
Fixed lease	100,00%	100,00%	100,00
Lump sum	100,00%	100,00%	100,00
Overnight stays of tourists	290.487	302.845	95,92

Real-estate	2019	2018	index 2019/2018
Number of lessees	37	36	102,78
Common costs	36	34	105,78
Use of common parts	21	24	87,50
Lease of inventory	8	8	100,00
Parking spaces in the garage	410	410	100,00
Rented area (m2 )	9.897,60	9.897,60	100,00
Number of vehicles in garage	763.982	667.753	114,41

Financial results

OVERVIEW OF KEY INDICATORS IN 2019

in HRK	2018	2019	% 19/18
FINANCIAL INDICATORS
Total revenues	161.048.880,05	167.797.556,86	104,19
Operating revenues	159.490.115,09	167.711.919,32	105,16
Hotel sector	57.104.655,63	59.784.757,62	104,69
Nautics	46.219.397,68	48.610.539,64	105,17
Camping	33.542.041,42	35.305.818,53	105,26
Other sectors and profit centers	22.624.020,36	24.010.803,53	106,26
Revenues from sale	157.999.499,71	165.072.177,40	106,13
EBITDA	54.216.254,17	50.310.2254,21	104,48
EBITDA margin	33,99%	30,00%	92,80
Adjusted EBITDA	56.101.861,24	51.216.000,21	88,25
Adjusted EBITDA margin	35,18%	30,54%	91,29
EBIT	41.419.356,76	35.930.820,22	86,75
Adjusted EBIT	43.304.963,83	36.863.566,22	85,06
Profit	37.035.167,22	31.333.913,66	84,61
Profit margin	23,22%	18,68%	80,46
Net profit	37.035.167,22	31.333.913,66	84,61

in HRK	31/12/2018	31/12/2019	% 19/18
BALANCE SHEET INDICATORS
Net debt	109.285.301,00	100.725.614,10	92,17
Net debt / EBITDA	2,02	2,00	99,32
Net debt / Adjusted EBITDA	1,95	1,97	100,96
Interest coverage	8,45	6,92	81,89
Capital investments	38.790.932,29	24.249.604	62,51
ROE	11,42%	9,04%	79,14
ROA	8,01%	6,46%	80,62
Adjusted ROCE	10,01%	8,25%	82,42

in HRK	31/12/2018	31/12/2019	% 19/18
INDICATORS OF FINANCIAL POSITION
Values of assets	462.391.910,95	485.278.090,92	104,95
Capital	324.375.413,08	346.783.374,38	106,91
Total liabilities	138.016.497,87	138.494.716,54	100,35

in HRK	31/12/2018	31/12/2019	% 19/18
ACHIVMENTS ON THE CAPITAL MARKET
Market capitalization	424.773.888,00	482.697.600,00	113,64
EV	533.039.004,94	579.755.725,07	108,76
EV / EBITDA	9,83	11,52	117,23
EV / Adjusted EBITDA	9,50	11,32	119,16
P / E	14,21	15,34	107,95
EPS	12,40	13,04	105,25
DPS	3,00	3,50	116,67

FINANCIAL REPORT OF THE COMPANY IN YEAR 2019 AND COMPARISON WITH YEARS 2017 AND 2018

REVENUES	2017	2018	INDEX 18/17	2019	INDEX 19/18
Revenues on the domestic market	112.784.382,37	121.382.130,52	108	125.815.700,92	104
Revenues on the foreign market	34.375.832,23	37.017.115,81	108	39.673.309,28	107
Other operating revenues	2.355.330,63	1.090.68,76	46	2.222.909,12	204
OPERATING REVENUES	149.515.545,23	159.490.115,09	107	167.711.919,32	105
FINANCIAL REVENUES	961.132,18	1.558.764,96	162	85.637,54	5
EXTRAORDINARY REVENUES	0,00	0,00	#DIV/0!	0,00	#DIV/0!
TOTAL REVENUES	150.476.677,41	161.048.880,05	107	167.797.556,86	104
EXPENSES
Cost of raw material	22.588.537,09	23.269.427,09	103	24.356.172,13	105
Cost of services	18.855.044,37	19.133.296,83	101	21.654.174,87	113
Gross salaries	35.265.395,20	38.668.915,13	110	42.362.521,92	110
Other expenses	24.170.429,65	25.760.986,83	107	29.114.433,73	113
OPERATING EXPENSES	100.879.406,31	106.832.625,88	106	117.487.302,65	110
AMORTISATION	11.146.900,91	12.796.897,41	115	14.379.433,99	112
FINANCIAL EXPENSES	4.564.585,65	4.384.189,54	96	4.596.906,56	105
EXTRAORDINARY REVENUES	0,00	0,00	#DIV/0!	0,00	#DIV/0!
TOTAL EXPENSES	116.590.892,87	124.013.712,83	106	136.463.643,20	110
PROFIT / LOSS	33.885.784,54	37.035.167,22	109	31.333.913,66	85
OPERATING PROFIT / LOSS	48.636.138,92	52.657.489,21	108	50.224.616,67	95
EBITDA	49.597.271,10	54.216.254,17	109	50.310.254,21	93

CUMULATIVE COMPARATIVE OVERVIEW

of fundamental business results and indicators on the position of assets, capital and liabilities of the Company as at 31/12/2019 and

also for the period from 2009 to 2019

YEAR	TOTAL LIABILITIES	CAPITAL	VALUE OF ASSETS	REVENUES	OPERATING PROFIT	EBITDA	PROFIT	ANNUAL DIVIDEND
1	2	3	4	5	6	7	8	9
31/12/2019	138.494.716,54	346.783.374,38	485.278.090,92	167.797.556,86	50.224.616,67	50.310.254,21	31.333.913,66	8.417.962,00
31/12/2018	138.016.497,87	324.375.413,08	462.391.910,95	161.048.880,05	52.657.489,21	54.216.254,17	37.035.167,22	7.221.240,00
31/12/2017	131.841.078,15	294.216.184,59	426.057.262,74	150.476.677,41	48.636.138,92	49.597.271,10	33.885.784,54	6.016.540,00
31/12/2016	137.502.260,55	275.683.907,98	413.186.168,53	129.019.007,31	43.599.262,35	45.027.129,46	31.240.796,80	4.937.148,00
31/12/2015	96.706.510,04	220.353.306,88	317.059.816,92	128.146.488,63	37.282.937,82	37.767.207,06	25.510.539,54	3.740.790,00
31/12/2014	133.053.616,64	177.858.715,67	310.912.332,31	122.873.752,12	32.955.338,23	33.211.137,28	20.385.115,12	3.740.790,00
31/12/2013	131.195.062,79	166.861.394,25	298.056.457,04	117,320.406,69	35.656.918,81	32.847.699,25	20.129.183,90	3.740.790,00
31/12/2012	136.546.285,85	151.895.416,40	288.441.702,25	111.134832,70	33.826.442,35	31.157.639,71	18.255.129,12	3.740.790,00
31/12/2011	139.927.300,98	140.262.242,54	280.189.543,52	103.735.228,95	30.013.975,99	28.030.097,35	13.249.683,38	3.740.790,00
31/12/2010	142.308.155,23	133.202.459,64	275.510.614,87	91.364.944,55	25.112.703,16	24.378.316,58	11.512.758,85	3.740.790,00
31/12/2009	141.990.022,14	127.844.800,85	269.834.822,99	90.832.774,16	25.001.384,39	21.827.113,57	10.818.589,83	3.740.790,00

BALANCE SHEET AS AT 31/12/2019

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37 5. 41 3, 08
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25 .8 95 .1 76 ,1 4
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2. 41 5. 60 4, 78
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2. 30 5. 18 6, 90
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4. 1. 63 6. 73 8, 20
75 3. 13 6, 40
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5. 72 .6 47 ,6 0
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5. 29 8. 46 9, 83
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CASH FLOWS IN YEAR 2019 AND COMPARISON WITH YEAR 2018

INFLOW OF FUNDS	12/2018	12/2019	Percentage
EMPLOYEES	45.557.179,92	52.002.705,82	26,24%
SUPPLIERS-goods-services-investments	90.246.675,79	88.071.938,84	44,45%
BANK	16.961.417,11	22.530.322,16	11,37%
GOVERNMENT - TAXES	27.766.393,18	26.127.961,43	13,19%
SHAREHOLDERS	7.208.997,98	8.402.797,05	4,24%
OTHER	935.312,14	1.008.789,89	0,51%
TOTAL	188.675.976,12	198.144.515,19	100,00%

OUTFLOW OF FUNDS	12/2018	12/2019	Percentage
OPERATING ACTIVITIES	190.218.867,76	195.497.313,09	96,19%
BANK	0,00	6.719.676,40	3,31%
OTHER	1.133.330,82	1.033.260,84	0,51%
TOTAL	191.352.198,58	203.250.250,33	100,00%

LONG-TERM LOAN LIABILITIES

LONG - TERM LOAN LIABILITIES AS AT 31/12/2019

	2019	2018	Index 2019/2018
I LONG - TERM LIABILITIES (1+2+3)	83.101.427,18 kn	90.352.799,82 kn	91,97%
1. Long term loan of ERSTE & STEIERMARKISCHE BANK d.d.	39.927.233,79 kn	43.508.934,66 kn	91,77%
Agreement: 5114430497 (6.378.944,30 EUR)
2. Long term loan of ERSTE & STEIERMARKISCHE BANK d.d. from HBOR	10.201.722,22 kn	11.005.221,81 kn	92,70%
Agreement: 5114305381 (1.598.423,86 EUR)
3. Dugoročni kredit ERSTE & STEIERMARKISCHE BANK d.d.	32.972.471,17 kn	35.838.643,35 kn	92,00%
Agreement: 5114670197 (5.242.856,68 EUR)

II LOAN TERMS (1 + 2 +3)

1. For the loan under number 1 loan will be repaid in 60 equal quarter installments by the amount of 124.850,14 EUR commencing as of 01/10/2016 do 01/07/2031.

Interest: fixed by +3,25%.

1. For the loan under number 2 repayment will be made in 60 quarter installments. The first installment falls due 30/06/2018, and the last 31/03/2033 in equal installments by the amount of 28.000,00 EUR. Interest: 3% is computed and collected on a quarter basis.

2. For the loan under number 3 repayment will be made in 180 monthly installments. The first installment falls due on 01/02/2017, and the last on 01/01/2032 in equal installments by the amount of 33.333,33 EUR-a. Interest: fixed by +3,25%.

Financial long-term leasing	15.289.157,60 kn	13.010.281,78 kn	117,52%
TOTAL LONG-TERM LIABILITIES	98.390.584,78 kn	103.363.081,60 kn	95,19%

Investments in the year 2019

INVESTMENTS IN THE YEAR 2019

Total investments were made in 2018 by the amount of HRK 24.249.604,35.

HOTEL SECTOR

• complete development of the hotel beach
• development of the wellness center
• connecting Ilirija Hotel with the indoor swimming pool
• reconstructing the external facade of the hotel Villa Donat in Sv. Filip i Jakov
• reconstructing the laundry facility accompanied by the purchase of new washing and drying machines

NAUTICS

• reconstruction of the anchoring system of piers D1 and D2
• improvement of the nautical sector's hospitality offer

CAMPING

• increase the accommodation capacities by purchasing new mobile homes with a floor area of 32 m2 and their complete infrastructure equipment and their complete infrastructure equipment and development
• reconstruction and adaptation of the largest sanitary facilities in the campsite
• construction of a new substation, electrification and construction of the hydrant network in the IV. campsite zone
• building an additional WiFi network
• asphalting the roads, construction of trails and parking lot inside the campsite
• gasification and landscaping

OTHER INVESTMENTS

• investments to the capacities of the destination management company/DMK Ilirija Travel, especially Arsenal and Villa Primorje
• at the Villa Primorje, investment activities related to increasing the capacities of hospitality facilities (decorating the terrace by constructing an automatic pergola, thus increasing the possibility of outdoor events, expanding and additional equipment of the kitchen) and landscaping
• a new automated car parking system was implemented in December 2018 in the Commercial-shopping center City Galleria
• improving and enhancing the waste management process by building a new waste yard approximately measuring 150 m2

INVESTMENTS IN THE YEAR 2019

Ilirija d.d. Tina Ujevića 7 23210 Biograd Hrvatska

Tel: +385(0)23 383 165 Fax: +385(0)23 384 564