Annual Report (ESEF) • Apr 29, 2022
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CONSOLIDATED ANNUAL REPORT OF THE GROUP FOR 2021
Contents
Page
Independent Auditor’s Report 1 - 7
Statement of the Management Board's responsibilities 8
Consolidated statement of comprehensive income 10
Consolidated statement of financial position 11 - 12
Consolidated statement of changes in equity 13
Consolidated statement of cash flows 14
Notes to the consolidated financial statements 15 - 57
Consolidated Management Report 58 - 72
Corporate Governance Statement 73 - 75
Statement of the Management Board's responsibilities
Pursuant to the Croatian Accounting Act in force, the Management Board is responsible for ensuring that consolidated financial statements are prepared for each financial year in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union, in order to give a true and fair view of the financial position and operating results of Jadran d.d. and its subsidiaries (hereinafter jointly: the Group).
After making enquiries, the Management Board has a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, the Management Board of the Group has prepared the annual consolidated financial statements under the going concern assumption.
In preparing the annual consolidated financial statements the responsibilities of the Group’s Management Board include ensuring that:
* suitable accounting policies are selected and then applied consistently, in accordance with applicable financial reporting standards;
* judgements and estimates are reasonable and prudent;
* applicable accounting standards are followed; subject to any material departures disclosed and explained in the consolidated financial statements; and
* the annual consolidated financial statements are prepared on a going concern basis unless this assumption is inappropriate.
The Management Board is responsible for keeping proper accounting records, which disclose with reasonable accuracy at any time the financial position, operating results, changes in equity and cash flows of the Group and must also ensure that the financial statements comply with the Croatian Accounting Act in force and International Financial Reporting Standards.
The Management Board is also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Moreover, in accordance with the Accounting Act, the Management Board is obliged to prepare a consolidated Annual Report comprising the consolidated financial statements, the consolidated Management Report and the Corporate Governance Statement. The consolidated Management Report was prepared in line with the requirements of Article 21 and 24 of the Croatian Accounting Act, and the Corporate Governance Statement in line with the requirements of Article 22 of the Croatian Accounting Act.
Furthermore, in accordance with Commission Delegated Regulation (EU) 2018/815 of 17 December 2018 supplementing Directive 2004/109/ EC of the European Parliament and of the Council with regard to regulatory technical standards on the specification of the single electronic reporting format ("ESEF Regulation"), the Management Board is obliged to prepare and publish the consolidated Annual Report in XHTML format and to tag the annual financial statements prepared in accordance with IFRS in XHTML format using XBRL tags and tag the notes to the annual financial statements as a text block to meet the requirements of Article 462 of the Capital Market Act.
The Annual Report was authorised for issue by the Management Board on 28 April 2022.
Crikvenica
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR 2021
| Note | 2020. | 2021. | |
|---|---|---|---|
| Revenue | 6 | 68,784,751 | 155,867,039 |
| Other income | 7 | 14,881,183 | 19,434,362 |
| Total operating income | 83,665,934 | 175,301,401 | |
| Cost of goods sold | -125,547 | -230,502 | |
| Cost of materials and supplies | 8 | -15,658,353 | -26,881,240 |
| Cost of services | 9 | -21,005,326 | -33,677,879 |
| Staff costs | 10 | -35,970,658 | -47,351,992 |
| Depreciation and amortisation | 17,18, 19, 36 | -42,203,003 | -53,461,752 |
| Impairment of non-current non-financial assets | 11 | -61,186,538 | - |
| Net gains/(losses) on value adjustment of financial assets | 12 | 433,415 | 14,377 |
| Other operating expenses | 13 | -9,032,128 | -10,349,639 |
| Total operating expenses | -184,748,138 | -171,938,627 | |
| Operating profit/(loss) | -101,082,204 | 3,362,774 | |
| Finance income | 14 | 352,812 | 2,772,696 |
| Finance costs | 14 | -11,894,298 | -12,937,571 |
| Net loss from financing activities | -11,541,486 | -10,164,875 | |
| Loss before tax | -112,623,690 | -6,802,101 | |
| Income tax | 15 | - | - |
| Net loss | -112,623,690 | -6,802,101 | |
| Other comprehensive income | - | - | |
| Total comprehensive loss for the year | -112,623,690 | -6,802,101 | |
| Loss per share | 16 | -4,03 | -0,24 |
*The accompanying notes are an integral part of these consolidated financial statements. These consolidated financial statements have been authorised and signed by the Management Board.
| Note | 31.12.2020. | 31.12.2021. | |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Goodwill | 1,316,765 | 1,316,765 | |
| Property, plant and equipment | 17 | 786,675,164 | 760,832,893 |
| Intangible assets | 18 | 743,198 | 1,965,576 |
| Investment property | 19 | 32,824,106 | 30,973,238 |
| Financial assets | 20 | - | 1,353,918 |
| Other non-current assets | 9,530 | 9,530 | |
| Right-of-use assets | 36 | 162,919,009 | 152,718,706 |
| Total non-current assets | 984,487,772 | 949,170,626 | |
| Current assets | |||
| Inventories | 21 | 620,904 | 895,796 |
| Trade receivables | 22 | 1,720,177 | 16,358,165 |
| Receivables from the government | 23 | 4,364,775 | 4,170,685 |
| Income tax receivable | 2,490,089 | 1,197,308 | |
| Other receivables | 24 | 2,199,354 | 4,785,970 |
| Cash and cash equivalents | 25 | 27,640,451 | 23,256,173 |
| Total current assets | 39,035,750 | 50,664,097 | |
| TOTAL ASSETS | 1,023,523,522 | 999,834,723 | |
| EQUITY AND LIABILITIES | |||
| Capital and reserves | |||
| Share capital | 482,507,730 | 482,507,730 | |
| Capital reserves | 234,210,922 | 234,210,922 | |
| Accumulated loss | -169,098,591 | -175,900,692 | |
| Total capital and reserves | 26 | 547,620,061 | 540,817,960 |
| Non-current liabilities | |||
| Provisions | 27 | 484,001 | 706,347 |
| Liabilities to financial institutions | 28 | 143,201,974 | 215,083,930 |
| Other non-current liabilities | 29 | 61,720 | 61,720 |
| Lease liabilities | 36 | 171,617,694 | 156,689,888 |
| Total non-current liabilities | 315,365,389 | 372,541,885 | |
| Current liabilities | |||
| Trade payables | 30 | 9,809,491 | 15,476,049 |
| Liabilities for advances, deposits and guarantees | 31 | 5,903,974 | 4,026,409 |
| Liabilities to employees | 32 | 4,195,396 | 7,668,069 |
| Liabilities to the government | 33 | 556,842 | 1,787,889 |
| Liabilities to banks and other financial institutions | 28 | 120,832,624 | 29,720,111 |
| Other current liabilities | 34 | 892,228 | 847,927 |
| Lease liabilities | 36 | 17,822,844 | 26,948,424 |
| Income tax payable | 524,673 | - | |
| Total current liabilities | 160,538,072 | 86,474,878 | |
| Total liabilities | 475,903,461 | 459,016,763 | |
| TOTAL EQUITY AND LIABILITIES | 1,023,523,522 | 999,834,723 |
*The accompanying notes are an integral part of these consolidated financial statements. These consolidated financial statements have been authorised and signed by the Management Board.
| Share capital | Capital reserves | Accumulated loss | Total | |
|---|---|---|---|---|
| Balance at 1 January 2020 | 482,507,730 | 234,210,922 | -56,474,901 | 660,243,751 |
| Comprehensive loss for the year | - | - | -112,623,690 | -112,623,690 |
| Balance at 31 December 2020 | 482,507,730 | 234,210,922 | -169,098,591 | 547,620,061 |
| Comprehensive loss for the year | 26 | - | - | -6,802,101 |
| Balance at 31 December 2021 | 482,507,730 | 234,210,922 | -175,900,692 | 540,817,960 |
*The accompanying notes are an integral part of these consolidated financial statements. These consolidated financial statements have been authorised and signed by the Management Board.
| Note | 2020. | 2021. | |
|---|---|---|---|
| Cash flow from operating activities | |||
| Loss before tax | -112,623,690 | -6,802,101 | |
| Depreciation and amortisation | 17.18, 19, 36 | 42,203,003 | 53,461,752 |
| Impairment of non-current non-financial assets | 11 | 61,186,538 | - |
| Gains from value adjustment of non-current financial assets | - | -1,000,000 | |
| Net loss/(gain) on sale and disposal of non-current assets | 306,840 | -445,419 | |
| Changes in non-current provisions | -5,418 | 222,346 | |
| Interest income | 14 | -19,935 | -1,278 |
| Interest expense | 14 | 9,640,989 | 10,839,083 |
| Net foreign exchange differences | 1,839,418 | -612,051 | |
| Net gains/(losses) on impairment of current financial assets | 12 | -433,415 | -14,377 |
| Changes in trade and other receivables | 64,359,100 | -3,422,312 | |
| Changes in inventories | -78,361 | -274,892 | |
| Decrease in trade and other payables | -31,428,959 | 7,832,378 | |
| Cash flows from operating activities | 34,946,110 | 59,783,129 | |
| Interest paid | 37 | -9,150,266 | -11,352,164 |
| A. | |||
| --- | --- | --- | |
| Cash flow from investing activities | |||
| Payments for purchases of non-current tangible and intangible assets | -66,248,764 | -43,101,961 | |
| Proceeds from sale of non-current tangible and intangible assets | 157,500 | 27,973,446 | |
| Interest received | 19,935 | 1,278 | |
| Loans granted | - | -353,918 | |
| B. Net cash from investing activities | -66,071,329 | -15,481,155 | |
| Cash flow from financing activities | |||
| Proceeds from borrowings | 37 | 75,665,552 | |
| Repayment of borrowings | 37 | -30,320,706 | |
| Repayment of lease liabilities | 37 | -685,899 | -19,360,354 |
| C. Net cash from financing activities | 44,658,947 | -37,334,088 | |
| Net increase/(decrease) in cash | 4,383,462 | -4,384,278 | |
| Cash and cash equivalents at beginning of period | 23,256,989 | 27,640,451 | |
| Cash and cash equivalents at end of period | 25 | 27,640,451 | 23,256,173 |
*The accompanying notes are an integral part of these consolidated financial statements. These consolidated financial statements have been authorised and signed by the Management Board.
JADRAN joint stock company for hotel management and tourism, Bana Jelačića 16, Crikvenica (the “Company”) is registered with the Commercial Court in Rijeka under Reg. No. (MBS): 040000817. The Company’s subscribed share capital amounts to HRK 482,507,730. The Company’s authorised representatives are Goran Fabris, Chairman of the Management Board, appointed on 22 May 2018, Ivan Safundžić, Member of the Management Board, appointed on 1 December 2020 and Miroslav Pelko, Member of the Management Board, appointed on 1 September 2021. The Company is represented by the Management Board in such a manner that each Member of the Management Board represents the Company jointly with another member of the Management Board.
The Company’s principal activity is the provision of accommodation services in hotels, resorts and campsites, preparation of food and provision of food services, and preparation and serving of drinks and beverages.
In 2021, the average number of the Group’s employees was 320 (2020: 227 employees). The Jadran Group consists of Jadran d.d., Crikvenica and its subsidiaries Club Adriatic d.o.o. and Stolist d.o.o. (the “Group”) in which Jadran d.d., Crikvenica has a 100% share and voting rights.
The Company's Supervisory Board comprises the following persons:
* Goran Hanžek, Chairman of the Supervisory Board
* Karlo Došen, Deputy Chairman of the Supervisory Board
* Adrian Čajić, Member of the Supervisory Board
* Dragan Magaš, Member of the Supervisory Board
* Mirko Herceg, Member of the Supervisory Board
The most significant accounting policies consistently applied in the current year and previous years are set out below:
The Group’s financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS) as adopted by the EU. The financial statements also comply with the Croatian Accounting Act which refers to the IFRSs as adopted by the EU.
The Group's financial statements have been prepared under the accrual basis according to which the transaction effects are recognised when incurred and included in the financial statements for the period to which they relate, and by applying the basic accounting assumption of going concern.
The financial statements have been presented in the Croatian currency, Croatian kuna (“HRK”), which is the Company’s functional currency.
In preparing these financial statements, certain estimates have been used that affect the presentation of the Group’s assets and liabilities, income and expenses and the disclosure of the Group’s contingent liabilities. Future events and their effects cannot be anticipated with certainty, and therefore actual results may differ from these estimates.
The estimates used in the preparation of the financial statements are subject to change as new events occur, as more experience is gained, additional information is obtained and due to the changing environment in which the Group operates. The key estimates used in the application of accounting policies when preparing consolidated financial statements are disclosed in Note 3 below.
At the beginning of 2021, the operations of the JADRAN group were marked by the COVID-19 pandemic to the same extent and in the same way as during almost the entire year 2020. Various forms of restrictions regarding both travels and events have led to most accommodation capacities remaining closed. Other than the café of International Hotel in Crikvenica, which operated in accordance with existing measures and restrictions, the Garden Palace Resort in Umag was opened on 1 February, and on 1 March, the Esplanade Hotel in Crikvenica reopened after having been closed in early January. It is important to note that based on the decision of the Management Board of JADRAN d.d. dated 31 December 2020, the Group accommodated residents living in the earthquake-affected areas of Banovina and Glina in the International Hotel, thus helping thirty families until mid-March 2021.
In the second quarter of 2021, the Group still operated under the strong impact of the COVID-19 pandemic. However, given the many efforts made both at the global and local levels to bring the pandemic under control, the Group recorded a better business result in that period compared to the same period last year. Although being faced with all the challenges posed to the Group by the COVID-19 pandemic, business continued in the third quarter with maximum adherence to all epidemiological measures, all for the purpose of protecting the Group’s guests and employees. In the third quarter of 2021, there was a boost in tourism turnover compared to the same period last year, primarily due to more favourable trends in the expansion of COVID-19 in the Republic of Croatia and the fact that our most important European tourism competitors were in the so-called red zone for most of the third quarter (especially during peak season), which resulted in more tourists travelling to Croatia.
It can be concluded that 2021 was uncertain, challenging and unpredictable for the Group's operations. In order to protect business continuity and preserve liquidity, the Group has maximally streamlined operating expenses, capital expenditures and control of cash outflows, similar to the previous year:
* As agreed with the social partners, it rationalised staff costs by reducing salaries for those employees who do not work and enabling, where possible, employees to work from home one to two days a week.
* Capital expenditures were limited to completing the investments started in recent years, completing the range of amenities in some facilities, investments in the beach management segment and continuing the investment cycle to ensure the further growth of the Group.
* Other operating expenses are limited to those necessary to maintain business continuity.
* Properties were sold in accordance with the previous disinvestment plan in CLUB ADRIATIC d.o.o., which in no way decreased the business potential, i.e. the accommodation capacities of the said company for 2021 were not reduced.
Despite the fact that the Group's operations were extremely challenging in the first half of the year and the future was uncertain and unpredictable at the time, the Group decided to continue the investment cycle. Capital expenditures were limited to completing the investments started in recent years, completing the range of amenities in some facilities, investments in the beach management segment, with liabilities arising from the signed concession agreements, and continuing the investment cycle to ensure the further growth of the Group as well as its future competitiveness. Of the realised investments, special emphasis should be placed on the final completion of the investment in furnishing the annex buildings of Hotel Slaven with the aim of upgrading the classification from 2 to 3 stars, the purchase of 12 new mobile homes, the development and furnishing of plots and a supermarket at the Selce campsite, the beginning of investment in the swimming pool complex at Hotel Omorika as well as the development and furnishing of the Hotel Alem annex buildings. All other operating expenses are limited to those necessary to maintain business continuity.
The Group’s cumulative losses as at 31 December 2021 amounted to HRK 175,901 thousand (2020: HRK 169,099 thousand) and current liabilities exceeded total assets by the amount of HRK 35,811 thousand (2020: HRK 121,502 thousand). The Group has sufficient funds in the account and due to agreed credit facilities is able to ensure the liquidity of the Group. Accordingly, the consolidated financial statements are prepared on the going concern principle.
The Group has applied the following standards and amendments for the first time for its annual reporting period commencing 1 January 2021:
* COVID-19-Related Rent Concessions – Amendments to IFRS 16 issued on 28 May 2020 and effective for annual periods beginning on or after 1 June 2020.
The above amendments did not have a significant impact on the Group's current period.
Certain new accounting standards and interpretations have been published that are not mandatory for 31 December 2021 reporting periods and have not been early adopted by the Group.# 2.4.2 Standards and interpretations not yet adopted: (continued)
Property, plant and equipment are presented in the statement of financial position (balance sheet) at historical cost less accumulated depreciation and accumulated impairment losses. Cost includes the purchase price and all costs directly attributable to bringing the asset to working condition for its intended use. The costs of current maintenance and repairs, replacements and minor investment maintenance are recognised as expense when incurred. The costs of major overhauls and replacements are capitalised. Gains and losses on the retirement or disposal of property, plant and equipment are presented in profit or loss in the period when incurred. Property under construction is presented at cost less any impairment losses. Depreciation commences when the assets are ready for their intended use. Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets, as follows:
| Asset Class | Useful Life (Years) |
|---|---|
| Buildings - concrete, metal, stone, brick | 20-59 |
| Buildings - wood and other materials | 20-59 |
| Campsite infrastructure | 20-59 |
| Furniture and technological equipment | 2-10 |
| Transportation vehicles | 7 |
| Passenger cars | 10 |
| Office equipment | 4-10 |
| Equipment - mobile homes | 10 |
| ICT equipment | 5-10 |
| Other equipment | 2-10 |
| Landscaping | 10 |
Non-current intangible assets include licenses and software and are measured at historical cost less accumulated amortisation and any accumulated impairment losses. Subsequent costs are capitalised only if they increase future economic benefits arising from the asset. All other costs are recognised in profit or loss as incurred.The amortisation charge is recognised in profit and loss on a straight-line basis over the estimated useful lives of intangible assets, from the date that they are available for use. Intangible assets are amortised using the straight-line method over a period of 5 years.
Investment property mainly relates to buildings and other business premises within the hotels and campsites and is held to earn long-term rentals or capital appreciation and is not owner-occupied. Investment property is treated as a long-term investment unless it is intended to be sold in the next year and a buyer has been identified in which case it is classified within current assets. Investment property is carried at historical cost less accumulated depreciation. The depreciation of buildings is calculated using the straight-line method to allocate cost over their estimated useful life. Subsequent expenditure is capitalised only when it is probable that future economic benefits associated with it will flow to the Group and the cost can be measured reliably. All other repairs and maintenance costs are expensed when incurred. If an investment property becomes owner-occupied, it is reclassified to property, plant and equipment, and its carrying amount at the date of reclassification becomes its deemed cost to be subsequently depreciated.
Income from a lease with the Group as the lessor is recognised in income for the period over the lease term.
Non-financial assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). The Group defined the CGU at the profit centre i.e. accommodation facility level. Non-financial assets that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.
The business model reflects how the Group manages their assets in order to generate cash flows - regardless whether the Group’s objective is: (i) solely to collect contractual cash flows from the assets (“hold to collect contractual cash flows”) or (ii) to collect both the contractual cash flows and cash flows arising from the sale of assets (“hold to collect contractual cash flows and sell”) or, if neither of (i) and (ii) are applicable, financial assets are classified as part of “other” business model and are measured at fair value through profit or loss. As at the reporting date, the Group’s financial assets comprise receivables.
The measurement of the expected credit loss (ECL) is based on reasonable and supportable information available without undue costs or effort, including information about past events, current and foreseeable future conditions and circumstances. Assessments of expected credit losses are normally based on historical probability of the inability to collect debts, supplemented by future parameters relevant to credit risk. For trade receivables, a simplified approach to expected credit loss measurement is applied i.e. measurement on a collective basis, depending on the type of customer, and are monitored according to their ageing structure. For example, ageing groups may be defined as follows: not past due, due in 0-90 days, due in 90-180 days, etc. The ageing groups are determined according to the stages of the collection process.
Inventories are carried at the lower of cost and net realisable value. Cost is determined using the weighted average cost method. Net realisable value is the estimated selling price in the ordinary course of business, less costs to sell.
Cash and cash equivalents comprise cash on hand, deposits held at call with banks, and other short-term highly liquid instruments with original maturities of three months or less.
Borrowings are initially recognised at fair value less transaction costs and subsequently at amortised cost using the effective interest rate method. Interest is recognised as an expense, except in the case of the construction of a qualifying asset, when it is capitalised as part of the asset’s cost. The effective interest rate method is a method to calculate the amortised cost of a financial liability and allocate interest expenses over the accounting period. Borrowings are classified based on the agreed maturity as current liabilities, or non-current liabilities if they mature in more than 12 months. If the Group has an unconditional right to defer the settlement of a liability for at least 12 months after the reporting date, such liabilities are classified as non-current liabilities. The Group derecognises financial liabilities when, and only when, they have been discharged, cancelled or have expired.
Trade payables are obligations to pay for goods or services that have been acquired from suppliers in the ordinary course of business. Trade payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
The income tax expense represents the sum of the tax currently payable and deferred tax. The current tax liability is based on taxable profit for the year. Taxable profit differs from profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years or non-taxable, i.e. not recognised as expense for income tax purposes. The Group’s current tax liability is calculated using tax rates that have been enacted by the reporting date. Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences, and deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences and tax losses can be utilised. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the tax asset to be recovered. Deferred tax is recognised as an expense or income in profit or loss, except when they relate to items credited or debited directly to equity, in which case the deferred tax is also recognised directly in equity.
In the normal course of business through salary deductions, the Group makes payments to mandatory pension funds on behalf of its employees as required by law. All contributions made to the mandatory pension funds are recorded as salary expense when incurred. The Group is not obliged to provide any other post-employment benefits.
The Group pays one-time termination benefits to its employees at retirement. The liability and costs of such benefits are determined using the projected unit credit method and discounted to their present value based on calculations made at the end of each reporting period, which take into account the assumptions of the number of employees estimated to become entitled to termination benefits at regular retirement, the estimated cost of such termination benefits, and the discount rate defined as the average anticipated rate of return on investment in government bonds. Actuarial gains and losses resulting from experience adjustments and changes in actuarial assumptions are recognised immediately in profit or loss.
The Group recognises a liability for long-term employee benefits (jubilee awards) evenly over the period the benefit is earned based on actual years of service. The long-term employee benefit liability is determined annually at the end of each reporting period using assumptions regarding the likely number of staff to whom the benefits will be payable, estimated benefit cost and the discount rate which is determined as the average expected rate of return on investments in government bonds. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised immediately in profit or loss.
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events; it is more likely than not that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. Where the Group expects a provision to be reimbursed, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain.
The Group’s share capital comprises ordinary shares. The consideration paid for treasury shares purchased, including any directly attributable transaction costs, is deducted from equity attributable to the Group’s shareholders until the shares are withdrawn, reissued or disposed of.2.18. Revenue recognition
Revenue is income arising in the course of the Group’s ordinary activities. A five-step model used for recognition of revenue from contracts with customers is presented below:
Step 1: Identify the contract(s) with a customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation
Revenue is recognised for each separate contractual performance obligation in the amount of the transaction price. The transaction price is the amount of the consideration in the contract to which the Group expects to be entitled in exchange for transferring control over the promised goods or services to a customer. The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the Group and specific criteria have been met for each of the Group’s activities.
Revenue from provision of services
Revenue from hotel & tourism services is recognised in the period the services are provided.
Lease income
Lease income is generally recognised in the period the services are provided, using a straight-line method over the lease term.
Interest income
Interest income is recognised on a time-proportion basis using the effective interest method.
2.19. Government grants
Government grants are recognised at their fair value where there is reasonable assurance that the grant will be received and the Group and the Company will comply with all attached conditions. A grant receivable as compensation for costs or losses already incurred or for immediate financial support, with no future related costs, are recognised as income in the period in which it is receivable within other operating income - Note 7.
2.20. Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
The Group as the lessor
Rental income from operating leases is recognised on the straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight-line basis over the lease term.
The Group as the lessee
Assets held under finance leases are initially recognised as assets of the Group at their fair value at the commencement date of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation. Lease payments are apportioned between finance costs and the reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. All other borrowing costs are recognised in gain or loss in the period in which they arise.
At the inception of a contract, the Group assesses whether the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. If the above conditions are met, the contract is considered to be or contain a lease. If the terms and conditions of the contract are changed, the Company shall reassess whether the above conditions are met. The Group determines the lease term as the non-cancellable period of a lease, together with the periods covered by the option to extend the lease if the lessee is reasonably certain to exercise that option; and the periods covered by the option to terminate the lease if the lessee is reasonably certain not to exercise that option, with the obligation to reassess the above if significant events or a significant change in circumstances arise.
2.20. Leases (continued)
At the commencement date (the date on which the underlying asset is available for use), the Group recognises a right-of-use asset and a lease liability. The right-of-use assets are measured at cost that comprises: the amount of the initial measurement of the lease liability; any lease payments made at or before the commencement date, less any lease incentives received; any initial direct costs incurred. After the commencement date, the right-of-use assets are measured using the cost model. Under the cost model, the right-of-use asset is measured at cost: less any accumulated depreciation on a straight-line basis over the period of the lease (3-15 years), and any accumulated impairment losses; and adjusted for any remeasurement of the lease liability.
Lease liabilities at the present value of the lease payments that are not paid by that date. The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, the lessee’s incremental borrowing rate is used. The measurement of lease liabilities includes: fixed payments less any lease incentives receivable; variable lease payments that are based on an index or a rate; amounts expected to be payable by the Group under residual value guarantees; the exercise price of a purchase option if the Group is reasonably certain to exercise that option; payments of penalties for terminating the lease, if the lease term reflects the Group exercising that option. After the commencement date, the lease liability is measured considering any changes in the interest rate, lease payments made and any reassessment or lease modifications.
Short-term leases and leases of low-value assets
The Group has decided to apply the short-term lease exemption recognition (for leases up to 12 months that do not include the purchase option) and leases for which the underlying asset is of low value (up to HRK 30,000). Payments for leases for which the underlying asset is of low value are recognised on a straight-line basis as an expense over the lease term. The Group will consider a short-term lease to be a new lease if there is a lease modification and/or a change to the lease term. These leases mainly relate to photocopier machines and fire extinguishers.
The Group as the lessor
Leases where the Group does not transfer substantially all the risks and rewards of ownership of the asset are classified as operating leases. Lease income is recognised on a straight-line basis over the lease term and included in the statement of comprehensive income due to its operating nature.
2.20. Leases (continued)
Concession arrangements
If investments are made that are expected to last less than one accounting period, then that expense is recognised as expense for the period, and if investments made in the concession area are expected to last longer than one accounting period, they will be capitalised. Investments in the concession area have a limited useful life and are stated at cost less accumulated depreciation. Depreciation is calculated using the straight-line method to allocate the cost of investments over their estimated useful lives, which is consistent with the remaining life of the concession agreement.
2.21. Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings over the period of their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. All other borrowing costs are recognised in the period in which they are incurred.
2.22. Foreign currencies
Transactions in currencies other than Croatian kuna are recorded at the exchange rate prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are re-translated at the reporting date using the exchange rate prevailing at that date. Gains and losses arising on translation are charged to profit or loss in the period when incurred.
2.23. Earnings (loss) per share
Earnings per share are determined by dividing the profit or loss attributable to equity holders of the Group by the weighted average number of participating shares outstanding during the year.
2.24. Business combinations
Subsidiaries are all entities controlled by the Group. The Group controls the entity when the Group is exposed or is entitled to variable returns from its association with the entity and has the ability to influence those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group and are de-consolidated from the date that control ceases. The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest’s proportionate share of the recognised amounts of the acquiree’s identifiable net assets.## 2.24. Business Combinations (continued)
Acquisition-related costs are expensed as incurred. If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held equity interest in the acquiree is remeasured to fair value as at the acquisition date through comprehensive income. Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance with IFRS 9 either as income or expense or as a change to other comprehensive income. The contingent consideration that is classified as equity is not remeasured, and its subsequent settlement is accounted for within equity. Goodwill is initially measured as the difference between the consideration transferred and the amount of non-controlling interest in the acquiree in relation to the fair value of identified net assets acquired. If this consideration is lower than the fair value of the net assets acquired, the difference is recognised in the statement of comprehensive income. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses.
Intercompany transactions, balances, income and expenses from transactions with Group entities are eliminated. Gains and losses from intercompany transactions recognised in assets are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.
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 responsible for allocating resources and assessing performance of the operating segments. The chief operating decision-maker is the Group’s Management Board.
Events after the end of the reporting year providing additional information about the position of the Group as at the date of the financial statements (adjusting events) are reflected in the financial statements. Events that are not adjusting events are disclosed in the notes to the financial statements, if material.
In applying the accounting policies described in Note 2, Group management has made certain judgements that had a significant impact on the amounts reported in the financial statements (independent of those presented below). These judgements are detailed in the relevant notes and the most significant ones among them relate to the following:
When a significant investment in tourism properties (buildings) occurs, the useful life of buildings or their components is reassessed/reviewed. The useful lives should be periodically revised to reflect any changes in circumstances since the previous assessment. Changes in estimate, if any, will be reflected prospectively in a revised depreciation charge over the remaining, revised useful life.
By using a certain asset, the Group uses the economic benefits contained in this asset, which diminish more intensely with economic and technological ageing. Consequently, in the process of determining the useful life of an asset, in addition to assessing the expected physical utilisation, it is necessary to consider the changes in demand on the tourism market, which will cause a faster economic obsolescence as well as a more intense development of new technologies. In view of the above, business operations in the hotel industry impose the need for more frequent investments, and this circumstance contributes to the fact that the useful life of assets is decreasing.
If the useful lives of property, plant and equipment had been 10% longer/shorter, with all other variables held constant, the net profit for the year would have been HRK 2,413 thousand higher/lower in 2021 (2020: HRK 2,018 thousand), and the net carrying amount of property, plant and equipment would have been HRK 2,942 thousand higher/lower in 2021 (2020: HRK 2,461 thousand).
In accordance with the adopted accounting policy, the Group reviews the carrying amounts of non-financial assets (including property, plant and equipment, investment property and right-of-use assets) at least once a year to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). The cash-generating unit in the hotel industry/tourism is the accommodation facility. The accounting policy is presented in Note 2.8.
Given the prolonged impact of the COVID-19 pandemic on the Group's operations in 2021 and the absence of operating profit or overall operations in individual cash-generating units, the Group has assessed that there are indicators of impairment of certain categories of non-current non-financial assets and in accordance with IAS 36 made an impairment test of all its cash-generating units i.e. accommodation facilities (own as well as leased facilities). The recoverable amount is calculated in one of two ways: by calculating the value of assets in use or by calculating the fair value of assets less costs to sell for individual cash-generating units whose value in use determined by the Discounted Cash Flows (DCF) method does not reflect their intrinsic value (taking into account their location and development potential).
The investment cycle started by the Group in 2019 and continued through 2020 and 2021 resulted in an increase in revenue in the facilities covered by new investments. Consequently, the historical approach to allocating administrative costs by revenue of an individual facility in relation to total revenues did not adequately reflect the Group’s new asset structure. In order to optimally allocate the administrative costs of central services, a new method of allocating these costs has been applied, which is based on the number of accommodation units per each facility. By applying the new method of allocating administrative costs of central services, the Group’s total operating result remained unchanged.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining the recoverable amount, management considers key indicators such as revenue growth based on occupancy of facilities, revenue per unit and expected market growth in the hotel industry, etc. The valuations are based on five-year cash flow projections prepared by the Group's management, with the budget for 2022 also approved by the Supervisory Board. For the period after the end of the five-year period, the assumed long-term sustainable growth rate (sustainable growth rate) was applied. Taking into account the significant capital investments in the Group's accommodation units just before the outbreak of the Covid-19 pandemic, the sustainable growth rates used in the valuation represent the maximum value of the projected inflation rates in the Republic of Croatia.
An overview of the assumptions used in the in-use value calculation model is as follows:
| Assumption | Tourism 2023 – 2026 |
|---|---|
| EBITDA margin | 17% - 53% (higher profitability rates are assumed for campsites and apartments) |
| Revenue growth | 6% - 13% (depending on the type of accommodation and capital investment) |
| Discount rate (before tax) | 9.4% - 9.6% (depending on the type of the CGU) |
| Sustainable long-term growth rate | 2% |
Note: the margin and revenue growth listed in the table above reflect the ranges after returning to the business level after the Covid-19 pandemic (in 2023 or onwards) and depend on the individual facility of different characteristics.
The calculation of fair value less costs to sell is based primarily on the revenue method, and in two cases on the comparative (for land) and cost method. According to the income method, real estate is worth as much as the cash it is able to generate over its lifetime. After determining all income and expenses related to an individual accommodation unit, the net income of all future periods is calculated and discounted at an adequate discount rate in order to obtain the present value of future cash flows. The assumptions used in the income method are the average board price per accommodation unit, the average occupancy rate, the estimated total cost defined as % of GOP and the capitalisation factor.
The following is an overview of the key assumptions in the revenue method used:
| Assumption | Tourism 2022 |
|---|---|
| Average board price (HRK) | 43 - 646 |
| Average occupancy rate | 18% - 66% |
| Estimated total cost (% of GOP) | 60% |
| Capitalisation factor | 7% |
Note: The key assumptions listed in the table above depend on the individual facility of different characteristics.
For accommodation facilities where land represents the most significant part of the estimated value, a comparative method was used, i.e. method of determination based on realised comparable transactions on the real estate market, in accordance with the current state of the respective real estate. Prepared impairment tests suggest that the recoverable amount of each facility exceeds the net carrying amount of each facility as at 31 December 2021 and, accordingly, there are no indications of impairment.### 3. CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES (continued)
2) Right-of-use assets
In 2021, the Group conducted an impairment test for right-of-use assets with respect to the indicators of impairment due to the prolonged effects of the COVID-19 pandemic. A leased accommodation facility was identified as a cash-generating unit. The recoverable amount of leased accommodation facilities has been determined on the basis of the value in use based on financial projections in the contracted lease term at a discount rate. For tourism facilities for which the recoverable amount is determined at fair value less costs to assess, based on the assessment of an independent appraiser, the Group has classified them in Level 3 of the fair value hierarchy. The applied valuation methods for these facilities are described above. The results of this analysis suggest that the recoverable amount of each leased facility exceeds the reported net carrying amount of each facility as at 31 December 2021 and, accordingly, there are no indications of impairment.
Leases
As the interest rate implicit in the lease cannot be readily determined, the Group uses its own incremental borrowing rate of 2.7% (2020: 2.70%) when calculating the lease liability for cash flow discounting purposes. The Group defines a lease term as a non-cancellable period, together with periods under the lease extension and/or termination option if it is reasonably certain that such option will be exercised (extension) or not exercised (termination). The Group does not expect to exercise either the lease termination or the extension option, and no potential effects were calculated in relation to these options.
Provisions for legal disputes
The Group is a party to a number of legal disputes arising from the ordinary course of business (Note 35). A provision is made if there is a present obligation resulting from a past event (taking into account all available evidence, including the opinions of legal experts) when it is probable than an outflow of resources will be required to settle the obligation, and the amount of the obligation can be measured reliably. As at 31 December 2021, provisions for legal disputes amounted to HRK 181,000 thousand (31 December 2020: HRK 0, see Note 25).
Capital risk management
The Group manages its capital to ensure that it will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance. The Group's capital structure consists of share capital, statutory reserves, retained earnings and profit for the year.
Classes of financial instruments
| 31 December 2020 | 31 December 2021 | |
|---|---|---|
| Financial assets | ||
| Trade receivables | 1,720,177 | 16,358,165 |
| Non-current financial assets | - | 1,353,918 |
| Cash and cash equivalents | 27,640,451 | 23,256,173 |
| Total | 29,360,628 | 40,968,256 |
| Financial liabilities | ||
| Liabilities to financial institutions | 264,034,598 | 244,804,041 |
| Trade payables | 9,809,491 | 15,476,049 |
| Lease liabilities | 189,440,538 | 183,638,312 |
| Total | 463,284,627 | 443,918,402 |
Financial risk factors
The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk. The Group does not have a formal risk management programme in place, and the overall risk management in respect of these risks is carried out by the Group’s Management Board and management.
Market risk
The Group’s activities primarily expose the Group to the financial risks of changes in foreign currency exchange rates and interest rates (see below). Market risk exposures are supplemented by the sensitivity analysis. There has been no change to the Group’s exposure to market risks or the manner in which it manages and measures the risk.
Currency risk management
The Group undertakes certain transactions denominated in foreign currencies. Hence, exposures to exchange rate fluctuations arise. The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities as at the reporting date are as follows:
| Assets | Liabilities | |
|---|---|---|
| 31 December 2020 | 31 December 2021 | |
| EUR | 19,283,686 | 17,560,362 |
Analysis of foreign currency sensitivity
The Group is exposed to foreign currency risk in the event of a change in the euro (EUR) exchange rate. The following table presents an analysis of the effects of changes in the HRK exchange rate compared to the increase or decrease in HRK value by 10% in relation to EUR. 10% is the rate used for internal reporting to the Management Board on foreign currency risk and represents the Management Board's assessment of the reasonably possible change in foreign exchange rates. An analysis is performed only for receivables and liabilities denominated in foreign currencies and represents the adjustment of their value at the period end for a change in the exchange rate of 10%. The sensitivity analysis includes third-party loans where the loan is denominated in the currency different from the lender's or the borrower's currency. The positive/negative amount recorded below indicates a net decrease/increase in profit or other equity when HRK compared to the relevant currency strengthens by 10%: If the HRK would weaken by 10% in relation to another relevant currency, the effect would be the same, only negative.
| 2020 | 2021 | |
|---|---|---|
| EUR exchange rate fluctuation by +10% | Increase in loss (43,479,176) | Increase in loss (40,370,035) |
| EUR exchange rate fluctuation by -10% | Decrease in loss 43,479,176 | Decrease in loss 40,370,035 |
Interest rate risk management
The Group is exposed to interest rate risk as it enters into loan agreements with variable interest rates. The Group’s exposure to interest rates based on financial assets and liabilities is detailed under Liquidity risk management. The Group manages this risk by maintaining an appropriate ratio of loans with fixed and variable interest rates in its loan portfolio.
Interest rate sensitivity analysis
Cash flow interest rate risk is the risk that the cost of interest for the instrument will fluctuate over time. Most financial liabilities are contracted at fixed interest rates and the sensitivity analysis of interest rate changes to financial liabilities contracted at a variable interest rate is shown in the following table:
| 2020 | 2021 | |
|---|---|---|
| Interest rate change by +100 bp | Decrease in profit/increase in loss 1,013,034 | Decrease in profit/increase in loss 1,010,383 |
| Interest rate change by -100 bp | Increase in profit/(decrease) in loss (1,013,034) | Increase in profit/(decrease) in loss (1,010,383) |
Credit risk management
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss for the Group. The Group constantly monitors its exposure to the parties it conducts business with and their credit ratings and allocates the total value of transactions among acceptable customers. The carrying amount of financial assets recorded in the financial statements, net of impairment losses, represents the Group's maximum exposure to credit risk without taking account of the value of any collateral obtained.
Liquidity risk management
The ultimate responsibility for liquidity risk management rests with the Group's Management Board which has built an appropriate liquidity risk management framework for the management of the Group’s short, medium and long-term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves, bank borrowings and other sources of financing, by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. The table below details the remaining contractual maturities for the Group for non-derivative financial liabilities. The table has been prepared on the basis of undiscounted cash flows of financial liabilities based on the earliest date on which the Group may be required to settle the liabilities.
Maturities of non-derivative financial liabilities
Weighted average interest method
| Past due | Up to 1 month | 1 to 3 months | 3 months to 1 year | 1 to 5 years | Over 5 years | Total | |
|---|---|---|---|---|---|---|---|
| 2020 | |||||||
| Interest-free | - | 10,559,918 | 18,762 | - | - | - | 10,578,680 |
| Lease liabilities | - | 1,660,653 | 87,624 | 21,085,802 | 88,133,410 | 108,508,808 | 219,476,297 |
| Fixed interest rate 2.7% | - | 264,828 | 504,044 | 20,934,064 | 91,754,804 | 65,110,598 | 178,568,338 |
| Variable interest rate 2.1% | - | - | 531,843 | 1,625,076 | 45,200,732 | 67,689,654 | 115,047,305 |
| Total | - | 12,485,399 | 1,142,273 | 43,644,942 | 225,088,946 | 241,309,060 | 523,670,620 |
| 2021 | |||||||
| Interest-free | - | 15,118,532 | 357,517 | - | - | - | 15,476,049 |
| Lease liabilities | - | 2,093,707 | 4,501,340 | 25,205,742 | 81,168,531 | 96,927,806 | 209,897,126 |
| Fixed interest rate 2.7% | 1,018,649 | 2,005,306 | 21,986,601 | 79,260,819 | 53,126,358 | - | 157,397,733 |
| Variable interest rate 2.1% | - | - | 524,557 | 9,163,335 | 46,760,857 | 56,146,204 | 112,594,953 |
| Total | - | 18,230,888 | 7,388,720 | 56,355,678 | 207,190,207 | 206,200,368 | 495,365,861 |
Operating segments are reported in accordance with the internal reporting procedure to the Group’s Management Board, the chief operating decision-maker, which is responsible for allocating resources to the reportable segments and assessing its performance. Management defined Hotels & Apartments, Campsites and operating units Inter café bar, Rokan, Katarina swimming pools and Kačjak beach as its reportable segments.
The segment information for the reportable segments for the year ended 31 December 2021 is as follows:
| Operating segment | Income by segment (HRK) | Expenses by segment (HRK) | Result by segment (HRK) |
|---|---|---|---|
| Hotels & Apartments | 129,530,510 | (128,945,634) | 584,876 |
| Campsites | 28,367,801 | (12,892,423) | 15,475,378 |
| Other | 6,530,095 | (6,413,774) | 116,321 |
| Total reportable segments | 164,428,406 | (148,251,831) | 16,176,575 |
| Other operating segments | 10,872,995 | (23,686,796) | (12,813,801) |
| TOTAL | 175,301,401 | (171,938,627) | 3,362,774 |
The segment information for the reportable segments for the year ended 31 December 2020 is as follows:
| Operating segment | Income by segment (HRK) | Expenses by segment (HRK) | Result by segment (HRK) |
|---|---|---|---|
| Hotels & Apartments | 61,028,118 | (151,481,742) | (90,453,624) |
| Campsites | 10,519,060 | (6,836,617) | 3,682,443 |
| Other | 4,259,133 | (4,731,752) | (472,619) |
| Total reportable segments | 75,806,311 | (163,050,111) | (87,243,800) |
| Other operating segments | 7,859,623 | (21,698,027) | (13,838,404) |
| TOTAL | 83,665,934 | (184,748,138) | (101,082,204) |
The result by segment represents the profit of each segment before the distribution of other operating income, other operating expenses, finance income, finance costs and income tax. This result represents a benchmark that is submitted to the Group's Management Board for the purpose of making a decision on allocating resources to that segment and evaluating its performance.
A reconciliation of the result of reportable segments and net loss for the current period is provided as follows:
| Item | 31 December 2020 (HRK) | 31 December 2021 (HRK) |
|---|---|---|
| Result by reportable segment | (87,243,800) | 16,176,575 |
| Unallocated operating income | 7,859,623 | 10,872,995 |
| Unallocated finance income | 352,802 | 2,772,696 |
| Unallocated operating costs: | (21,698,027) | (23,686,796) |
| Cost of goods sold | 47,255 | (8,198) |
| Cost of raw materials and supplies | (357,266) | (333,666) |
| Cost of services | (4,797,885) | (5,786,959) |
| Staff costs | (11,297,994) | (13,817,968) |
| Depreciation and amortisation | (3,981,071) | (1,699,490) |
| Impairment | 762,216 | 450,542 |
| Other operating expenses | (2,073,282) | (2,491,057) |
| Unallocated finance costs | (11,894,288) | (12,937,571) |
| Income tax | - | - |
| Loss for the year | (112,623,690) | (6,802,101) |
The Group does not monitor assets and liabilities by segments and therefore, this information has not been disclosed. The Group does not monitor income and expenses or assets and liabilities of the subsidiary Stolist d.o.o. by segments. The hotels, apartments and campsites (operating assets) are located in the Republic of Croatia. The Group provides its hotel/hospitality services and sales activities in Croatia to domestic and foreign customers.
| 2020 (HRK) | 2021 (HRK) | |
|---|---|---|
| Accommodation | 46,316,294 | 108,073,251 |
| Food and beverages | 20,962,604 | 44,517,164 |
| Other hotel services | 1,267,192 | 2,864,350 |
| Trade goods | 238,661 | 412,274 |
| TOTAL | 68,784,751 | 155,867,039 |
The Group provides its hotel/hospitality services and sales activities in Croatia to domestic and foreign customers. The Group’s revenues are classified according to the customers’ origin.
| 2020 (HRK) | 2021 (HRK) | |
|---|---|---|
| Sales - domestic customers | 17,784,516 | 44,836,490 |
| Sales - foreign customers | 43,080,344 | 96,681,670 |
| Other /i/ | 7,919,891 | 14,348,879 |
| Total | 68,784,751 | 155,867,039 |
/i/ Other includes revenues from the sale of trade goods, alcoholic and non-alcoholic drinks, food and beverages, parking services, wellness and other similar services, where it is not possible to determine whether revenue was earned from the sale to foreign or domestic customers.
| 2020 (HRK) | 2021 (HRK) | |
|---|---|---|
| Covid-19-related grants | 8,624,301 | 5,985,903 |
| Rental income | 3,233,296 | 4,918,407 |
| Disposal of non-current assets | 131,504 | 1,904,358 |
| Income from marketing and other services | 365,404 | 1,062,539 |
| Collection of amounts due as per judgement and out-of-court settlement | 95,428 | 941,048 |
| Recharged costs of lessees | 582,656 | 633,068 |
| Direct aid | 346,126 | 361,761 |
| Insurance reimbursements | 71,644 | 610 |
| Other operating income | 1,430,824 | 3,626,668 |
| TOTAL | 14,881,183 | 19,434,362 |
| 2020 (HRK) | 2021 (HRK) | |
|---|---|---|
| Groceries consumed | 5,878,803 | 11,691,607 |
| Electricity | 3,437,323 | 6,192,680 |
| Water used | 1,265,629 | 2,838,238 |
| Consumables and cleaning supplies | 1,339,010 | 1,855,670 |
| Heating oil and gas | 686,995 | 1,295,047 |
| Alcoholic and soft drinks consumed | 571,648 | 1,054,139 |
| Write-off of small inventory | 991,141 | 743,205 |
| Fuel for passenger and freight vehicles | 219,283 | 425,852 |
| Overheads - leased properties | 789,925 | 300,641 |
| Packaging | 123,347 | 131,766 |
| Office supplies | 72,814 | 91,921 |
| Other costs | 282,435 | 260,474 |
| TOTAL | 15,658,353 | 26,881,240 |
| 2020 (HRK) | 2021 (HRK) | |
|---|---|---|
| Commissions and banking services | 6,356,800 | 11,635,646 |
| Contractor services | 3,601,354 | 7,277,675 |
| Utility services | 2,341,058 | 3,236,330 |
| Intellectual services | 2,272,292 | 2,532,346 |
| Investment and current maintenance | 2,203,672 | 3,178,240 |
| Student employment agency services | 1,012,010 | 1,711,299 |
| Gross temporary service contract cost | 542,136 | 911,802 |
| Advertising services | 349,813 | 673,956 |
| Telephone, Internet and mail | 843,342 | 673,516 |
| Rentals | 555,340 | 563,895 |
| Music and ZAMP fees | 148,797 | 179,436 |
| Transport services (road and maritime transport) | 20,765 | 76,413 |
| Other services | 757,947 | 1,027,325 |
| TOTAL | 21,005,326 | 33,677,879 |
| 2020 (HRK) | 2021 (HRK) | |
|---|---|---|
| Net salaries | 19,568,037 | 23,417,809 |
| Contributions from salaries | 5,776,808 | 6,695,576 |
| Contributions on salaries | 4,468,322 | 5,387,873 |
| Taxes and surtaxes | 2,336,551 | 2,370,371 |
| Performance bonus and holiday pay | 6,417 | 3,105,914 |
| Accrual for unused vacation days | 500,068 | 1,528,906 |
| Children’s gifts, Christmas bonus, non-taxable voucher | 594,200 | 1,174,176 |
| Transportation to and from work | 1,000,825 | 1,370,540 |
| Meal | 417,913 | 1,042,046 |
| Unused hours off - redistribution | 127,840 | 556,034 |
| Termination benefits | 993,015 | 339,572 |
| Non-current provisions for termination benefits and jubilee awards | 23,200 | 63,332 |
| Other | 157,462 | 299,843 |
| TOTAL | 35,970,658 | 47,351,992 |
Remuneration for the members of the key management personnel and Supervisory Board:
| 2020 (HRK) | 2021 (HRK) | |
|---|---|---|
| Key management | 1,657,111 | 1,814,838 |
| of which receipts in kind | 221,935 | 146,601 |
| Supervisory Board | 103,914 | 672,723 |
| TOTAL | 1,761,025 | 2,487,561 |
| 2020 (HRK) | 2021 (HRK) | |
|---|---|---|
| Impairment of property, plant and equipment (Note 17) | 52,994,245 | - |
| Impairment of investment property (Note 19) | 549,799 | - |
| Impairment of right-of-use assets (Note 37) | 7,642,494 | - |
| TOTAL | 61,186,538 | - |
| 2020 (HRK) | 2021 (HRK) | |
|---|---|---|
| Impairment of trade receivables | (361,202) | (515,069) |
| Impairment of trade receivables-IFRS 9 | 794,617 | 529,446 |
| TOTAL | 433,415 | 14,377 |
| 2020 (HRK) | 2021 (HRK) | |
|---|---|---|
| Utility charges and concessions | 2,472,994 | 1,979,126 |
| Charges to Hrvatske vode | 2,397,136 | 1,750,004 |
| Insurance premiums | 828,441 | 1,020,763 |
| Animation and entertainment | 108,365 | 664,606 |
| Entertainment | 239,394 | 487,628 |
| Net book amount of disposed assets | 281,358 | 474,498 |
| Taxes and contributions irrespective of business result | 251,671 | 421,752 |
| Employee accommodation | 220,955 | 388,009 |
| Subscriptions and memberships | 273,304 | 376,231 |
| Reimbursement to students in practice and scholarships | 209,143 | 375,616 |
| Aid to employees | 92,500 | 308,444 |
| Travel expenses, per diems, accommodation and field bonus | 168,437 | 105,313 |
| Disability benefits | 98,719 | 91,800 |
| Professional training of employees | 61,058 | 43,604 |
| Other operating expenses | 1,328,653 | 1,862,245 |
| TOTAL | 9,032,128 | 10,349,639 |
| 2020 (HRK) | 2021 (HRK) | |
|---|---|---|
| Finance income | ||
| Regular and penalty interest income | 19,935 | 1,278 |
| Foreign exchange gains | 332,877 | 2,771,418 |
| Subtotal | 352,812 | 2,772,696 |
| Finance costs | ||
| Regular and penalty interest expense | (4,820,018) | (5,506,426) |
| Foreign exchange losses | (2,253,309) | (2,098,488) |
| Interest expense on lease | (4,820,971) | (5,332,657) |
| Subtotal | (11,894,298) | (12,937,571) |
| NET FINANCE (COSTS) / INCOME | (11,541,486) | (10,164,875) |
The Group is liable for income tax under the laws and regulations of the Republic of Croatia. The tax base is determined as the difference between income and expenses for the period plus and net of income and expenses having a different tax treatment according to the tax regulations concerning the taxation of income. The income tax rate was 18% in all presented periods.
| 2020 (HRK) | 2021 (HRK) | |
|---|---|---|
| Accounting loss before tax | (112,623,690) | (6,802,101) |
| Income tax calculated at the rate of 18% | (20,272,264) | (1,224,378) |
| Effects of expenses not recognised for tax purposes | 14,827,158 | 1,177,918 |
| Effects of income not recognised for tax purposes | (1,649,166) | (1,083,344) |
| Effects of utilised tax losses from previous years | (10,729,673) | (834,473) |
| Effects of unrecognised deferred tax assets | 17,823,945 | 1,964,277 |
| Income tax | - | - |
In recent years, the Tax Authority has not conducted an audit of tax on the Group's income tax returns. According to the relevant tax regulations, the Tax Administration may inspect the Group’s books and records at any time within three years of the end of the year in which the relevant tax liability is presented and may impose additional tax liabilities and penalties. The Group's Management is not aware of any circumstances, which may give rise to a potential material liability in this respect. As at 31 December 2021, temporary tax differences for which deferred tax assets were not recognised, and which relate to property, plant and equipment, amount to HRK 20,293 thousand. Also, the Group has tax losses available for utilisation in the amount of HRK 13,456 thousand for which deferred tax assets are not recognised as presented in the table below Deferred tax assets were not recognised given that their utilisation is uncertain.In the following periods, the Group will consider the recognition of deferred tax assets in accordance with the requirements of IAS 12. Tax losses available for carry forward are presented below:
| Year incurred | Amount | Year of expiry |
|---|---|---|
| 2017 | (6,359,699) | 2022 |
| 2018 | (3,449,889) | 2023 |
| 2019 | (920,085) | 2024 |
| 2020 | (44,228,217) | 2025 |
| 2021 | (19,799,229) | 2026 |
| 2020 | 2021 | |
|---|---|---|
| Loss attributable to shareholders of the Group | (112,623,690) | (6,802,101) |
| Weighted average number of ordinary shares used to calculate basic/diluted earnings per share | 27,971,463 | 27,971,463 |
| Basic and diluted loss per share | (4.03) | (0.24) |
| Item description | Land | Buildings | Plant and equipment | Other | Tangible assets under construction | Total assets |
|---|---|---|---|---|---|---|
| COST | ||||||
| At 1 January 2020 | 447,701,921 | 694,275,321 | 112,554,742 | 1,043,426 | 35,855,416 | 1,291,430,826 |
| Additions | - | 58,786,083 | 39,684,049 | 326,171 | (33,188,961) | 65,607,342 |
| Disposals | (9,196) | - | (3,691,824) | - | - | (3,701,020) |
| At 31 December 2020 | 447,692,725 | 753,061,404 | 148,546,967 | 1,369,597 | 2,666,455 | 1,353,337,148 |
| Additions | - | 10,291,295 | 25,773,100 | 518,488 | 4,298,357 | 40,881,240 |
| Transfer from investment property | - | 7,252,171 | - | - | - | 7,252,171 |
| Disposals | (36,733,282) | (3,560,369) | (4,007,032) | - | - | (44,300,683) |
| Transfer to investment property | - | (483,649) | - | - | - | (483,649) |
| At 31 December 2021 | 410,959,443 | 766,560,852 | 170,313,035 | 1,888,085 | 6,964,812 | 1,356,686,227 |
| ACCUMULATED DEPRECIATION | ||||||
| At 1 January 2020 | - | 454,510,042 | 37,639,074 | 312,414 | - | 492,461,530 |
| Depreciation charge | - | 9,398,201 | 15,100,609 | 105,976 | - | 24,604,786 |
| Disposals | - | - | (3,398,577) | - | - | (3,398,577) |
| Impairment of non-current assets | 27,988,579 | 25,005,666 | - | - | - | 52,994,245 |
| At 31 December 2020 | 27,988,579 | 488,913,909 | 49,341,106 | 418,390 | - | 566,661,984 |
| Depreciation charge | - | 9,569,894 | 18,706,880 | 161,717 | - | 28,438,491 |
| Transfer from investment property | - | 6,613,602 | - | - | - | 6,613,602 |
| Disposals | - | (2,806,242) | (2,789,722) | - | - | (5,595,964) |
| Transfer to investment property | - | (264,779) | - | - | - | (264,779) |
| At 31 December 2021 | 27,988,579 | 502,026,384 | 65,258,264 | 580,107 | - | 595,853,334 |
| NET BOOK AMOUNT | ||||||
| At 31 December 2020 | 419,704,146 | 264,147,495 | 99,205,861 | 951,207 | 2,666,455 | 786,675,164 |
| At 31 December 2021 | 382,970,864 | 264,534,468 | 105,054,771 | 1,307,978 | 6,964,812 | 760,832,893 |
Additions to tangible assets in 2021: buildings in the amount of HRK 10,955,805 relate to investments in hotel facilities (upgrading the classification of hotels, developing campsites and other construction works) (2020: HRK 58,786,083), equipment in the amount of HRK 25,773,100 relates to the purchase of equipment necessary for operations in hotels and campsites (2020: HRK 39,684,049), other assets in the amount of HRK 518,488 (2020: HRK 326,171) and the additions to tangible assets under construction in the amount of HRK 4,298,357 relate to investments in hotel facilities and campsite development, which were not put into use during 2021 (2020: disposals of HRK 33,188,961). As at 31 December 2021, the carrying amount of mortgaged properties (hotels Omorika, hotel Ad Turres, Esplanade, Katarina, International, Slaven resort, pavilions, swimming pool and central restaurant within the Ad Turres, Kačjak and Kaštel resorts) amounts to a total of HRK 298,653,837 (31 December 2020: HRK 165,115,398). The total value of tangible assets that are fully depreciated, and which are still in use as at 31 December 2021 amounts to HRK 107,649,750 (31 December 2020: HRK 102,812,819). Proceeds from sale of property, plant and equipment in 2021 amounted to HRK 27,943,446 and the unsettled amount of HRK 12,191,132 is stated within trade receivables at the balance sheet date.
| Item description | Licences, software and other rights |
|---|---|
| COST | |
| At 1 January 2020 | 4,365,249 |
| Additions | 641,421 |
| Disposals | (373,136) |
| At 31 December 2020 | 4,633,534 |
| Additions | 1,556,211 |
| Disposals | (1,877,979) |
| At 31 December 2021 | 4,311,766 |
| ACCUMULATED AMORTISATION | |
| At 1 January 2020 | 4,109,916 |
| Amortisation charge | 149,161 |
| Disposals | (368,741) |
| At 31 December 2020 | 3,890,336 |
| Amortisation charge | 333,514 |
| Disposals | (1,877,660) |
| At 31 December 2021 | 2,346,190 |
| NET BOOK AMOUNT | |
| At 31 December 2020 | 743,198 |
| At 31 December 2021 | 1,965,576 |
| Item description | Land and buildings |
|---|---|
| COST | |
| At 1 January 2020 | 51,049,733 |
| At 31 December 2020 | 51,049,733 |
| Transfer from property, plant and equipment | 483,649 |
| Other additions | 664,510 |
| Disposals | (6,044,043) |
| Transfer to property, plant and equipment | (7,252,171) |
| At 31 December 2021 | 38,901,678 |
| ACCUMULATED DEPRECIATION | |
| At 31 December 2019 | 17,246,431 |
| Depreciation charge | 429,397 |
| Impairment | 549,799 |
| At 31 December 2020 | 18,225,627 |
| Depreciation charge | 637,058 |
| Transfer from property, plant and equipment | 264,779 |
| Disposals | (4,585,422) |
| Transfer to property, plant and equipment | (6,613,602) |
| At 31 December 2021 | 7,928,440 |
| NET BOOK AMOUNT | |
| At 31 December 2020 | 32,824,106 |
| At 31 December 2021 | 30,973,238 |
Investment property relates to land and buildings that are leased or held for future realisation through renting or selling. The fair value of investment property based on an external appraisal by independent appraisers or an internal appraisal amounts to HRK 30,973 thousand. Estimates of the fair value of investment property are categorised as Level 3 in the fair value hierarchy.
| 31 December 2020 | 31 December 2021 | |
|---|---|---|
| Hoteli Novi d.d. in bankruptcy | 4,384,800 | 4,384,800 |
| Impairment of shares | (4,384,800) | (4,384,800) |
| Loan repayment agreement - Municipality of Podgora | - | 1,353,918 |
| Loans granted | 2,495,015 | 1,495,015 |
| Loans granted - impairment | (2,495,015) | (1,495,015) |
| TOTAL | - | 1,353,918 |
| 31 December 2020 | 31 December 2021 | |
|---|---|---|
| Cost - low value items, tyres in use | 13,768,709 | 13,037,420 |
| Raw materials and supplies on stock | 512,473 | 803,257 |
| Inventories - packaging | 20,798 | 57,292 |
| Trade goods | 13,710 | 35,247 |
| Impairment of small inventory and tyres | (13,694,786) | (13,037,420) |
| TOTAL | 620,904 | 895,796 |
| 31 December 2020 | 31 December 2021 | |
|---|---|---|
| Domestic trade receivables | 5,344,007 | 20,507,747 |
| Foreign trade receivables /i/ | 2,521,403 | 1,513,451 |
| Domestic trade receivables - impairment | (3,347,574) | (3,600,582) |
| Impairment of trade receivables - individual adjustments | (1,094,362) | (888,602) |
| Impairment of receivables - IFRS 9 | (1,703,297) | (1,173,849) |
| TOTAL | 1,720,177 | 16,358,165 |
/i/ The carrying amount of foreign trade receivables is translated from EUR.
31 December 2021
| Not past due | Past due up to 30 days | Past due from 31–90 days | Past due from 91–180 days | Past due from 181–270 days | Past due beyond 270 days | TOTAL | |
|---|---|---|---|---|---|---|---|
| Expected loss rate | 4.27% | 21.31% | 31.16% | 67.12% | 1.76% | 98.86% | 26.02% |
| Gross book amount - trade receivables | 2,399,794 | 287,829 | 1,497,456 | 770,930 | 12,724,043 | 4,341,146 | 22,021,198 |
| Loss allowance | (102,381) | (61,327) | (466,570) | (517,469) | (224,507) | (4,290,779) | (5,663,033) |
| Trade receivables – net of impairment | 2,297,413 | 226,502 | 1,030,886 | 253,461 | 12,499,536 | 50,366 | 16,358,165 |
31 December 2020
| Not past due | Past due up to 30 days | Past due from 31–90 days | Past due from 91–180 days | Past due from 181–270 days | Past due beyond 270 days | TOTAL | |
|---|---|---|---|---|---|---|---|
| Expected loss rate | 1.71% | 8.10% | 25.09% | 83.61% | 56.60% | 98.77% | 78.13% |
| Gross book amount - trade receivables | 307,016 | 438,427 | 395,350 | 480,933 | 1,336,692 | 4,906,992 | 7,865,410 |
| Loss allowance | (5,265) | (35,508) | (99,206) | (402,126) | (756,534) | (4,846,594) | (6,145,233) |
| Trade receivables – net of impairment | 301,751 | 402,919 | 296,144 | 78,807 | 580,158 | 60,398 | 1,720,177 |
Based on the above calculation, the closing loss allowance for trade receivables is reconciled with the opening loss allowance as follows:
| 2020 | 2021 | |
|---|---|---|
| Loss allowance as at 1 January | (6,705,618) | (6,145,233) |
| Increase in bad debt allowance recognised in profit or loss over the period | (361,202) | (515,069) |
| Write-off of previously impaired receivables | 1,280 | 318,758 |
| IFRS 9 effects | 794,617 | 529,446 |
| Other movements | 125,690 | 149,065 |
| At 31 December | (6,145,233) | (5,663,033) |
| 31 December 2020 | 31 December 2021 | |
|---|---|---|
| Grants receivable | 2,371,324 | 74,723 |
| Prepaid VAT receivable | 1,818,658 | 2,849,930 |
| Other receivables from the government | 174,793 | 1,246,032 |
| TOTAL | 4,364,775 | 4,170,685 |
| 31 December 2020 | 31 December 2021 | |
|---|---|---|
| Receivables for advances given /i/ | 1,021,963 | 3,535,793 |
| Recognised leasehold improvements | 87,450 | 42,769 |
| Banking charges for loans | 281,312 | 221,223 |
| Suspense accounts for services accounted for | 674,535 | 837,546 |
| Other receivables | 134,094 | 148,639 |
| TOTAL | 2,199,354 | 4,785,970 |
/i/ Receivables arising from advances given relate to advances paid to HEP in the amount of HRK 560,199, to Cossetto in the amount of HRK 464,230 and other advances given to suppliers.
| 31 December 2020 | 31 December 2021 | |
|---|---|---|
| Bank balances - domestic currency | 10,344,099 | 6,499,282 |
| Bank balances - foreign currency /i/ | 17,291,304 | 16,751,772 |
| Cash on hand | 5,048 | 5,119 |
| TOTAL | 27,640,451 | 23,256,173 |
/i/ The carrying amount of cash at banks in foreign currency was translated from EUR. The Company mainly deposits its cash at local banks that are members of banking groups with the following credit ratings by Standard & Poor's:
| 31 December 2020 | 31 December 2021 | |
|---|---|---|
| Cash at bank and deposits: | ||
| A | 2,605,193 | 12,151,076 |
| BBB | 25,008,647 | 11,062,953 |
| No credit rating | 21,563 | 37,025 |
| TOTAL | 27,635,403 | 23,251,054 |
The parent company's share capital amounts to HRK 482,507,730 and is divided among 27,971,463 ordinary shares without a nominal value with the ticker symbol JDRN-R-B. The Company's ID No. (OIB) is 56994999963, while its Reg. No. (MBS) is 040000817.The share capital represents the Company’s own sources of assets for its operating purposes. Capital reserves as of 31 December 2021 as well as of 31 December 2020 amount to HRK 234,210,922 and are not available for distribution to the shareholders. Individual major shareholders are PBZ CO OMF – CATEGORY B which holds 58.02% of shares and ERSTE PLAVI OMF CATEGORY B which holds 30.56% of the Company’s shares.
Table 1: Structure of shareholders as at 31 December 2021 and 31 December 2020
| Investor | Balance % | Balance | % | Balance | % |
|---|---|---|---|---|---|
| ADDIKO BANK D.D./PBZ CO OMF - CATEGORY B (1/1) - Custodial account | 16,250,954 | 58.10 | 16,228,666 | 58.02 | |
| OTP BANKA d.d. /ERSTE PLAVI OMF CATEGORY B - Custodial account | 8,547,346 | 30.56 | 8,547,346 | 30.56 | |
| RESTRUCTURING AND SALE CENTER - CERP (0/1) REPUBLIC OF CROATIA (1/1) | 673,666 | 2.41 | 673,666 | 2.41 | |
| ZS HRVATSKE VODE, WATER MANAGEMENT CORPORATION (1/1) | 208,292 | 0.74 | 208,292 | 0.74 | |
| TOWN OF CRIKVENICA (1/1) | 184,056 | 0.66 | 184,056 | 0.66 | |
| OTP BANKA D.D./ERSTE PLAVI EXPERT - VOLUNTARY PENSION FUND (1/1) | 174,249 | 0.62 | 174,249 | 0.62 | |
| OTHER SHAREHOLDERS | 1,932,900 | 6.91 | 1,955,188 | 6.99 | |
| TOTAL | 27,971,463 | 100 | 27,971,463 | 100 |
| 31 December 2020 | 31 December 2021 | |
|---|---|---|
| Provisions for termination benefits | 174,648 | 237,980 |
| Provisions for jubilee awards | 309,353 | 287,367 |
| Provisions for legal disputes | - | 181,000 |
| TOTAL | 484,001 | 706,347 |
Movements in provisions over the years are as follows:
| Legal disputes | Termination benefits | Jubilee awards | Total | |
|---|---|---|---|---|
| At 31 December 2019 | - | 151,448 | 337,971 | 489,419 |
| Additional provisions based on estimate | - | 23,200 | - | 23,200 |
| Release of provisions | - | - | (28,618) | (28,618) |
| At 31 December 2020 | - | 174,648 | 309,353 | 484,001 |
| Additional provisions based on estimate | 181,000 | 63,332 | - | 244,332 |
| Release of provisions | - | - | (21,986) | (21,986) |
| At 31 December 2021 | 181,000 | 237,980 | 287,367 | 706,347 |
| 31 December 2020 | 31 December 2021 | |
|---|---|---|
| Interest in currency | 1,377,861 | 859,068 |
| Long-term loans-HBOR - DT-6/15 /i/ | 1,718,321 | 1,071,140 |
| Long-term loans-HBOR - DT-1/16 /ii/ | 13,382,934 | 12,294,129 |
| Long-term loans-HBOR - DT-10/16 /iii/ | 7,798,357 | 7,163,900 |
| Long-term loans-PBZ - 2016 -5110217867-5110217867 /iv/ | 46,124,889 | 36,803,344 |
| Long-term loans-PBZ - 2019 -5110228722-5110228722 /v/ | 92,327,001 | 85,572,377 |
| Long-term loans-ERSTE-2019-5117407680/15 /vi/ | 101,303,446 | 101,038,336 |
| Other liabilities to financial institutions | 1,789 | 1,747 |
| TOTAL LIABILITIES | 264,034,598 | 244,804,041 |
| Other liabilities to financial institutions | (1,789) | (1,747) |
| Current maturities of long-term loans in the current year | (119,452,974) | (28,859,295) |
| Interest in currency | (1,377,861) | (859,069) |
| CURRENT LIABILITIES | (120,832,624) | (29,720,111) |
| NON-CURRENT LIABILITIES | 143,201,974 | 215,083,930 |
A summary of long-term loans denominated in foreign currencies is presented below:
| 31 December 2020 | 31 December 2021 | |
|---|---|---|
| EUR | 262,654,948 | 243,943,226 |
/i/ In 2015, the Group entered into a long-term loan agreement with the Croatian Bank for Reconstruction and Development for a loan of HRK 7 million, repayable over 5 years, with a 1-year grace period and 3% interest rate, for the renovation of facilities and upgrading the classification of Hotel Omorika and Selce Autocamp. The loan matures in 2022 due to moratorium granted in Covid period.
/ii/ In 2016, the Group entered into a long-term loan agreement with the Croatian Bank for Reconstruction and Development for a loan of HRK 17,400,000, repayable over 8 years, with a 1-year and 10 months grace period and 3% interest rate, for the renovation of facilities and upgrading the classification of Hotel Omorika and Hotel Varaždin (Katarina).
/iii/ In 2016, the Group entered into a long-term loan agreement with the Croatian Bank for Reconstruction and Development for a loan of HRK 10 million, repayable over 8 years, with a 1-year and 3 months grace period and 3% interest rate, for the renovation of facilities and upgrading the classification of Hotel Varaždin (Katarina).
/iv/ In 2016, the Group entered into a long-term loan agreement with Privredna banka Zagreb d.d. for a loan of EUR 7,400,000, repayable over 6 years, with a 1-year and 6 months grace period and 2.6% interest rate, for the renovation of facilities and upgrading the classification of Hotel Varaždin (Katarina) and Hotel Esplanade and to purchase the receivables from Veneto banka d.d. This Agreement was entered into in December of 2016. The amount of EUR 7,343,852 was drawn under the loan, and the loan commencement date was 20 July 2019.
/v/ In 2019, the Group entered into a long-term loan agreement with Privredna banka Zagreb d.d. for a loan of EUR 12,250,000, repayable over 12 years, with a 2.05% interest rate, for the renovation of facilities and upgrading the classification of the Ad Turres resort, Selce Campsite - swimming pool and allotment, Hotel Katarina, Hotel Omorika, Kačjak resort, Slaven pavilions and Hotel Esplanade (up to 31 December 2019, the unused part of the loan amounted to HRK 44,238,054).
/vi/ In 2019, the Group entered into a long-term loan agreement with Erste&Steiermärkische Bank d.d. for a loan of EUR 13,441,000.00, repayable over 10 years, with a 2.1% interest rate, to be used for investments - purchasing and other costs of acquiring Club Adriatic d.o.o. Zagreb.
| 31 December 2020 | 31 December 2021 | |
|---|---|---|
| Bankruptcy Plan /i/ | 61,720 | 61,720 |
| TOTAL | 61,720 | 61,720 |
/i/ The liabilities under the Bankruptcy Plan of HRK 61,720 relate to liabilities to secured creditors of the 2nd rank = HRK 31,224 and liabilities intended to be included in the share capital of HRK 30,496. The Bankruptcy Plan does not infringe on the secured creditors’ right to be paid from items subject to separate satisfaction.
| 31 December 2020 | 31 December 2021 | |
|---|---|---|
| Domestic trade payables | 9,677,924 | 15,397,421 |
| Foreign trade payables | 131,567 | 78,628 |
| TOTAL | 9,809,491 | 15,476,049 |
| 31 December 2020 | 31 December 2021 | |
|---|---|---|
| Advances received /i/ | 5,310,355 | 3,474,266 |
| Security and other deposits | 593,619 | 552,143 |
| TOTAL | 5,903,974 | 4,026,409 |
/i/ In 2021, liabilities for advances received mainly relate to individual advances from domestic customers in the amount of HRK 215,192, individual advances from foreign customers in the amount of HRK 211,613 (equivalent of EUR 28,151) and Katarina line d.o.o., Opatija in the amount of HRK 185,674 (equivalent of EUR 24,700).
| 31 December 2020 | 31 December 2021 | |
|---|---|---|
| Net salaries payable | 1,442,577 | 1,913,269 |
| Unused vacation days | 500,068 | 1,803,294 |
| Liabilities to employees - bonuses | 1,393,817 | 2,908,982 |
| Liabilities to employees - redistribution of working hours | 127,840 | 683,874 |
| Other liabilities to employees | 731,094 | 358,650 |
| TOTAL | 4,195,396 | 7,668,069 |
| 31 December 2020 | 31 December 2021 | |
|---|---|---|
| Contributions from and on salaries | 700,315 | 1,052,839 |
| Taxes and surtaxes payable | 139,266 | 207,590 |
| Other liabilities to the government | (282,739) | 527,460 |
| TOTAL | 556,842 | 1,787,889 |
| 31 December 2020 | 31 December 2021 | |
|---|---|---|
| Accrual of received capital aid /i/ | 799,999 | 737,911 |
| Deferred income | 25,000 | - |
| Scholarships | 25,200 | 23,024 |
| Fees based on temporary service agreements | 35,334 | 80,296 |
| Other liabilities - unpaid to bankruptcy creditors | 6,695 | 6,696 |
| TOTAL | 892,228 | 847,927 |
/i/ The capital aid of HRK 737,911 remitted by the Energy Efficiency and Environmental Protection Fund relates to the reconstruction of the heating system at Hotel Katarina in 2016 and is prorated to revenue on an annual basis.
After the bankruptcy proceedings were completed in 2014, the Group continued to conduct all legal disputes initiated at the time of bankruptcy of JADRAN d.d., as well as those that the stated company did not manage to resolve during the bankruptcy period. Most legal actions related to claims brought by employees for failure to pay wages owed since before the year 2000. Pursuant to the settlement agreements signed, JADRAN d.d. made the relevant payments to its former employees and the relevant mortgages/pledges and annotations were removed from the land registry. JADRAN d.d. took legal action against a former employee with whom no settlement agreement was reached. The process of JADRAN d.d.’s transformation and the Property Statement Resolution issued by the Croatian Privatisation Fund resulted in unresolved proprietary matters. For the purpose of resolving such proprietary matters regarding the stated company’s properties, JADRAN d.d. initiated individual corrective processes to align the land registry status with the actual status of the properties, as well as processes to establish title. Modular structures owned by third parties were illegally mounted on a part of assets owned by JADRAN d.d., namely at the Selce campsite and the Kačjak campground. As the owners of such modular structures refuse to remove them and surrender the plots, JADRAN d.d. took legal action for the purpose of repossessing the land/plots. JADRAN d.d. is involved in three legal proceedings concerning the establishment of title regarding two restaurants that had been owned by the stated company until 2006, when JADRAN d.d. leased them out. Based on the Decisions of the Primorje-Gorski Kotar County, these facilities were given to be managed by third parties, without JADRAN d.d. receiving any compensation, considering that the stated company built and maintained these properties until they were leased. The proceedings in question are being conducted against the Town of Crikvenica and the Republic of Croatia. Also, JADRAN d.d. has several disputes with the Town of Crikvenica, related to property issues. Returning the plots at the Selce campsite and the Kačjak campground to the possession of JADRAN d.d.# 36. LEASE LIABILITIES AND RIGHT-OF-USE ASSETS
The interest expense on lease liabilities is included in Finance costs - Interest expense on lease (Note 14). The method of recognition and measurement is set out in Note 2.20.
| 31 December 2020 | 31 December 2021 | |
|---|---|---|
| Non-current lease liabilities | 171,617,694 | 156,689,888 |
| Current lease liabilities | 17,822,844 | 26,948,424 |
| TOTAL | 189,440,538 | 183,638,312 |
| Vehicles | Real estate | Beach concession | Total | |
|---|---|---|---|---|
| Net book amount at 1 January 2020 | 59,082 | 16,000,011 | - | 16,059,093 |
| Initial recognition as per new contracts | 886,228 | 164,030,159 | 883,953 | 165,800,340 |
| Modifications to existing contracts | - | 5,721,729 | - | 5,721,729 |
| Depreciation charge for the year | (439,063) | (16,464,532) | (116,064) | (17,019,659) |
| Impairment | - | (7,642,494) | - | (7,642,494) |
| Net book amount at 31 December 2020 | 506,247 | 161,644,873 | 767,889 | 162,919,009 |
| Net book amount at 1 January 2021 | 506,247 | 161,644,873 | 767,889 | 162,919,009 |
| Initial recognition as per new contracts | 54,390 | 6,999,000 | - | 7,053,390 |
| Modifications to existing contracts | 1,112,795 | 5,740,839 | - | 6,853,634 |
| Depreciation charge for the year | (763,810) | (23,172,815) | (116,064) | (24,052,689) |
| Disposals | (54,638) | - | - | (54,638) |
| Net book amount at 31 December 2021 | 854,984 | 151,211,897 | 651,825 | 152,718,706 |
As stated in Note 2.20, the Group uses the exemption expedient for short-term leases and low-value leases. In 2021, short-term leases and low-value leases amounted to HRK 563,895 (Note 9).
Changes in net debt are presented in the table below:
| Cash | Liabilities to financial institutions and loans | Lease liabilities | Total | |
|---|---|---|---|---|
| Net debt at 31 December 2019 | 23,256,989 | (216,912,152) | (17,344,062) | (210,999,225) |
| Cash flow | 4,383,462 | (45,344,846) | 685,899 | (40,275,485) |
| Increase arising from new lease agreements and modifications | - | - | (171,522,069) | (171,522,069) |
| Interest expense | - | (4,820,018) | (4,820,971) | (9,640,989) |
| Interest paid | - | 4,820,018 | 4,330,248 | 9,150,266 |
| Foreign exchange differences and other non-cash movements | - | (1,777,600) | (769,583) | (2,547,183) |
| Net debt at 31 December 2020 | 27,640,451 | (264,034,598) | (189,440,538) | (425,834,685) |
| Cash flow | (4,384,278) | 17,973,734 | 19,360,354 | 32,949,810 |
| Increase arising from new lease agreements and modifications | - | - | (13,907,024) | (13,907,024) |
| Interest expense | - | (5,506,426) | (5,332,657) | (10,839,083) |
| Interest paid | - | 5,506,426 | 5,845,738 | 11,352,164 |
| Foreign exchange differences and other non-cash movements | - | 1,256,823 | (164,185) | 1,092,638 |
| Net debt at 31 December 2021 | 23,256,173 | (244,804,041) | (183,638,312) | (405,186,180) |
On 23 March 2022, the Lease Agreement for the View Hotel located in Postira on the island of Brač was signed for the period from 1 June 2022 to 31 December 2022. The rent was agreed in the amount of EUR 225,000.00 payable in HRK at the middle exchange rate of the CNB on the date of the invoice issued by the Lessor over the entire lease term.
The situation in Ukraine is alarming, but due to its unpredictability it is not possible to assess its impact on the overall tourist season. Given the structure of our guests and the fact that in our facilities we have not had a significant share of guests from Ukraine, Russia and guests from remote markets such as South Korea or the United States, at this time we still believe in a very successful season in the Kvarner and Istria region. Compared to the same period last year, the dynamics of accommodation bookings has slowed down, with an increasing tendency. In our Dalmatian destinations, activities have been launched aimed at adapting to the possible decline in the number of air travellers.
| 2020 | 2021 | 2021/2020 | |
|---|---|---|---|
| Number of accommodation units (capacity) | 3,155 | 3,440 | 9.0% |
| Number of bed-places | 7,675 | 8,380 | 9.2% |
| Full occupancy days | 68 | 63 | -7.4% |
| Annual occupancy rate | 9% | 17% | 88.9% |
| Number of accommodations sold | 104,135 | 217,191 | 108.6% |
| Number of overnights | 271,302 | 559,391 | 106.2% |
| ADR (in HRK) | 449 | 652 | 45.1% |
| RevPar (in HRK) | 19,455 | 50,861 | 161.4% |
| 2020 | 2021 | 2021/2020 | |
|---|---|---|---|
| TOTAL REVENUE | 84,018,746 | 178,074,097 | 111.9% |
| SALES REVENUE | 68,784,751 | 155,867,039 | 126.6% |
| OTHER OPERATING INCOME | 14,881,183 | 19,434,362 | 30.6% |
| TOTAL COSTS | 196,642,436 | 184,876,198 | -6.0% |
| OPERATING EXPENSES | 184,748,138 | 171,938,627 | -6.9% |
| MATERIAL COSTS | 36,789,226 | 60,789,621 | 65.2% |
| STAFF COSTS | 35,970,658 | 47,351,992 | 31.6% |
| DEPRECIATION AND AMORTISATION | 42,203,003 | 53,461,752 | 26.7% |
| IMPAIRMENT OF NON-CURRENT NON-FINANCIAL ASSETS | 61,186,538 | 0 | n/a |
| VALUE ADJUSTMENTS | -433,415 | -14,377 | -96.7% |
| OTHER COSTS | 9,032,128 | 10,349,639 | 14.6% |
| FINANCE INCOME | 352,812 | 2,772,696 | 685.9% |
| FINANCE COSTS | 11,894,298 | 12,937,571 | 8.8% |
| EBITDA | -58,879,201 | 56,824,526 | -196.5% |
| EBITDA MARGIN | -70% | 32% | -145.5% |
| NORMALISED EBITDA 1 | 1,873,922 | 56,810,149 | 2931.6% |
| NORMALISED EBITDA MARGIN | 2% | 32% | 1500% |
| EBIT | -101,082,204 | 3,362,774 | -103.3% |
| NORMALISED EBIT 2 | -40,329,081 | 3,348,397 | -108.3% |
| EBT | -112,623,690 | -6,802,101 | -94.0% |
1 EBITDA was normalised for one-time costs
2 EBIT was normalised for one-time costs
The JADRAN group consists of JADRAN d.d. and its subsidiaries:
* CLUB ADRIATIC d.o.o. in which JADRAN has 100% business shares.
* Stolist d.o.o. in which JADRAN has 100% business shares.
JADRAN, dioničko društvo za hotelijerstvo i turizam, from Crikvenica, Bana Jelačića 16, is registered at the Commercial Court in Rijeka under registration number 040000817, Company ID no. 5699499963. In 2021, the Company was governed by the Management Board and Supervisory Board.
In 2021, the Supervisory Board comprised the following members:
* Goran Hanžek, Chairman of the Supervisory Board as of 30 July 2021
* Tomislav Kitonić, Chairman of the Supervisory Board until 30 July 2021
* Karlo Došen, Deputy Chairman of the Supervisory Board
* Adrian Čajić, Member of the Supervisory Board as of 23 April 2021
* Ivan Blažević, Member of the Supervisory Board until 23 April 2021
* Dragan Magaš, Member of the Supervisory Board
* Mirko Herceg, Member of the Supervisory Board
In 2021, the Management Board comprised the following members:
* from 1 January 2021 to 1 September 2021:
- Goran Fabris, Chairman of the Management Board
- Ivan Safundžić, Member of the Management Board
* from 1 September 2021 to 31 December 2021:
- Goran Fabris, Chairman of the Management Board
- Ivan Safundžić, Member of the Management Board
- Miroslav Pelko, Member of the Management Board
The members of the Company’s Management Board are authorised to represent the Company together with another member of the Management Board, based on the amendment to the provisions of the Articles of Association adopted at the General Assembly as at 31 August 2020.
CLUB ADRIATIC d.o.o. za turizam i usluge, from Baška Voda, Petra Krešimira IV 11, is registered at the Commercial Court in Zagreb under registration number 080391811, Company ID no. 44661735229, EUID: HRSR.080391811. The sole owner of the Company is JADRAN d.d. as of 19 December 2018, and on 12 February 2019 an entry was made in the court register. The share capital amounts to HRK 120,947,400 thousand.
On 13 January 2004, the Company's share capital was increased from the amount of HRK 20,000.00 in cash, by the amount of HRK 107,988,500.00 in kind, to the amount of HRK 108,008,500.00 in cash and in kind based on the Decision amending the Company's Statement. The Company's share capital was increased from the amount of HRK 108,008,500.00 in cash and in kind, by the amount of HRK 12,938,900.00, to the amount of HRK 120,947,400.00, by entering the right of claim into the share capital of the company based on the Decision of the General Assembly on the share capital increase by investing rights dated 21 December 2012.
Based on the decision of the General Assembly of the company dated 16 December 2019, the share capital of the company was reduced from the amount of HRK 120,947,400.00 by the amount of HRK 60,947,400.00 to the amount of HRK 60,000,000.00 to cover the accumulated losses, by reducing the nominal amount of each business share.
Based on the decision of the General Assembly dated 16 December 2019, the share capital of the company was increased from the amount of HRK 60,000,000.00 by the amount of HRK 57,104,500.00 to the amount of HRK 117,104,500.00, by paying a new cash contribution, i.e. by creating a new business share with a nominal amount of HRK 57,104.500.00 kuna taken over by a new company owner.
In 2021, the Company was governed by the Management Board and Supervisory Board. The Supervisory Board comprised the following members:
* Dragan Magaš - Chairman of the Supervisory Board
* Darko Lendić - Deputy Chairman of the Supervisory Board
* Mirko Herceg - Member of the Supervisory Board
In 2021, the Company was governed by the Management Board comprising the following members:
* Goran Fabris - director
Stolist d.o.o. za usluge i trgovinu, a tourist agency from Crikvenica, Frankopanska 22, is registered at the Commercial Court in Rijeka under registration number 040270363, Company ID no. 20400393476, EUID: HRSR.040270363.The sole owner of the Company is JADRAN d.d. as of 18 June 2020, and on 28 June 2019 an entry was made in the court register. The share capital amounts to HRK 20,000 thousand. In 2021, the company Stolist was managed by the Management Board:
The Group is mainly engaged in the provision of accommodation and catering services, whereof it generates most of its revenue. The Group performs its financial operations through giro accounts opened at:
In 2021, the Group has:
As at 31 December 2021, the Group’s share capital amounted to HRK 482,507,730. The list of the Company’s shareholders with a 5% share or more in the share capital of JADRAN d.d. (balance at 31 December 2021) is as follows:
As at 31 December 2021, the ownership structure of CLUB ADRIATIC d.o.o. is as follows:
As at 31 December 2021, the ownership structure of Stolist d.o.o. is as follows:
Major events for the Group in 2021:
On 1 July 2021, the Group additionally leased the Lišanj Hotel annex, which increased the Company's capacity by 60 accommodation units.
REALISED OVERNIGHTS
In 2021, the challenging trend of doing business in pandemic circumstances, which began in 2020, continued. Based on the previous season’s business performance, further partial support through government instruments of job preservation measures, the advantage of independence from air transport due to the geographical proximity of emitting markets and epidemiological measures aimed at successful preparation and realisation of the tourist season, business results have reached record numbers compared to 2020 and record 2019. In 2021, campsites have been recognised as a very interesting product as they provide all the comfort and infrastructure of hotel accommodation, but offer additional privacy, proximity to nature and freedom of movement, which has proven to be a benefit in the present specific epidemiological circumstances. We believe that further investment planning in campsite infrastructure will significantly contribute to better future results.
Chart 1
Number of overnights recorded in hotels and campsites from 2019 to 2021
Source: JADRAN d.d.
The continuation of the investment cycle and new facilities in the company's portfolio resulted in an increase in overnight stays in 2021 compared to the successful 2019. In hotel accommodation, we recorded a growth of 104% compared to 2020, and 4% compared to 2019. In 2021, the capacity of the Club Adriatic annexes was reduced, resulting in 99 refurbished accommodation units compared to 198 in 2019. At the Group level, campsites recorded an increase of 111% compared to 2020, or a decrease of 6% compared to 2019, primarily due to planned, but unrealised overnight stays. For the most part, this applies to Club Adriatic for June and mid-July, as a result of the later start of bookings due to the pandemic, which was particularly reflected in destinations in the south of the country. It should be noted here that the growth in 2021 was also achieved due to the new facility, the Uvala Slana campsite, which the Group leased for a period of 3 years. The flexibility of cancellation policies, last-minute bookings and travel uncertainty have resulted in changes to sales channels distribution. The share of individual channels increased by 129% compared to 2020, and 597% compared to 2019, indicating a positive result of continued investment in the booking call centre and the beginning of targeted advertising using Google Adwords, which brings guests to the Group's website. Online bookings increased by 72% compared to 2020 and 27% compared to 2019.
Chart 2
Overnights by the Group’s sales channels in 2019 and 2021 for hotel accommodation
Source: JADRAN d.d.
Chart 3
Overnights by the Group’s sales channels in 2019 and 2021 for campsites
Source: JADRAN d.d.
The majority of guests in campsites arrive from Slovenia, followed by guests from Germany, Poland, Croatia and the Czech Republic.
4.1. Impact of COVID-19 on the Group's operations
At the beginning of 2021, the Jadran Group’s operations were marked by the COVID-19 pandemic to the same extent and in the same way as during almost the entire year 2020. Various forms of restrictions regarding both travels and events have led to most accommodation capacities remaining closed. Other than the café of International Hotel in Crikvenica, which operated in accordance with existing measures and restrictions, the Garden Palace Resort in Umag was opened on 1 February, and on 1 March, the Esplanade Hotel in Crikvenica reopened after having been closed in early January. It is important to note that based on the decision of the Management Board of JADRAN d.d. dated 31 December 2020, the Group accommodated residents living in the earthquake-affected areas of Banovina and Glina in the International Hotel, thus helping thirty families until mid-March 2021.
In the second quarter of 2021, the Group still operated under the strong impact of the COVID-19 pandemic. However, given the many efforts made both at the global and local levels to bring the pandemic under control, the Group recorded a better business result in that period compared to the same period last year. Although being faced with all the challenges posed to the Group by the COVID-19 pandemic, business continued in the third quarter with maximum adherence to all epidemiological measures, all for the purpose of protecting the Group’s guests and employees. In the third quarter of 2021, there was a boost in tourism turnover compared to the same period last year, primarily due to more favourable trends in the expansion of COVID-19 in the Republic of Croatia and the fact that our most important European tourism competitors were in the so-called red zone for most of the third quarter (especially during peak season), which resulted in more tourists travelling to Croatia.
It can be concluded that 2021 was uncertain, challenging and unpredictable for the Group's operations. In order to protect business continuity and preserve liquidity, the Group has maximally streamlined operating expenses, capital expenditures and control of cash outflows, similar to the previous year:
Despite the fact that the Group's operations were extremely challenging in the first half of the year and the future was uncertain and unpredictable at the time, the Group decided to continue the investment cycle.# 4.2. Overview of the Group's operations in 2021
In the period from January to December 2021, the JADRAN Group generated total revenues of HRK 178,074,096, which is HRK 94,055,351 or 112% higher than the total revenues generated in the same period in 2020. Total expenses amounted to HRK of 184,876,198, which was HRK 11,766,239 or 6% less than the costs incurred in the same period in 2020. The Group realised a loss of HRK 6,802,101, which is by HRK 105,821,589 lower than the loss realised in 2020. In 2021, EBITDA amounted to HRK 56,824,526, which is by HRK 115,703,727 higher than the EBITDA realised in 2020.
The analysis of total revenues, which in 2021 amounted to HRK 178,074,097, shows that operating revenues amounted to HRK 175,301,400, which is HRK 91,635,467 or 109% higher than revenues generated in the same period in 2020. To better understand the generated revenues, it should be noted that in the period from January to December 2021, the Group requested and received job preservation grants for the period from January to June in the amount of HRK 5,985,903, while in 2020 the Group received grants for the period from March to August and October to December in the amount of HRK 8,624,301. If we were to compare the total revenues generated from January to December 2021 and 2020 without the aforementioned grants, then in 2021 a total of HRK 172,088,193 or HRK 96,693,747 more revenue was generated than the revenue generated in 2020.
In 2021, the Group’s total expenses amounted to HRK 184,876,198, which is HRK 11,766,238 or 6% lower than the expenses incurred in the same period in 2020. Operating expenses amounted to HRK 171,938,626 and were HRK 12,809,511 or 7% lower than operating expenses in 2020. In 2020, material costs amounted to HRK 60,789,621, which is HRK 24,000,395 or 65% higher than the costs incurred in 2020. Staff costs amounted to HRK 47,351,992 and exceed the costs incurred in 2020 by HRK 11,381,334 or 32%. In 2021, amortisation and depreciation amounted to HRK 53,461,752, which is HRK 11,258,749 or 27% higher than the amortisation and depreciation realised in 2020. Other operating expenses amounted to HRK 10,349,639 and were HRK 1,317,511 or 15% higher than the expenses incurred in 2020.
In 2021, net impairment losses on non-current non-financial assets amounted to HRK 0.00, while in 2020 they amounted to HRK 61,186,538. In 2021, the value adjustments of financial assets amounted to HRK 14,377, while in 2020 it amounted to HRK 433,415.
In the period from January to December 2021, the Group realised a loss in the amount of HRK 6,802,101, while in the same period in 2020 it realised a loss in the amount of HRK 112,623,690. In 2021, EBITDA amounted to HRK 56,824,525, which is by HRK 115,703,726 lower than the EBITDA realised in the same period in 2020.
The Group manages owned properties and properties for which it has entered into lease agreements for a period longer than 1 year.
| FACILITY | Classification | Capacity of accommodation units | Capacity of bed-places |
|---|---|---|---|
| KAČJAK | 2* rooms | 185 | 435 |
| OMORIKA | 4/3 | 169 | 350 |
| AD TURRES TN | TN 3* | 351 | 663 |
| AD TURRES HOTEL | 3* | 40 | 80 |
| ESPLANADE | 4* | 38 | 76 |
| ZAGREB | 2* | 40 | 62 |
| INTERNATIONAL | 2* | 52 | 82 |
| KAŠTEL | 3* | 74 | 178 |
| KATARINA | 4* | 176 | 352 |
| SLAVEN HOTEL | 3* | 50 | 85 |
| SLAVEN PAVILIONS | 3* | 157 | 314 |
| SELCE CAMPSITE | 3* | 500 | 1,500 |
| UVALA SLANA CAMPSITE | 3/4 | 204 | 567 |
| KAČJAK CAMPGROUND | campground | 30 | 90 |
| DELFIN | boarding house | 48 | 123 |
| LIŠANJ | 4* | 228 | 522 |
| GARDEN PALACE RESORT UMAG | 4* | 112 | 293 |
| ALEM | 2* | 306 | 630 |
| BAŠKO POLJE CAMPSITE | 3* | 617 | 1861 |
| NOEMIA | 4* | 63 | 117 |
| TOTAL IMMOVABLE FACILITIES | 2,089 | 4,362 | |
| TOTAL OTHER | 1,351 | 4,018 | |
| TOTAL | 3,440 | 8,380 |
Source: JADRAN d.d.
On 6 May 2021, the Group entered into a lease agreement for the Uvala Slana campsite including the Club Vala apartments with the Republic of Croatia, the Ministry of Physical Planning, Construction and State Assets, for a fixed period of 3 years. By entering into this Agreement, the Company's capacities were expanded by 204 accommodation units. On 1 July 2021, the Group additionally leased the annex to the Lišanj Hotel, which further expanded the Group's capacity by 60 accommodation units.
After the bankruptcy proceedings were completed in 2014, the Group continued to conduct all legal disputes initiated at the time of bankruptcy of JADRAN d.d., as well as those that the stated company did not manage to resolve during the bankruptcy period. Most legal actions related to claims brought by employees for failure to pay wages owed since before the year 2000. Pursuant to the settlement agreements signed, JADRAN d.d. made the relevant payment to its former employees and the relevant mortgages/pledges and annotations were removed from the land registry.
JADRAN d.d. took legal action against a former employee with whom no settlement agreement was reached. The process of JADRAN d.d.’s transformation and the Property Statement Resolution issued by the Croatian Privatisation Fund resulted in unresolved proprietary matters. For the purpose of resolving such proprietary matters regarding the stated company’s properties, JADRAN d.d. initiated individual corrective proceedings to align the land registry status with the actual status of the properties, as well as processes to establish title.
Modular structures owned by third parties were illegally mounted on a part of assets owned by JADRAN d.d., namely at the Selce campsite and the Kačjak campground. As the owners of such modular structures refuse to remove them and surrender the plots, JADRAN d.d. took legal action for the purpose of repossessing the land/plots.
JADRAN d.d. is involved in three legal proceedings concerning the establishment of title regarding two restaurants that had been owned by the stated company until 2006, when JADRAN d.d. leased them out. Based on the Decisions of the Primorje-Gorski Kotar County, these facilities were given to be managed by third parties, without JADRAN d.d. receiving any compensation, considering that the stated company built and maintained these properties until they were leased. The proceedings in question are being conducted against the Town of Crikvenica and the Republic of Croatia. Also, JADRAN d.d. has several disputes with the Town of Crikvenica, related to property issues.
Returning the plots at the Selce campsite and the Kačjak campground to the possession of JADRAN d.d. is a precondition for the stated company to continue the investment cycle in these two very attractive locations. For the further continuation of the investment cycle, it is important to resolve the issue of the status of the restaurant as well as disputes with the Town of Crikvenica.
As regards other legal proceedings, JADRAN d.d. is a party to proceedings for the restitution of and compensation for property seized and enforcement proceedings to collect receivables from third parties. CLUB ADRIATIC d.o.o. conducts enforcement and litigation proceedings against third parties and one labour dispute for the purpose of annulling an extraordinary dismissal. The stated company has no proprietary legal disputes with respect to the real estate Baško Polje. In 2021, STOLIST d.o.o. was not involved in any proprietary or other legal disputes.
The most significant risks faced by the Group are as follows:
Competition risk in the tourism market is very high because other similar tourism destinations have invested substantial funds to further improve and develop their capacities, as well as in other marketing activities focusing on the arrival of tourists. Among other things, competition is based on the prices, quality and substance of tourism offers on the Crikvenica Riviera and other domestic and foreign tourism destinations. To increase its market competitiveness, the Group launched a new investment cycle in 2018, which continued in 2021 including not only investments in accommodation for the purpose of increasing the number of units and improve accommodation quality, but also investments in the destination through active involvement in all events and designing new attractions on the Crikvenica-Vinodol and Makarska Riviera.
Regardless of the “coronavirus crisis”, the Company's and the Group’s Management Board has assessed that, without jeopardising its liquidity, the Group can continue with a part of its investments planned for the 2021 season, which were concluded during the year. In addition to all the existing challenges related to competitiveness, the events related to the COVID-19 pandemic require that it should be considered how the Group and the local community manage the events related to this new challenge. The way in which the local communities at the destinations where the Group operates will respond to the challenges will be extremely important for the Group’s future business and therefore the Group is trying to engage in solving this problem in a structural manner.# Currency risk
The official currency of the Group is HRK, but certain transactions denominated in foreign currencies are translated into HRK at the prevailing exchange rate at the balance sheet date. The resulting exchange differences are charged to operating expenses or credited to the income statement, but do not affect operating cash flows.
The Group is exposed to interest rate risk because it enters into loan agreements with banks at variable interest rates, which exposes the Group to higher risk. The inflation rate trends and the levels of interest rates on foreign and domestic financial markets are actively monitored, enabling the Group to react in a timely manner in the event of expected changes in interest rates on the domestic money market.
Settlement risk is present in all bilateral transactions. Given that settling financial obligations to issuers is one of the key elements necessary for smooth business operations, the Group considers this risk to be highly important. The Group has established stringent procedures to minimise collection risks. During the pandemic, certain partners may be further exposed to liquidity risk, which may result in higher settlement risk. In addition, settlement risk arising from executed contracts may be significantly increased if there is an option of terminating them on grounds of force majeure or in case the free movement of people and goods is disrupted during the pandemic.
Inflation risk is present in contractual relationships where the price of a service or product is indexed and tied to the Croatian National Bank’s strong HRK policy. As this is an external risk, the ability to eliminate it is minimal. The Group notes trends of increasing inflation rates primarily measured through the consumer price index, as a result of extremely expansive monetary policies of central banks and for the purpose of minimising inflation risk, the Group insists on negotiating fixed terms of supply with all suppliers where possible. Suppliers of energy are an exception - their prices are subject to market variations.
The Group manages liquidity risk by maintaining adequate reserves, bank borrowings and other sources of financing, by continuously monitoring planned and actual cash flows and matching the maturity profiles of financial assets and liabilities. The Group is particularly focused on this risk due to increased uncertainty regarding revenues as a result of the pandemic’s adverse impact on the free movement of guests, guests’ spending power and performance of contractual obligations by business partners. The Group manages liquidity risk by maintaining adequate reserves, bank borrowings and other sources of financing, by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. The current high level of indebtedness of the Group does not jeopardise current liquidity, and the Company’s and the Group’s Management Board assesses that even in the event of a continued “crisis”, the Group can provide the necessary liquidity and smooth operations from its own reserves. It should be noted that several parties have expressed their interest for the purchase of a part of the Group’s property that is currently not in operation or its business performance is significantly below its current market value. In 2021, the Group realised the planned divestment in CLUB ADRIATIC, thus creating the preconditions for the repayment of loans by a related company, but also provided funds for a continuous investment cycle, although restricted due to the pandemic.
The risk of changes in tax and concession regulations is the likelihood that legislative authorities will amend tax regulations in a way that they adversely impact the Group’s profitability. This risk is reflected in potential changes in tax rates and taxable assets, as well as changes in regulations concerning concessions and concessional authorisations. The right to use maritime domain is one of the significant conditions for the Group’s further operations, and the Group has actively endeavoured to establish new bases for cooperation with the local community in this segment. During the pandemic, the Group is hoping that the legislator, the relevant executive authorities and the local community will, in addition to the measures absolutely necessary to protect people’s health, offer various financial and operational reliefs for entities adversely affected by the pandemic.
Tourism trends are largely affected by the COVID-19 pandemic and the global political situation. As an industry, tourism is highly sensitive to the epidemiological situation at the destination and its surroundings. By launching the aforementioned investment cycle and the advantages of the geographical position compared to the most important emitting markets (car destination), the Group will endeavour to minimise the impact of adverse market trends and the resulting risks. The global financial crisis may significantly reduce the spending power of individuals inclined to travelling, whereas a pandemic may also significantly reduce or completely eliminate the effects of tourist arrivals at the Group’s destination as a result of the inability to travel outside one’s own country or fear for one’s own health and future.
Environmental risk may significantly affect the Group’s performance, notably through the quality of the sea and coast where guests stay. Climate changes may directly affect the length of stay in the Company’s accommodation facilities. This risk also includes various other natural disasters.
As at 31 December 2021, JADRAN d.d. had a total of 271 employees. As at 31 December 2021, CLUB ADRIATIC d.o.o. had a total of 49 employees. As at 31 December 2020, Stolist d.o.o. had no employees. As at 31 December 2021, the Group had 320 employees.
The Group constantly monitors developments in its environment and invests in market research, identification of new business opportunities and new acquisitions. The Group directs and supports the activities of its related parties.
As at 31 December 2021, the share capital of JADRAN d.d. amounted to HRK 482,507,730.00, divided into 27,971,463 regular dematerialised shares with no nominal value and the Company held 631 own shares, which accounted for 0,0023% of the Company's share capital. As at 31 December 2021, the share capital of CLUB ADRIATIC d.o.o. amounted to HRK 117,104,500.00. As at 31 December 2021, the share capital of Stolist d.o.o. amounted to HRK 20,000.
On 23 March 2022, the Lease Agreement for the View Hotel located in Postira on the island of Brač was signed for the period from 1 June 2022 to 31 December 2022. The rent was agreed in the amount of EUR 225,000.00 payable in HRK at the middle exchange rate of the CNB on the date of the invoice issued by the Lessor over the entire lease term. The situation in Ukraine is alarming, but due to its unpredictability it is not possible to assess its impact on the overall tourist season. Given the structure of our guests and the fact that in our facilities we have not had a significant share of guests from Ukraine, Russia and guests from remote markets such as South Korea or the United States, at this time we still believe in a very successful season in the Kvarner and Istria region. Compared to the same period last year, the dynamics of accommodation bookings has slowed down, with an increasing tendency. In our Dalmatian destinations, activities have been launched aimed at adapting to the possible decline in the number of air travellers.
JADRAN d.d. (hereinafter Jadran d.d. or the Company), in accordance with Article 250.b. paragraphs 4 and 5 and Article 272.p of the Companies Act (Official Gazette No. 111/93, 34/99, 121/99, 52/00 - Decision of the Constitutional Court of the Republic of Croatia, 118/03, 107/07, 146/08, 137/09,152/11 - consolidated text, 111/12, 68/13, 110/15, 40/19 and 34/22), hereby issues this Corporate Governance Statement.
In 2021, JADRAN d.d., whose shares are listed on the ZSE Official Market, applied the Code of Corporate Governance adopted by the Croatian Financial Services Supervisory Agency (HANFA) and the Zagreb Stock Exchange, Inc. Zagreb. This Code has been in force since 1 January 2020, and has been published on the website of the Stock Exchange (www.zse.hr) and on the website of the Croatian Financial Services Supervisory Agency (www.hanfa.hr). The Company’s application of the Zagreb Stock Exchange’s Code is reflected in an annual questionnaire which is publicly disclosed in accordance with the applicable regulations. The answers in the questionnaire clearly show which provisions of the Code are complied with by the Company and which are not, and the Questionnaire is publicly available on the official website of the Zagreb Stock Exchange (www.zse.hr).
The Company's shares were listed on the official market of the Zagreb Stock Exchange in January 2018, and the shareholding report is an integral part of the Annual Report. As of the date its shares were first quoted on the stock exchange, the Company has not recorded profits and no dividend has thus been distributed. The Company’s share capital is HRK 482,507,730.00, divided and contained in 27,971,463 registered common dematerialised shares without nominal value, each entitling its holder to one vote. There are no holders of securities in the Company that entail special control rights or voting limitations to a specific percentage or number of votes. As at 31 December 2021, the Company held 631 treasury shares.# Shareholder Information and Corporate Governance
Information about significant shareholders is available on a daily basis on the official website of the Central Depositary and Clearing Company (www.skdd.hr). The Company applied the principle of equal treatment of all shareholders. The shareholders exercised their primary control rights by deciding on matters within their scope of responsibility via the General Meeting. The operation of the General Meeting, its powers, the rights of shareholders and the manner of their realisation are prescribed by the Company's Articles of Association, which are publicly available on the Company's website (www.jadran-crikvenica.hr).
The General Meeting is responsible for deciding on the following matters: election and removal of Supervisory Board members, allocation of profits, granting discharge to Management Board members, appointment of auditors, amendments to the Articles of Association, increasing and decreasing of share capital and any other matters placed under its responsibility under the law. The shareholders exercise their rights via the General Meeting. In 2021, the General Meeting in was convened and held in accordance with the provisions of the Companies Act and the Company's Articles of Association. The General Meeting notice, the motions made to, and resolutions passed by the General Meeting are publicly disclosed in accordance with the Companies Act, the Capital Market Act, the Zagreb Stock Exchange Rules and the Company's Articles of Association. Registrations for the General Meeting are limited insomuch as each shareholder is required to notify his/her their participation in accordance with the Companies Act.
At the session held on 30 July 2021, decisions on granting discharge to the members of the Company’s Management Board and the Supervisory Board were adopted, a decision on loss coverage was rendered and approval of the Remuneration Policy and acceptance of the Report on Remuneration of Members of the Management Board and the Supervisory Board of the Company in 2020 and an auditor was appointed to audit the financial statements for 2021. All decisions from the sessions of the General Meeting were published in accordance with legal regulations on the websites of the Company (www.jadran-crikvenica.hr), the Zagreb Stock Exchange and HANFA.
In accordance with the Corporate Governance Code of the Zagreb Stock Exchange and HANFA in force since 1 January 2020, the Supervisory Board is mainly composed of independent members who do not have business, family or other relations with the Company, the majority shareholder or a group of majority shareholders or members of the Management Board or the Supervisory Board of the Company or the majority shareholder. The Supervisory Board has five members, four of whom are elected and relieved of duty by the General Meeting, and one representative is elected by the employees in accordance with the provisions of the Labour Act. In accordance with the amendment of the Articles of Association adopted at the General Meeting on 31 August 2020, the term of office of the Supervisory Board members is 2 years. The rules for appointing and removing members of the Management Board and the Supervisory Board are defined by the Articles of Association and the Companies Act. No restrictions as regards gender, age, education, profession or other similar restrictions apply in any executive, managing or supervisory bodies or at any other level.
Pursuant to the Companies Act and the Company's Articles of Association, the Supervisory Board renders decisions at its meetings. In 2021, the Supervisory Board supervised the management of the Company's affairs in accordance with the Companies Act, the Articles of Association and other internal corporate documents. The Supervisory Board held a total of 10 meetings, which is consistent with good corporate practices. The Supervisory Board of the Company operated three committees which support the Supervisory Board by preparing decisions to be taken by the Supervisory Board and supervising their implementation. These committees are as follows: the Audit and Remuneration Committee, the Appointment Committee and the Corporate Governance Committee.
During 2021, two members of the Supervisory Board were changed. That's how it was on April 23, 2021. The Company received a notification from the Workers' Council on the change of employee representatives on the Supervisory Board, and Mr. Adrian Čajić was appointed as the new employee representative. With the election of a new employee representative on the Supervisory Board, the term of office of the current member of the Supervisory Board ended. 29 July 2021 The President of the Supervisory Board, Mr. Tomislav Kitonić, resigned from his membership in the Supervisory Board. The General Assembly, at its session held on July 30, 2021. appointed Mr. Goran Hanžek a member of the Supervisory Board, and the Supervisory Board at a meeting held on 30 July 2021 make a Decision appointing Mr. Hanžek President of the Supervisory Board.
As at 31 December 2021, the Supervisory Board comprised the following persons:
* Goran Hanžek, Chairman of the Supervisory Board
* Karlo Došen, Deputy Chairman of the Supervisory Board
* Dragan Magaš, Supervisory Board Member
* Mirko Herceg, Supervisory Board Member
* Adrian Čajić - Supervisory Board Member (employee representative)
In 2021, the Management Board managed the Company’s affairs in accordance with the Companies Act, the Articles of Association and other internal corporate documents, and fully complied with the provisions of the Code. In 2021, the Company’s Management Board comprised the following persons:
30 July 2021 the Supervisory Board made a Decision appointing Mr. Miroslav Pelko a member of the Management Board. Members of the Company’s Management Board are authorised to represent the Company together with another member of the Management Board, based on the amendment of the Articles of Association adopted at the General Meeting on 31 August 2020.
In 2020, the Company established the Internal Audit Department, and in June 2020, the Internal Audit Charter was adopted, which defines the operational framework and the main principles used in the Company's internal audits. Internal Audit Department is responsible for assessing the level of risk management in business processes, auditing the effectiveness of internal control systems, in order to improve risk management and compliance with procedures, examining and analysing compliance of existing business systems with adopted policies, plans, procedures, laws and rules that may have a significant impact on business reports. It is charged with recommending preventive measures in the areas of financial reporting, compliance, operations and control in order to eliminate risks and possible deficiencies that could lead to the inefficiency of processes or fraudulent procedures. Internal audit informs the Management Board, the Audit and Remuneration Committee and the Supervisory Board about its activities and audit plan.
The Company complies with the provisions of the Code, except for those provisions that cannot be implemented at a given time. Such exceptions are as follows:
Crikvenica, April 28, 2022
Pursuant to Article 300.d, subject to the provision of Article 300.c of the Companies Act (Official Gazette No. 111/93, 34/99, 121/99, 52/00, 118/03, 107/07, 146/08, 137/09, 125/11, 152/11, 111/12, 68/13, 110/15, 40/19, 34/22), and Article 34 of the Articles of Association of JADRAN d.d., the Supervisory Board of JADRAN d.d., having its registered office in Crikvenica, Bana Jelačića 16, adopted at its 46 th meeting held on April 28, 2022 the following Resolution on the Validation of Annual Financial Statements
I
The 2021 Annual Financial Statements for the Company are hereby approved, including as follows:
* Balance Sheet with assets equal to the liabilities in the amount of HRK 872,089,012
* Profit and Loss Statement with an operating loss in the amount of -HRK 7,575,778
* Cash Flow Statement – Indirect Method showing a reduction in cash and cash equivalents in the amount of -HRK 10.939.580 in 2021
* Statement of Changes in Capital and Reserves amounting as at December 31, 2021 to a total of HRK 482,237,268
* Notes to the Annual Financial Statements
* Management Board's Annual Financial Condition Report
The 2021 Consolidated Annual Financial Statements for the Group are hereby approved. The Auditor’s Report for the Company and the Group prepared by PricewaterhouseCoopers d.o.o., Heinzelova 70, 10000 Zagreb, PIN: 81744835353, is hereby also approved.
II
In accordance with the provision of Article 300.d of the Companies Act, based on the approval referred to in Section I of this Resolution, the 2021 Annual Financial Statements for Jadran d.d are hereby validated by the Management Board and the Supervisory Board.
Crikvenica, April 28, 2022
Pursuant to Article 300.d, subject to the provision of Article 300.c of the Companies Act (Official Gazette No. 111/93, 34/99, 121/99, 52/00, 118/03, 107/07, 146/08, 137/09, 125/11, 152/11, 111/12, 68/13, 110/15, 40/19, 34/22), and Article 34 of the Articles of Association of JADRAN d.d., the Supervisory Board of JADRAN d.d., having its registered office in Crikvenica, Bana Jelačića 16, adopted at its 46 th meeting held on April 28, 2022 the following DRAFT RESOLUTION ON LOSS COVERAGE FOR 2021
I
It is hereby established that in the business year that ended on December 31, 2021 JADRAN d.d. recorded an operating loss in the amount of -HRK 7,575,778. It is hereby also proposed that the said loss be covered using the expected future profits.
II
It is hereby further proposed that the General Meeting accept the joint proposal of the Management Board and the Supervisory Board, as determined in Section I of this Resolution.
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