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Valamar Riviera d.d.

Quarterly Report Feb 28, 2018

2085_10-q_2018-02-28_4bf06e14-0da0-4b21-899a-f28a4361cb2a.PDF

Quarterly Report

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Quarterly Valamar Isabella Island Resort 4*&5*, Poreč Report Of the Group and the Company Valamar Riviera d.d.

for the fourth quarter of 2017, including the period from 1 January 2017 to 31 December 2017

Executive Summary

Key financial indicators

(in '000,000 HRK) 2016 2017 2017/2016
Total revenues 1,579.5 1,842.0 16.6%
Sales revenues 1,454.9 1,755.3 20.6%
Board revenues 1,174.7 1,447.9 23.3%
Operating costs 949.9 1,145.2 20.6%
EBITDA 512.6 606.0 18.2%
Adjusted EBITDA 519.0 622.6 20.0%
EBIT 246.7 259.5 5.2%
Adjusted EBIT 253.1 276.1 9.1%
EBT 271.9 238.6 -12.2%
Net profit 342.3 245.1 -28.4%
EBITDA margin 34.4% 34.1% -30 bp
Adjusted EBITDA margin 34.9% 35.0% 10 bp
Net debt 1,398.1 1,772.4 26.8%
Cash and cash equivalents 274.7 287.8 4.8%
Net debt / Adjusted EBITDA 2.69 2.85 5.8%
Capital investments 428.4 877.7 104.9%
Market capitalization 4,295.1 5,420.3 26.2%
EV 5,693.2 7,192.6 26.3%
DPS 0.60 0.80 33.3%

Key operating indicators

2016 2017 2017/2016
18,072 20,852 15.4%
48,524 56,662 16.8%
126 127 0.4%
34% 35% 100 bp
2,278 2,640 15.9%
5,144 6,173 20.0%
516 548 6.4%
65,002 69,435 6.8%

Note: Details and explanations can be found on page 9 in "Results of the Group".

EBITDA and EBITDA margin

The Group reported strong adjusted EBITDA growth in 2017, up 20% to HRK 623 million (HRK 519 million in 2016). Adjusted EBITDA growth was driven by higher sales revenues (up 21%; from HRK 1,455 million to HRK 1,755 million) and active management of operating efficiency as seen in the adjusted EBITDA margin of 35.0% (34.9% in 2016). Adjusted EBITDA margin was high in 2017 despite 2017 negative impact of the lower seasonal EUR/HRK exchange rate and the VAT rate for hospitality services going from 13% to 25% as of 1 January 2017.

Revenues

Total revenues were HRK 1,842 million, up 17% in 2017 (HRK 1,580 million in 2016). In total revenues, HRK 1,755 million represented sales revenues (HRK 1,455 million in 2016) while the remaining part was mainly financial income, down HRK 27 million (from HRK 91 million to HRK 64 million) due to the absence of the one-off effect of 2016 income from share portfolio sale. Sales revenues growth was largely driven by higher board revenues, up 23% to HRK 1,448 million (HRK 1,175 million in 2016) and higher revenues of other operating departments (+HRK 17 million; leasing, sport, laundry, tourist agency, etc.).

The Group reported 6,173,142 overnights (+20%) in 2017 while ADR rose by 6%. Board revenue growth was mainly driven by: i) the acquisition of Imperial d.d. (hereinafter: Imperial), ii) large investments to improve competitiveness and the quality of services and products, iii) demanddriven optimization of distribution and prices, iv) better occupancy and strong performance in 1H 2017.

Costs

Operating costs rose by 21% to HRK 1,145 million, mainly due to i) this year's consolidation of Imperial, ii) increased material costs driven by larger business volumes, iii) the salary increase policy, and iv) new employees hired as construction staff (to carry out the large investments) and resort staff (to ensure service quality in the new Premium/ Upscale properties).

Financial result

The Group reported a negative financial result of HRK 21 million (in 2016 the reported profit was HRK 25 million). A weaker financial result is largely due to the absence of the one-off income from share portfolio sales achieved in 2016.

Profit

The Group's net profit fell by HRK 98 million to HRK 244 million in 2017 (HRK 342 million in 2016) due to weaker financial results (-HRK 46 million) and lower tax revenues (-HRK 64 million) mainly due the lower one-off recognition of deferred tax assets related to the achieved tax incentives prescribed by the Act on Investment Promotion (HRK 54 million in 2017 vs. HRK 125 million in 2016).

Enterprise value

Enterprise value continued to grow (+26%) driven by increased operating business and efficient net debt management.

Investments

The Group's largest investments worth over HRK 900 million were completed and 2017 saw strong market demand for the newly renovated properties. Most of the investments were focused on the projects in Rabac (Family Life Bellevue Resort 4* and Valamar Girandella Resort 4*&5*), the development of premium camping resorts, Imperial's projects and a range of other smaller

Executive Summary Outlook (Continued)

projects for improving quality, operating efficiency and energy saving.

In line with the previously announced investments worth up to HRK 2 billion until 2020, the Group is planning new large investments worth HRK 705 million in 2018. The investments will strategically reposition the hotel and camping portfolio towards products and services with high added value.

For details, see "2017 Investments" on page 19 and "2018 Investments" on page 21.

Acquisitions

By the end of 2016, Valamar Riviera successfully acquired 54.71% of Imperial's share capital by the end of 2016 and concluded a contract covering the management of Imperial's properties and services. The implementation of the contract started on 4 January 2017 and now Valamar Riviera manages a portfolio of 30 hotels and resorts and 15 camping resorts that can welcome more than 56,000 guests daily.

Imperial's business consolidation accounts for 9 percentage points of growth in total revenues, or 11 percentage points in adjusted EBITDA.

Valamar's press release is available from the Valamar Riviera corporate website (valamar-riviera.com/ en/1Y2017).

Awards and Recognitions

Mr. Željko Kukurin, Management Board President at Valamar Riviera, was voted as Businessperson of the Year in 2017 by the readers of "Večernji list" and "Poslovni dnevnik". The award recognized Valamar Rivera's contribution to the record-breaking year for Croatia's tourism that saw over 100 million overnights for the first time, and confirmed Valamar's philosophy of excellence in hospitality achieved by responsible and sustainable investments in employees, products and destinations.

Valamar Riviera was awarded the "Zlatna koza-Capra d'oro" (Golden Goat Award) by the Istria Tourist Board for its exceptional contribution to the development of Istrian tourism. It also received the Golden Kuna Award from the Croatian Chamber of Economy as the most successful Istrian company among large enterprises and was nominated for the title of most successful large company in Croatia.

Valamar Riviera received two valuable recognitions given by the Zagreb Stock Exchange in 2017: Share of the Year by public vote for the 6th consecutive time and Top Turnover Share. Moreover, it won another first place award for Best Investor Relations, conferred by the business newspaper "Poslovni dnevnik" and the Zagreb Stock Exchange.

Valamar Riviera has received numerous awards and certificates: TUI Environmental Champion 2017, Best Wi-Fi, Best hotel in TUI family concept, Best practice in TUI standards implementation - TUI; ANWB Top 2017 - ANWB, ADAC Superplatz 2017 - ADAC, Croatia's Best Campsite - Croatian Camping Association; Developer - Euromoney; Travelife GOLD Award - Travelife; Croatia's Leading Business Hotel, Croatia's Leading Hotel, Croatia's Leading Resort, Croatia's Leading Boutique Hotel - World Travel Awards; Camping2be 2017 Award - Camping2be. com; Recommended - Holidaycheck; Certificate of Excellence 2017, Top 25 hotels in Croatia, Top 10 hotels for Families in Croatia - TripAdvisor; Healthy Meal Standard - Healthy Meal Standard; World Luxury Hotel Awards - World Luxury Hotel Awards; Loved by guest 2017 - Hotels.com; ISO 50001, ISO 9001, ISO 14001 - ISO, Codex Alimentarius - HACCP, etc.

Valamar Riviera d.d. and PBZ Croatia osiguranje (managing mandatory pension funds), submitted on 15 May 2017 a joint offer for the investment and recapitalization of a bankrupt hospitality company on Hvar Island, Helios Faros d.d. u stečaju (hereinafter: Helios Faros), with 591 keys in its portfolio. In July 2017, the Assembly of bankruptcy creditors of Helios Faros decided to prepare a Bankruptcy plan following the investment and recapitalization offer. However, the Bankruptcy plan still needs to be adopted by the Assembly of bankruptcy creditors and validated by the bankruptcy judge.

On 27 December 2017 Valamar Riviera submitted a binding bid to buy 55.48% of Hoteli Makarska d.d. share capital (HRK 172.7 million), which had been accepted on 12 February 2018 by Croatia's Restructuring and Sale Center-CERP. The agreement covering the purchase and transfer of shares is expected to be concluded in the first quarter of 2018. Valamar Riviera signed a cooperation agreement with Allianz ZB d.o.o. (managing mandatory pension funds) in order to start their joint activity towards Hoteli Makarska that manages a portfolio of 725 keys.

In accordance with our strategic goals for the period up to 2020, we are focusing on investments projects aimed at improving the portfolio properties and services. However, numerous factors reduce the competitiveness of Croatian tourism and hinder further investment potential: VAT and the rate of total contributions to salaries (both among the highest in the Mediterranean), the still unresolved issue of tourism land, skilled labor shortages, the likely introduction of property tax and tourist tax increase.

Following the successful acquisition of the Baška hotel group on Krk Island and the Imperial hotel group on Rab Island, we are considering further expansion by pursuing new partnerships and acquisition opportunities in Croatia and abroad.

Table of contents

Significant Business Events 6
Results of the Group 9
Results of the Company 18
2017 Investments 19
2018 Investments 21
The Risks of the Company and the Group 22
Corporate Governance 26
Related-party Transactions 27
Branch Offices of the Company 27
Valamar Riviera Share 28
Investors Day and the 2016 Integrated Annual Report and Corporate Social Responsibility 30
Additional Information 31
Responsibility for the Quarterly Financial Statements 32
Quarterly Financial Statements 33

Significant Business Valamar Girandella Resort 4*&5*, Rabac Events

About Valamar Riviera

Valamar Riviera is the leading tourism company and one of the leading tourism groups in Croatia. It is also one of the largest investors in Croatian tourism with over HRK 4 billion invested in the last 14 years. Valamar Riviera owns two brands: Valamar Hotels and Resorts and Camping Adriatic. With last year's acquisition of Imperial, a hotel group on Rab Island, Valamar Riviera Group now operates 30 hotels and resorts and 15 camping resorts in five attractive destinations along the Adriatic coast – from Istria and the islands of Krk and Rab to Dubrovnik. It operates about 12% of Croatia's total categorized tourist accommodation and can welcome over 56,000 guests a day in nearly 21,000 accommodation units. It is the largest tourism group in Croatia by number of keys. Valamar Riviera looks after the interests of all its stakeholders: guests, suppliers and partners, local communities and destinations, around 21,000 shareholders, almost 6,000 people employed during peak season and society at large. Stakeholders' interests are actively promoted through Valamar Riviera's principles of sustainable growth, development and corporate social responsibility. The company aims at growing further through portfolio investments, new acquisitions and partnerships, by developing its destinations and human resources and by increasing operating efficiency.

Acquisition of Imperial

Valamar Riviera concluded a Management contract with Imperial by the end of 2016 regarding the management of Imperial's properties and services. The implementation of the contract started on 4 January 2017. On 27 December 2016, when the takeover bid transaction was completed,

Valamar Riviera acquired 54.71% of Imperial's share capital. Valamar Riviera also concluded a cooperation agreement with Allianz ZB from Zagreb, acting in its own name and on behalf of the mandatory pension funds it manages (category A and B). With this agreement, the two companies established joint activity towards Imperial. Valamar Riviera and Allianz ZB expect to achieve significant synergies in the future development of Imperial's hotel portfolio and Rab as a tourist destination.

General Assembly of Valamar Riviera

The General Assembly of Valamar Riviera was held on 4 May 2017 and decided that:

  • • The Company's realized profits in 2016 totaling HRK 336,657,721 were distributed as follows: HRK 16,402,312 to legal reserves and HRK 320,255,410 to retained profits.
  • The Management Board members were discharged from managing the company business in 2016. The Supervisory Board members were discharged from supervising Valamar Riviera's business management in 2016.
  • The established dividend was HRK 0.80 (eighty lipa) per each share. The dividend would be paid out of the retained profit realized in 2013, 2014 and 2015. The total dividend that Valamar Riviera's shareholders received on 29 May 2017 was HRK 99.4 million. 99% of this amount was paid in cash, and the remaining 1% in company shares.
  • The appointed Auditor for Valamar Riviera d.d. in 2017 is Ernst & Young d.o.o. from Zagreb, 50 Radnička cesta.
  • As the term of office for the Supervisory Board members expired on 6 July 2017, the following were appointed for a new 4-year term: Mr. Gustav Wurmböck, Mr. Franz Lanschützer, Mr. Mladen Markoč, Mr. Georg Eltz, Mr. Hans Dominik Turnovszky, Mr. Vicko Ferić, and Mr. Valter Knapić - employee representative appointed by the Works Council. The newly elected Supervisory Board members started their term of office on 7 July 2017.

• The Assembly decided on the amendment to the Company Statute.

Puntižela d.o.o. merger

In order to improve the operating efficiency and streamline operations, on 6 February 2017 Valamar Riviera initiated the merger of Puntižela d.o.o. (hereinafter: Puntižela). The merger was completed on 31 March 2017 when it was recorded in the court register, after which Valamar Riviera became the universal legal successor of the merged company.

Investment and recapitalization offer for Helios Faros

Valamar Riviera d.d. and PBZ Croatia osiguranje, a pension fund management company acting in its own name and on behalf of the mandatory pension funds it manages (category A and B) submitted on 15 May 2017 a joint offer for the investment and recapitalization of Helios Faros, a bankrupt hospitality company from Stari Grad on Hvar Island. The Assembly of bankruptcy creditors of Helios Faros decided on 20 July 2017 to prepare a Bankruptcy plan, following the investment and recapitalization offer for Helios Faros. In this offer, PBZ Croatia osiguranje and Valamar Riviera presented a restructuring plan as well as a six-year plan worth HRK 650 million for investments in hospitality assets. The total renovation and construction of two premium resorts containing around 600 accommodation units would reposition the Helios Faros portfolio as premium accommodation, thus turning Stari Grad into an attractive and well-known destination. Helios Faros would employ 500 people after the renovation of the Arkada and Lavanda hotels. The Bankruptcy plan would enable Helios Faros to emerge from bankruptcy and continue its business operations in close partnership with the destination, Stari Grad, in order to bring prosperity to the whole island. PBZ Croatia osiguranje and Valamar Riviera see this project as a confirmation of synergies from the joint activity of a large institutional investor and a strategic tourism investor contributing with its expertise and results. Consequently, Valamar Riviera would manage Helios Faros' development and operations through a model

contract related to the management of facilities. However, the Bankruptcy plan still needs to be adopted by the Assembly of bankruptcy creditors and validated by the bankruptcy judge.

Valamar Riviera and Kinderhotels

On 5 June 2017, Valamar Riviera announced the conclusion of a contract with Kinderhotels Europa Management & Marketing GmbH regarding the purchase of the right to use the Kinderhotels brand for a period of 5 years and 5 months. The collaboration between Valamar and Kinderhotels Europa will result in the hotel branding of Valamar Girandella Maro Resort 5* in Rabac. it is planned to be opened in the 2018 season as the third hotel of this kind in Croatia. With this, Valamar became part of the Kinderhotels chain, specialized in family vacations. Kinderhotels Europa is a marketing association that brings together high-quality premium family hotels under the Austrian "Kinderhotels" brand, and it includes 50 European hotels.

2018 investing decisions

The Supervisory Board approved 2018 investments worth HRK 633 million at its meeting held on 1 December 2017. Investments approved by the Supervisory Board of Imperial totaled HRK 72 million. The Group's new total investments worth HRK 705 million are focused on repositioning the portfolio towards products and services with high added value. For details, see "2018 Investments" on page 21. The

7

investment community was notified on 5 September 2017 that the investment in a new family hotel, Valamar Pinia Family Suites 5*, had been postponed due to an unpredictable fiscal framework for investors in tourism as well as delays in the preparation of required technical data.

Agreement with TUI UK and DER Touristik DE

On 25 September 2017 and 28 September 2017, Valamar Riviera announced the legal transactions concluded with TUI UK and DER Touristik Deutschland GmbH related to the provision of hospitality services. The total estimated annual value of the concluded agreements is HRK 80 million and HRK 70 million, respectively. The partnerships with TUI UK and DER Touristik, two leading tour operators on the European source market, will secure one part of the occupancy at Valamar hotels in the 2018 main season and shoulder season.

Elafiti Babin Kuk d.o.o. merger

In order to improve operating efficiency and streamline operations, the Supervisory Board of Valamar Riviera approved the initiation of the Elafiti Babin Kuk d.o.o. merger on 20 October 2017. Elafiti Babin Kuk d.o.o. is a company where Valamar Riviera holds 100% stake and the merger was completed on 29 December 2017, when it was recorded in the court register. Consequently, Valamar Riviera became the universal legal successor of the merged Elafiti Babin Kuk d.o.o.

Bid to buy Hoteli Makarska shares

On 27 December 2017 Valamar Riviera submitted a binding bid to buy a 55.48% stake (621,086 shares) in Hoteli Makarska, a peer company from Makarska with 725 keys in its portfolio. Valamar Riviera concluded a cooperation agreement with Allianz ZB d.o.o., a pension fund company from Zagreb, which acts in its own name and on behalf of the mandatory pension funds it manages, in order to start their joint activity towards Hoteli Makarska. On 12 February 2018 the Restructuring and Sale Center announced that the Company's bid in the amount of HRK 172.7 million had been accepted. The agreement covering the purchase and transfer of shares is expected to be concluded in the first quarter of 2018.

Changes in the percentage of voting rights

On 26 January 2018 Valamar Riviera received the notification of EPIC, Goldscheider und Wurmböck Unternehmensberatungsgesellschaft m.b.H., a company with registered office in Vienna, 8 Plösslgasse, Republic of Austria, regarding the changes in the percentage of voting rights. The change in the percentage of voting rights, i.e. fall below the voting rights threshold, was due to the transfer of shares pursuant to the demerger agreement and status change –demerger of EPIC, Goldscheider und Wurmböck Unternehmensberatungsgesellschaft m.b.H., as demerging company and EPIC Hospitality Holding GmbH with registered office in Vienna, 8 Plösslgasse, Republic of Austria, as transferee company. As evidenced by the received notifications, the shareholder structure of the transferee company is indirectly identical to the shareholder structure of the demerging company. Consequently, no changes occurred in the controlling persons, since the shareholders in EPIC Hospitality Holding GmbH are indirectly the same persons and hold the same stakes as the shareholders in EPIC, Goldscheider und Wurmböck Unternehmensberatungsgesellschaft m.b.

Pursuant to this, on the same day Valamar Riviera received the notification of EPIC Hospitality Holding GmbH informing on the acquisition of 55,594,884 shares of the Company (44.11% of the share capital).

Quarterly audited financial statements

The Company's Management Board presents the quarterly fnancial statements for the fourth quarter of 2017 (the period 1 January 2017 – 31 December 2017 is also included). These statements must be viewed in the context of the said mergers and acquisitions, and they provide information on the state of the Company and Group, as well as significant events.

The Company balance sheet for the reviewed period as at 31

December 2017 includes the merged Puntižela d.o.o. for the period following the merger, i.e. as from 1 April 2017, and the merged Elafiti Babin-kuk d.o.o. for the period following the merger, i.e. as of 29 December 2017. Please note that 2017 data cannot be entirely compared to the previous period, as the latter did not include Puntižela d.o.o. and Elafiti Babin Kuk d.o.o.

The Group balance sheet for the reviewed period, as at 31 December 2017, and the previous period as at 31 December 2016 includes Imperial d.d.

The Company income statement for the reviewed period includes the merged companies: Hoteli Baška d.d. for the period following the merger i.e. as of 1 April 2016, Bastion upravljanje d.o.o. for the period following the merger i.e. as of 1 July 2016, and Puntižela d.o.o. for the period following the merger, i.e. as of 1 April 2017 and Elafiti Babin Kuk d.o.o. for the period following the merger, i.e. as of 29 December 2017. Please note that 2017 data are not fully comparable to previous period data, as the latter do not include, until the time of the merger, the said merged companies.

The Group income statement for the reviewed period includes the following companies: Elafiti Babin Kuk d.o.o., Magične stijene d.o.o., Palme turizam d.o.o., Pogača Babin Kuk d.o.o., Bugenvilia d.o.o., and Imperial d.d. Thus, 2017 data are not fully comparable to previous period data, as the latter do not include Imperial d.d.

Results of the Group

Key financial indicators1 2016 2017 2016/2017
Total revenues 1,579,499,901 1,842,036,109 16.6%
Sales revenues 1,454,867,739 1,755,286,721 20.6%
Board revenues (accomodation and board revenues)2 1,174,716,569 1,447,866,807 23.3%
Operating costs3 949,930,753 1,145,185,720 20.6%
EBITDA4 512,583,688 606,042,467 18.2%
Extraordinary operations result and one-off items5 -6,376,909 -16,566,528 -159.8%
Adjusted EBITDA6 518,960,597 622,608,995 20.0%
EBIT 246,704,521 259,502,687 5.2%
Adjusted EBIT6 253,081,430 276,069,214 9.1%
EBT 271,909,189 238,643,759 -12.2%
Net profit 342,313,778 245,087,385 -28.4%
EBT margin 18.3% 13.4% -490 bp
EBITDA margin 34.4% 34.1% -30 bp
Adjusted EBITDA margin6 34.9% 35.0% 10 bp
31/12/2016 31/12/2017 2016/2017
Net debt7 1,398,102,734 1,772,353,634 26.8%
Net debt / Adjusted EBITDA 2.69 2.85 5.8%
Cash and cash equivalents 274,650,648 287,836,954 4.8%
Capital investments (more details in chapter "2017 Investments") 428,440,048 877,743,649 104.9%
ROE8 14.4% 9.7% -470 bp
Adjusted ROCE9 6.7% 6.4% -30 bp
Market capitalization10 4,295,057,872 5,420,289,760 26.2%
EV11 5,693,160,606 7,192,643,394 26.3%
EPS12 2.76 1.96 -29.1%
DPS13 0.60 0.80 33.3%
Key business indicators14
2016 2017 2016/2017
Number of accommodation units (capacity) 18,072 20,852 15.4%
Number of beds 48,524 56,662 16.8%
Full occupancy days 126 127 0.4%
Annual occupancy (%) 34% 35% 100 bp
Accommodation units sold 2,277,815 2,639,755 15.9%
Overnights 5,144,328 6,173,142 20.0%
ADR15 (in HRK) 516 548 6.3%
RevPAR16 (in HRK) 65,002 69,415 6.8%
  • 1 Classified accordiong to the Quarterly Financial Statement (TFI POD-RDG). EBIT, EBITDA and their adjusted values and respective margins are recorded on the basis of operating income.
  • 2 In compliance with the classification under the USALI international standard for reporting in hotel industry (Uniform System of Accounts for the Lodging Industry).
  • 3 Operating costs include material costs, staff costs, other costs, and other operating costs reduced by extraordinary expenses and oneoff items.
  • 4 EBITDA (eng. earnings before interest, taxes, depreciation and amortization) is calculated as: operating income - total operating costs + depreciation and amortisation + value adjustments.
  • 5 Adjustments were made for (i) extraordinary income (in the amount of HRK 11.0 million in 2017, and HRK 21.5 million in 2016), (ii) extraordinary expenses (in the amount of HRK 26.5 million in 2017, and HRK 23.6 million in 2016), and (iii) termination benefit costs (in the amount of HRK 1.0 million in 2017, and HRK 4.3 million in 2016).
  • 6 Adjusted by the result of extraordinary operations and one-off items.
  • 7 Net debt: non-current and current liabilities to banks and other financial institutions + liabilities for loans, deposits and other– cash and cash equivalents – long-term and short-term investments in securities – current loans given, deposits, etc.
  • 8 ROE refers to return on equity; calculated as: profit for the period / (capital and reserves).
  • 9 Adjusted ROCE refers to return on capital employed; calculated as: adjusted EBIT / (capital and reserves at the end of the period + noncurrent and current liabilities to banks and other financial institutions - cash and cash equivalents - long-term and short-term investments in securities - loans given, deposits, etc.).
  • 10 The number of shares as at 31 December 2017 net of treasury shares amounts to 124,233,091, while per 31 December 2016 amounts to 124,170,508.
  • 11 EV refers to enterprise value; calculated as market capitalization + net debt.
  • 12 EPS refers to earnings per share calculated on the basis of net profit. Weighted average number of shares as at 31 December 2017: 124,207,204. Weighted average number of shares as at 31 December 2016: 124,235,079.
  • 13 DPS refers to dividends per share.
  • 14 2016 key business indicators of Valamar Riviera Group do not include data of Imperial.
  • 15 Average daily rate is recorded on the basis of board revenues (accommodation and board's food and beverage revenues).
  • 16 Revenue per accommodation unit is recorded on the basis of cumulative board revenues (accommodation and board's food and beverage revenues).

9

Overnights and ADR

Total revenues

Total revenues were HRK 1,842.0 million in 2017, and their strong growth (+16.6% or +HRK 262.5 million) resulted from the following:

i) Sales revenues rose by 20.6% (+HRK 300.4 million) to HRK 1,755.3 million, mainly driven by board revenues (+23.3% or +HRK 273.2 million) and the revenues of other operating departments: leasing, sport, laundry, tourist agency, etc. (+HRK 16.8 million).

ADR rose by 6.4% to HRK 548, the total number of accommodation units sold was 2.639.755 (+15.9%) thanks to the active management of revenues, sales channels and marketing segments. Board revenues hit HRK 1.447,9 million (+HRK 273,2 million). All marketing segments grew in January and February, except for M.I.C.E.17. March saw smaller business volumes due to Easter holidays occurring in April. However, this was offset in April when all marketing segments received great feedback. May was affected by the later occurrence of holidays in the German and Austrian source market, and the positive effects were carried over into June. Apart from the holiday factor, June saw a strong demand for Valamar Riviera's portfolio products and services, thus driving an optimum price yield, especially in destination Poreč. The growth in board revenues in high season (July-September) was mainly driven by ADR increase. The direct sales channel presented the highest growth rates, especially in northern destinations, as focus was shifted from the less profitable OTA18 channel. Shoulder season (October-December) saw higher group and allotment numbers especially during holidays in the German and Austrian market, and an increase in the number of US guests in Dubrovnik. The market feedback during the Christmas/ New Year period was as strong as usual. Domestic sales revenues rose by 26.1% over 2016 results to HRK 150.1 million and represented 8.1% of total revenues (7.5% in 2016). International sales revenues rose by HRK 269.4 million to HRK 1,605.2 million and represented 87.1% of total revenues (84.6% in 2016).

ii) Financial income fell by 30.0% (-HRK 27.2 million) to HRK 63.6 million due to the absence of 2016 one-time income effect driven by share portfolio sale.

iii) The consolidation of Imperial contributed to the Group's total revenues with 9 percentage points.

Other operating and financial income represented 4.7% of total revenues (7.9% in 2016).

17 Meetings, incentives, conferencing, exhibitions.

18 Online travel agencies.

Total operating expenses of Valamar Riviera Group19

(in HRK) 2016 2017 2017/2016
Operating costs20 949,930,753 1,145,185,720 20.6%
Total operating expenses 1,241,906,080 1,518,893,175 22.3%
Material costs 450,374,430 519,753,525 15.4%
Staff costs 371,316,789 480,161,466 29.3%
Depreciation and amortisation 265,188,188 346,413,599 30.6%
Other costs 128,500,052 143,755,460 11.9%
Provisions and value adjustments 2,545,384 9,612,565 277.6%
Other operating expenses 23,981,236 19,196,560 -20.0%

Total operating expenses

Total operating expenses grew by 22.3% (+HRK 277.0 million) to HRK 1,518.9 million. If Imperial's data are excluded for comparability's sake, total operating expenses grew by 11%. The breakdown of total operating expenses is the following:

i) Material costs represented 34.2% of total operating expenses (36.3% in 2016) and rose by 15.4% (+HRK 69.4 million) to HRK 519.8 million, mainly due to Imperial's consolidation and increased raw material costs (especially direct food and beverage costs, as well as costs of energy and water consumption) driven by larger business volumes.

ii) Staff costs represented 31.6% of total operating expenses (29.9% in 2016) and rose by 29.3% (+HRK 108.8 million) to HRK 480.2 million, mainly due to the efforts invested in securing competitive salaries, benefits and work conditions well as the hiring of construction site staff (to carry out the large investments) and resort staff (to ensure high service quality in the new Premium/ Upscale properties). In 2017 these efforts resulted in Valamar guaranteeing a minimal monthly net salary of HRK 4,000, and an increase in the base salary and coefficients that resulted in a 19% increase in the volume of total salaries. Consequently, following an agreement with trade unions, the base salary for nearly two thousand Valamar employees increased (2% in June 2016, 2% in December 2016 and 1.5% in June 2017; and 0.5% increment for years of service as of 1 January 2017) as well as the Tariff coefficients (2.5%) for

20 Operating costs include material costs, staff costs, other costs, and other operating costs reduced by extraordinary expenses and one-off items.

21 Adjustments were made for (i) extraordinary income (in the amount of HRK 11.0

nearly 50 key and scarce occupations (maids, cleaners, chefs, waiters and other)

iii) Amortization cost represented 22.8% of total operating expenses (21.4% in 2016) and rose by 30.6% (+HRK 81.3 million) to HRK 346.4 million, mainly due to the consolidation of Imperial and the previous investments.

iv) Other costs represented 9.5% of total operating expenses (10.3% in 2016) and rose by 11.9% (+HRK 15.3 million) to HRK 143.8 million, mainly due to Imperial's consolidation.

v) Provisions and value adjustments represented 0.6% of total operating expenses (0.2% in 2016) and rose by 277.6% (+HRK 7.1 million) to HRK 9.6 million, mainly due to Imperial's consolidation, provisions for litigations in progress and the value adjustment of non-core assets of Magične stijene d.o.o.

vi) Other operating expenses represented 1.3% of total operating expenses (1.9% in 2016) and fell by 20.0% (-HRK 4.8 million) to HRK 19.2 million due to operating expenses of previous years.

Operating costs20

Operating costs rose by 20.6% to HRK 1,145.2 million mainly due to i) this year's consolidation of Imperial, ii) increased raw material costs driven by larger business volumes and iii) increased staff costs (as previously explained). If Imperial's consolidation is excluded for comparability's sake, operating costs grew by 12% and remained under control through active cost management.

EBITDA

Adjusted EBITDA21 jumped by 20.0% (+HRK 103.5 million) to HRK 622.6 million, as a result of the largest investments so far that were focused on improving competiveness and the quality of services and products, the Imperial hotel group acquisition, active operating efficiency management and demand drivenoptimization of distribution and prices. Imperial's consolidation carried 11 percentage points in the growth. Unadjusted EBITDA rose by 18.2% (+HRK 93.5 million) to HRK 606.0 million as a result of better performance. Please note that the strong growth in adjusted and unadjusted EBITDA is influenced by the 2017 negative impact of the lower seasonal EUR/HRK exchange rate and the VAT rate for hospitality services going from 13% to 25% as of 1 January 2017.

Profit

The Group's net profit fell by HRK 97.2 million to HRK 245.1 million in 2017 due to weaker financial results (-HRK 46.0 million; for details see next page) and lower tax revenue (-HRK 64.0 million) mainly due to the lower one-off recognition of deferred tax assets22. EBT margin fell by 490 basis points to 13% (18% in 2016).

11

19 Classified accordiong to the Quarterly Financial Statement (TFI POD-RDG).

million in 2017, and HRK 21.5 million in 2016), (ii) extraordinary expenses (in the amount of HRK 26.5 million in 2017, and HRK 23.6 million in 2016), and (iii) termination benefit costs (in the amount of HRK 1.0 million in 2017, and HRK 4.3 million in 2016).

22 In 2017 deferred tax assets was recognized mainly due to tax incentives prescribed by the Act on Investment Promotion and Investment Improvement which amounted to HRK 54.1 million, in respective to HRK 124.7 million in 2016.

BUSINESS RESULTS 1/1/2017 - 31/12/2017

12

Financial result

The Group achieved a negative financial result of HRK 20.9 million in 2017 (in 2016 it achieved a positive financial result of HRK 25.2 million). The financial result decreased by HRK 46.1 million mainly due to a i) HRK 35.0 million decrease in income from share portfolio sale resulting from the absence of last year's one-off income effect, ii) HRK 5.0 million decrease in net forex gains related to long-term loans (in 2017 total forex gains were HRK 31.6 million, and total forex losses were HRK 25.5 million), and iii) the net effect of a HRK 6.3 million increase in financial expenses related to long-term loan interest.

Financial income

Financial income fell by HRK 27.2 million over 2016 results to HRK 63.6 million. The most significant decrease was reported in other financial income due to the aforesaid absence of the one-off income effect of HRK 35.0 million driven from 2016 share portfolio sale. Forex gains related to long-term loans increased by HRK 10.8 million to HRK 31.6 million. Financial income related to interest fell by HRK 3.6 million to HRK 0.7 million as a result of reduced free cash flow and lower interest rates in 2017 vs. 2016.

Financial expenses

Financial expenses rose by HRK 18.8 million over 2016 to HRK 84.5 million. Forex loss related to long-term loan rose by HRK 15.8 million to HRK 25.5 million. Financial expenses related to interest rose by HRK 6.3 million to HRK 40.1 million driven by higher financial leverage used for 2017 investments. Unrealized expenses from financial assets fell by HRK 1.5 million to HRK 6.8 million, driven by higher interest rates that had a positive impact on IRS fair value.

Profitability indicators of Valamar Riviera Group

2016 2017 2017/2016
EBITDA margin 34.4% 34.1% -30 bp
Adjusted EBITDA margin 34.9% 35.0% 10 bp
EBIT margin 16.6% 14.6% -200 bp
Adjusted EBIT margin 17.0% 15.5% -150 bp
EBT margin 19.3% 13.4% -590 bp
Net profit margin 23.0% 13.8% -920 bp
ROA 7.7% 4.9% -280 bp
ROE 14.4% 9.7% -470 bp
Adjusted ROCE 6.7% 6.4% -30 bp

Valuation of Valamar Riviera Group

31/12/2016 31/12/2017 2017/2016
Average share price per (in HRK) 34.59 43.63 26.1%
Market capitalization (in HRK) 4,295,057,872 5,420,289,760 26.2%
EV (in HRK) 5,693,160,606 7,192,643,394 26.3%
EPS (in HRK) 2.76 1.96 -29.0%
DPS (in HRK) 0.60 0.80 33.3%
EV / Sales revenues 3.9x 4.1x 5.1%
EV / EBITDA 11.1x 11.9x 6.9%
EV / Adjusted EBITDA 11.0x 11.6x 5.0%
EV / EBIT 23.1x 27.7x 20.0%
EV / Adjusted EBIT 22.5x 26.1x 15.8%

Assets and liabilities

As at 31 December 2017 the total value of the Group's assets increased by 11.9% vs 31 December 2016 and totaled HRK 4,996.6 million.

Total share capital and reserves grew by 6.0% to HRK 2,516.2 million as a result of i) HRK 243.6 million of realized profit in 2017 vs HRK 342.3 million of realized profit as at 31 December 2016 and ii) HRK 263.1 million of retained profit vs HRK 36.6 million of retained profit in 2016.

Total long-term liabilities rose from HRK 1,556.1 million to HRK 1,915.7 million due to loans contracted to finance this year's investments.

Total short-term liabilities were HRK 402.9 million and rose by 2.2 % vs 31 December 2016 as a result of i) lower trade payables (down by HRK 21.9 million) given the smaller range of 2017/18 investments (for details, see page 21), ii) the current repayment of 2018 long-term debt (up by HRK 22.8 million), iii) higher liabilities related to advance payments from customers (up by HRK 8.0 million), and iv) liabilities related to employees (up by HRK 1.8 million due to a larger consolidation scope and the increased number of employees vs 31 December 2016).

Cash and cash equivalents were HRK 287.8 million as at 31 December 2017 and rose by 4.8%, indicating a further strong cash potential from business activities. Together with external financing, they are able to secure a smooth continuation of future investments and potential acquisitions.

13

Key operating indicators of Valamar Riviera Group per segments24

HOTELS AND RESORTS Total Premium Upscale Midscale Economy
2016 2017 2017/
2016
2016 2017 2017/
2016
2016 2017 2017/
2016
2016 2017 2017/
2016
2016 2017 2017/
2016
Number of accommodation units 7,927 8,982 13.3% 1,037 1,269 22.4% 1,422 1,980 39.2% 3,112 3,493 12.2% 2,356 2,240 -4.9%
Full occupancy days 158 162 2.5% 194 174 -10.5% 159 158 -0.7% 159 163 2.3% 139 156 12.2%
Annual occupancy rate (%) 43% 44% 2.7% 53% 48% -10.2% 43% 43% -0.4% 44% 45% 2.6% 38% 43% 12.5%
Accommodation units sold 1,250,791 1,452,014 16.1% 201,003 220,226 9.6% 226,086 312,618 38.3% 495,689 569,159 14.8% 328,013 350,011 6.7%
Overnights 2,668,550 3,115,692 16.8% 386,163 463,667 20.1% 500,925 729,117 45.6% 1,056,601 1,193,419 12.9% 724,861 729,489 0.6%
ADR15 735 764 3.9% 1,118 1,257 12.4% 984 1,009 2.5% 682 672 -1.4% 410 385 -6.1%
Board revenues (in HRK) 919,726,790 1,109,581,848 20.6% 224,678,769 276,758,965 23.2% 222,521,004 315,357,057 41.7% 338,024,283 382,724,084 13.2% 134,502,733 134,741,742 0.2%
RevPAR16 (in HRK) 116,025 123,534 6.5% 216,662 218,092 0.7% 156,485 159,271 1.8% 108,620 109,569 0.9% 57,089 60,153 5.4%
Adjusted EBITDA25 (in HRK) 560,211,649 643,485,966 14.9% 144,730,691 170,535,626 17.8% 138,900,914 212,065,021 52.7% 195,987,797 195,305,919 -0.3% 80,592,247 65,579,399 -18.6%

Board revenues of hotels and resorts rose by 20.6% (+HRK 189.9 million) to HRK 1,109.6 million. Their growth was driven by the strong demand for the new Premium and Upscale properties, the Imperial hotel group acquisition, demand-driven optimization of the marketing mix and prices and the successful realization of group stays (leisure and events). Please note that the growth was partly due to the performance of the hotels and resorts on Rab Island. If excluded, the total board revenues of hotels and resorts grew by 10%.

Premium hotels and resorts

Premium hotels and resorts reported HRK 276.8 million in board revenues that were up by 23.2% (+HRK 52.1 million) driven by ADR (HRK 1,257, +12.4%) and 220,226 accommodation units sold (+9.6%). The properties that influenced most of the growth were the newly-opened Valamar Girandella Resort 4*&5* that achieved an 80% growth in board revenues with fewer operating days, and Valamar Isabella Island Resort 4*&5* that reported strong growth in direct sales and 15% ADR growth. Last year's

24 According to the classification under the USALI international standard for reporting According to the classification under the USALI international standard for reporting in hotel industry (Uniform System of Accounts for the Lodging Industry). Business operations of Imperial's properties on the Island of Rab Daimler AG – Mercedes-Benz M.I.C.E. event did not take place, but this was compensated by allotments and growth in all other sales channels, ADR optimization and M.I.C.E. events in the shoulder season at Valamar Dubrovnik President 5*and Valamar Lacroma 4*.

Upscale hotels and resorts

Upscale hotels and resorts reported HRK 315.4 million in board revenues that were up by 41.7% (+HRK 92.8 million) driven by ADR (HRK 1,009, +2.5%) and 312,618 accommodation units sold (+38.3%). The properties that influenced most of the growth were i) the new Bellevue Family Life Resort 4* (with fewer operating days, this Upscale property achieved a near 65% growth in board revenues) and ii) this year's consolidation of the hotels and resorts on Rab Island with their 10% contribution to board revenues. The strong growth reported by Valamar Zagreb 4* was driven by ADR increase in peak season and larger business volumes in the shoulder season, especially through allotments and groups. Valamar Hotel & Casa Sanfior 4* reported strong growth mainly due to a very good group placement in the shoulder season and excellent direct sales results. The Tamaris Resort reported board revenue growth mainly driven by two events, "X-Jam Croatia" and "Lighthouse Festival Croatia". Valamar Argosy 4* reported board revenue growth driven by the allotment and group sales channels.

Midscale hotels and resorts

Midscale hotels and resorts reported HRK 382.7 million in board revenues that were up by 13.2% (+HRK 44.7 million) driven by ADR (HRK 672, -1.4%) and 569,159 accommodation units sold (+14.8%). In 2017 the Midscale segment was negatively affected by Bellevue Family Life Resort 4* going from Midscale to Upscale. However, this was offset by the positive effect of this year's consolidation of Imperial Midscale hotels and resorts (18% contribution to board revenues). All Midscale hotels and resorts reported growth, with most of the comparable growth generated by the hotels: i) Valamar Diamant 4*, Valamar Crystal 4* and Valamar Rubin 3* (successful replacement of OTA sales with direct sales), ii) Miramar 3* and Allegro 3* (increase in allotments and direct sales in peak season and groups in the post season period), iii) Corinthia 3* (more operating days,

are not included in 2016. Puntižela - Pula business is included in destination Poreč. A detailed comparison of the new portfolio segmentation can be found on page 17. 25 When calculating adjusted EBITDA, internal allocation of revenues and expenses as well as inter-segment revenues and expenses are excluded from the calculation. Adjusted EBITDA of other segments amounts to HRK -270.0 million in 2017, i.e. HRK -229.6 million in 2016. Other segments include business of central operations, laundry, sport, central kitchen, strategic rentals, etc.

14

successful group placement in the preseason period and excellent individual sales in peak season) and iv) Valamar Club Dubrovnik 3* (sales channel optimization with focus on the allotment and group channels).

Economy hotels and resorts

Economy hotels and resorts reported HRK 134.7 million in board revenues that were up by 0.2% (+HRK 0.2 million), driven by ADR (HRK 385, -6.1%) and 729.489 accommodation units sold (+0.6%). The Economy segment was negatively affected by the newly- renovated Valamar Girandella Resort 4*&5* going from Economy to Premium. However, this was offset by the positive effect of this year's consolidation of destination Rab (carrying 9% of the growth) and other comparable segment growth. Most of it was generated by i) Lanterna Apartments 2* (increased demand, "X-Jam Croatia" and "Lighthouse Festival Croatia"), ii) Tirena 3* (excellent allotment and group channel results).

CAMPING RESORTS Total Premium Upscale Midscale Economy
2016 2017 2017/
2016
2016 2017 2017/
2016
2016 2017 2017/
2016
2016 2017 2017/
2016
2016 2017 2017/
2016
Number of accommodation units 10,145 11,870 17.0% 511 3,466 578.3% 4,437 1,434 -67.7% 3,387 5,150 52.1% 1,810 1,820 0.5%
Full occupancy days 101 100 -1.2% 132 112 -15.3% 106 117 11.0% 98 93 -5.5% 87 83 -3.7%
Annual occupancy rate (%) 28% 27% -0.9% 36% 31% -15.1% 29% 32% 11.3% 27% 25% -5.3% 24% 23% -3.5%
Accommodation units sold 1,027,020 1,187,741 15.6% 67,694 388,757 474.3% 469,121 168,264 -64.1% 333,531 479,060 43.6% 156,674 151,660 -3.2%
Overnights 2,475,778 3,057,450 23.5% 197,491 1,135,715 475.1% 1,198,905 398,631 -66.8% 721,187 1,153,982 60.0% 358,195 369,122 3.1%
ADR15 248 285 14.7% 361 343 -5.0% 280 316 13.0% 209 252 20.4% 189 206 8.9%
Board revenues (in HRK) 254,989,779 338,284,959 32.7% 24,448,224 133,352,887 445.5% 131,206,913 53,156,811 -59.5% 69,686,153 120,533,212 73.0% 29,648,489 31,242,049 5.4%
RevPAR16 (in HRK) 25,134 28,499 13.4% 47,844 38,475 -19.6% 29,571 37,069 25.4% 20,575 23,405 13.8% 16,380 17,166 4.8%
Adjusted EBITDA25 (in HRK) 188,350,077 249,094,437 32.3% 17,245,497 101,669,058 489.5% 102,671,633 41,528,065 -59.6% 46,834,312 86,505,421 84.7% 21,598,635 19,391,893 -10.2%

Camping resorts reported high board revenues totaling HRK 338.3 million. Campsites reported strong overall performance due to increased demand for this year's investments in campsites, especially mobile homes. ADR optimization for mobile homes, more overnights and this year's consolidation of Imperial camping resorts resulted in a strong 32.7% growth in board revenues (+HRK 83.3 million). This year's consolidation of Rab camping resorts affected board revenues by 15%.

Premium camping resorts

Premium camping resorts reported HRK 133.4 million in board revenues that were up by 445.5% (+HRK 108.9 million) driven by ADR (HRK 343, -5.0%) and 388,757 accommodation units sold (+474.3%). The Premium segment was positively affected by Camping Resort Lanterna 4* going from Upscale to Premium. Camping Resort Lanterna 4* reported an 18% growth in board revenues due to the great feedback received by marketing activities related to the placement of this year's investments in new products and amenities. The rest of the growth was mainly driven by the excellent performance of Camping Resort Krk 5*.

Upscale camping resorts

Upscale camping resorts reported HRK 53.2 million in board revenues that were down by 59.5% as a result of Camping Resort Lanterna 4* going from Upscale to Premium. Excluding 2016 performance of Camping Resort Lanterna 4*, the Upscale segment reported a strong 25.3% growth in board revenues. Camping Marina 4* and Ježevac 4* reported high growth in board revenues thanks to the investments in new mobile homes. Better results at Camping Bunculuka 4* were driven by ADR increase.

Midscale camping resorts

All Midscale campsites reported growth in board revenues that totaled HRK 120.5 million. Board revenues rose by 73.0% (+HRK 50.8 million) driven by ADR (HRK 252, +20.4%) and 479,060 accommodation units sold (+43.6%). Most of the growth was driven by the consolidation of Rab campsites. The remaining 18% in the growth was generated by the following campsites: i) Stara Baška 3* and Zablaće 3* (investments in new mobile homes), and ii) Solaris 3*, Orsera 3* and Solitudo 3* (increased business volumes).

Economy camping resorts

Economy campsites reported HRK 31.2 million in board revenues that were up by 5.4% (+HRK 1.6 million) driven by ADR (HRK 206, +8.9%) and 151,660 accommodation units sold (-3.2%). These results were positively influenced by investments in Camping Brioni 2* and stronger performance reported by Istra 2* and Tunarica 2*.

Key operating indicators of Valamar Riviera Group per destinations24

DESTINATION Poreč Rabac Krk Island Rab Island Dubrovnik
2016 2017 2017/
2016
2016 2017 2017/
2016
2016 2017 2017/
2016
2016 2017 2017/
2016
2016 2017 2017/
2016
Number of accommodation units 10,632 10,584 -0.5% 2,065 1,971 -4.6% 3,414 3,577 4.8% / 2,759 / 1,961 1,961 0.0%
Full occupancy days 116 121 4.3% 136 156 14.7% 128 126 -0.9% / 96 / 166 170 2.2%
Annual occupancy rate (%) 32% 33% 4.6% 37% 43% 15.0% 35% 35% -0.6% / 26% / 45% 47% 2.4%
Accommodation units sold 1,234,693 1,282,228 3.8% 281,750 308,369 9.4% 435,348 451,987 3.8% / 264,114 / 326,020 333,057 2.2%
Overnights 2,881,737 3,075,877 6.7% 642,552 673,169 4.8% 1,010,914 1,063,850 5.2% / 716,510 / 609,125 643,736 5.7%
ADR15 465 487 4.8% 538 635 18.1% 384 432 12.3% / 499 / 864 901 4.3%
Board revenues (in HRK) 574,077,286 624,793,941 8.8% 151,518,687 195,916,080 29.3% 167,341,883 195,074,956 16.6% / 131,842,656 / 281,778,713 300,239,175 6.6%
RevPAR16 (in HRK) 53,995 59,032 9.3% 73,375 99,399 35.5% 49,016 54,536 11.3% / 47,786 / 143,691 153,105 6.6%
Adjusted EBITDA25 (in HRK) 368,687,622 393,293,569 6.7% 85,462,089 95,161,189 11.3% 109,627,842 129,928,462 18.5% / 80,715,171 / 184,784,174 193,482,014 4.7%

Destination Poreč

Destination Poreč reported HRK 624.8 million in board revenues that were up by 8.8% (+HRK 50.7 million) driven by ADR (HRK 487, +4.8%) and 1,282,228 accommodation units sold (+3.8%). The properties that influenced most of the board revenues growth were Valamar Isabella Island Resort 4*&5*, Apartments Lanterna 2*, Camping Resort Lanterna 4*, Valamar Zagreb 4*, Valamar Diamant 4*, Valamar Crystal 4* and Valamar Rubin 3*.

Destination Rabac

Board revenues were HRK 195.9 million, driven by ADR (HRK 635, +18.1%) and 308,369 accommodation units sold (+9.4%). The 18.1% growth in board revenues (+HRK 44.4 million) was mainly due to a strong demand for Valamar Girandella Resort 4*&5* and Bellevue Family Life Resort 4* that were repositioned after a series of investments, as well as the following properties: Hotel & Casa Valamar Sanfior 4*, Allegro hotel 3*, Miramar hotel 3* and Camping Marina 4*.

Krk Island

Board revenues were HRK 195.1 million, driven by ADR (HRK 432, +12.3%) and 451,987 accommodation units sold (+3.8%). The campsites on Krk Island (especially Ježevac 4* and Zablaće 3*) and Corinthia hotel 3* were the main contributors to total growth.

Rab Island

This year's consolidation of hotels and resorts and camping resorts on Rab Island contributed with HRK 131.8 million. Destination Rab reported a 14% increase in board revenues over 2016 results.

Destination Dubrovnik

Destination Dubrovnik reported HRK 300.2 million in board revenues that were mainly driven by ADR going up by 4.3% to HRK 901. "Global Training Experience by Daimler AG – Mercedes-Benz" M.I.C.E. event was not held in 2017, destination Dubrovnik generated HRK 18.5 million more in board revenues.

BUSINESS RESULTS 1/1/2017 - 31/12/2017

17

Over the years Valamar Riviera has consolidated its portfolio in order to clearly differentiate, develop and reposition its hospitality products. A precise definition of market segments, innovative development of service concepts, brand management, increase in profitability and ROI optimization demanded a revision of the portfolio segments.

Last year's acquisition of Imperial added 5 new hotels and resorts and 2 camping resorts to Valamar Riviera's portfolio. The additional 2,759 keys contributed to the growth of the Group's business volume and profitability in 2017. The Group's total accommodation capacity in 2017 was 20,852 keys.

Hotels and Resorts Overview26 Categorization Segment Destination
2016 2017 2016 2017
Valamar Dubrovnik President Hotel * * Premium Premium Dubrovnik
Valamar Isabella Island Resort * / ** * / ** Premium Premium Poreč
Valamar Lacroma Hotel ****+ ****+ Premium Premium Dubrovnik
Valamar Club Tamaris **** **** Upscale Upscale Poreč
Valamar Riviera Hotel & Residence **** **** Upscale Upscale Poreč
Valamar Zagreb Hotel **** **** Upscale Upscale Poreč
Hotel & Casa Valamar Sanifor **** **** Upscale Upscale Rabac
Valamar Argosy Hotel **** **** Upscale Upscale Dubrovnik
Hotel Padova **** **** Upscale Upscale Rab Island
Valamar Diamant Hotel & Residence **** **** Midscale Midscale Poreč
Valamar Crystal Hotel **** **** Midscale Midscale Poreč
Valamar Pinia Hotel & Residence *** *** Midscale Midscale Poreč
Valamar Rubin Hotel *** *** Midscale Midscale Poreč
Bellevue Family Life Resort **** **** Midscale Upscale Rabac
Allegro Hotel *** *** Midscale Midscale Rabac
Miramar Hotel *** *** Midscale Midscale Rabac
Hotel Corinthia *** *** Midscale Midscale Krk Island
Zvonimir Hotel, Atrium & Villa Adria * / ** * / ** Midscale Midscale Krk Island
Valamar Koralj Romantic Hotel *** *** Midscale Midscale Krk Island
Valamar Club Dubrovnik *** *** Midscale Midscale Dubrovnik
Grand Hotel Imperial **** **** Midscale Midscale Rab Island
Hotel & Ville Carolina **** **** Midscale Midscale Rab Island
Tourist Village San Marino *** *** Midscale Midscale Rab Island
Naturist Resort Solaris *** *** Economy Economy Poreč
Pical Hotel *** ** Economy Economy Poreč
Tirena Hotel *** *** Economy Economy Dubrovnik
Valamar Girandella Resort ** */** Economy Premium Rabac
Lanterna Apartments ** ** Economy Economy Poreč
Hotel Eva & Apartments Suha Punta ** ** Economy Economy Rab Island
Marina Hotel & Mediteran Residence ** ** Economy Economy Rabac
Camping Resorts Overview26 Categorization Segment Destination
2016 2017 2016 2017
Camping Krk * * Premium Premium Krk Island
Camping Ježevac **** **** Upscale Upscale Krk Island
Camping Lanterna **** **** Upscale Premium Poreč
Camping Marina **** **** Upscale Upscale Rabac
Naturist Camping Bunculuka **** **** Upscale Upscale Krk Island
Camping Orsera *** *** Midscale Midscale Poreč
Naturist Resort Solaris *** *** Midscale Midscale Poreč
Camping Zablaće *** *** Midscale Midscale Krk Island
Camping Škrila *** *** Midscale Midscale Krk Island
Camping Solitudo *** *** Midscale Midscale Dubrovnik
Camping & Residence San Marino *** *** Midscale Midscale Rab Island
Camping Padova 3 *** *** Midscale Midscale Rab Island
Naturist Camping Istra ** ** Economy Economy Poreč
Camping Brioni ** ** Economy Economy Pula - Puntižela
Camping Tunarica ** ** Economy Economy Rabac

Results of the Company

Please note that the data provided in the current year's financial statements are not fully comparable to prior year's data because of the said mergers. Current period items and prior period items until the time of the merger i.e. until 31 March 2017 did not include Puntižela d.o.o. Similarly, prior period items until the time of the merger i.e. i) until 31 March 2016 did not include the merged Hoteli Baška d.d. and ii) until 30 June 2016 did not include the merged Bastion upravljanje d.o.o. All significant changes in the Company's financial statements should also be viewed in the context of the said transactions in the previous period.

Total revenues in 2017 rose by HRK 136.9 million (+9%) to HRK 1,696.0 million. Sales revenues were HRK 1,616.7 million and represented 95% of total revenues (92% in 2016). They rose by HRK 176.2 million (+12%) over 2016 results. Sales revenues between parties within the Group were HRK 13.9 million (HRK 0.6 million in 2016) and mainly represented Imperial's management fee. Sales revenues outside the Group were HRK 1,602.8 million (HRK 1,439.8 million in 2016). Domestic sales revenues were HRK 137.9 million, up by 17% over 2016 results and represented 8% of total revenues (8% in 2016). International sales revenues were HRK 1,478.7 million, up by 12% over 2016 results and represented 87% of total revenues (85% in 2016). Other operating and financial income represented 5% of total revenues (8% in 2016). Other operating revenues fell by 35%, to HRK 19.7 million and represented 1% of total revenues (2% in 2016).

Material costs were HRK 511.8 million, representing 37% of operating expenses (38% in 2016) and rose by HRK 37.6 million due to higher raw material costs (direct food and beverage costs and costs of energy sources and water) driven by larger business volumes. Staff costs rose by HRK

78.4 million over 2016 results to HRK 443.8 million, representing 32% of operating expenses (30% in 2016). Growth was driven by i) Hoteli Baška and Puntižela mergers and staff carryover, ii) salary increase policy (June 2016: 2%, December 2016: 2%, June 2017: 1.5%, and 0.5% increment for years of service as of 1 January 2017), and iii) the hiring of construction site staff (to carry out the large investments) and resort staff (to ensure high service quality in the new Premium/Upscale properties).

Amortization cost rose by 17% given the previous large investments and the mergers of Hoteli Baška and Puntižela. Amortization was HRK 283.5 million (HRK 243.2 million in 2016) and represented 20% of operating expenses (20% in 2016). Other costs rose by 6% to HRK 133.8 million. Provisions and value adjustments were HRK 5.2 million. Other operating expenses were HRK 18.2 million and fell by HRK 3 million.

Financial income in 2017 was HRK 59.6 million and fell by HRK 28.6 million compared to 2016. Other financial income had the most significant decrease of HRK 35.0 million, resulting from the absence of last year's one-time income driven by share portfolio sale. Interest and other financial income jumped by HRK 11.7 million mainly driven by forex gains related to long-term loans due to HRK appreciation in 1H 2017. Interest

income fell by HRK 3.7 million to HRK 0.5 million as a result of reduced free cash flow and market yield in 2017 vs 2016.

Financial expenses were HRK 82.1 million, up by HRK 21.3 million over 2016 results and mainly driven by forex loss of HRK 13.9 million related to long-term loans due to HRK depreciation in 2H 2017. Due to land revaluation in a subsidiary (Magične stijene d.o.o.) the value of the Company's stake decreased by HRK 5.6 million as a one-time effect of the value adjustment. Financial expenses related to interest rose by HRK 4.8 million due to financial leverage used for 2017 investments.

Operating profit rose by HRK 2.5 million to HRK 240.2 million. Profit before tax was HRK 217.7 million (HRK 265.1 million in 2016). The Company's gross margin was 13% (18% in 2016). Net profit fell by HRK 104.7 million to HRK 232.0 million in 2017 (HRK 336.7 million in 2016), resulting from weaker financial results (-HRK 49.9 million) and this year's lower (-HRK 57.3 million) one-time recognition of deferred tax assets that will burden gross profit in the forthcoming years of utilization.

Total company assets as at 31 December 2017 were HRK 4,632 million and rose by 11.7% vs 31 December 2016.

2017 Investments Valamar Girandella Resort 4*&5*, Rabac

Investments worth HRK 877.7 million were capitalized in the existing portfolio of non-current tangible assets in 2017, of which HRK 174.2 million represented assets under construction.

The total value of 2016/2017 investments exceeded HRK 900 million27 and represented the largest series of portfolio investments so far. HRK 494 million were earmarked for improving products and services in Rabac (Family Life Bellevue Resort 4* and Valamar Girandella Resort 4*&5*). Besides hotels and resorts, a number of investments worth HRK 186 million was focused on campsites. The most significant were the investments in Camping Resort Lanterna and two campsites, Zablaće and Ježevac. Investment maintenance was HRK 68 million, while other individual investments totaled HRK 138 million. Imperial's investments totaled nearly HRK 21 million.

Two luxury resorts in Rabac, a brand new Family Life Bellevue Resort 4* (the first TUI Family Life hotel in Croatia) and a fully renovated Valamar Girandella Resort 4*&5* welcomed its guests in the 2017 season. The large investment project in Rabac included the total reconstruction of the two resorts totaling 764 keys, the construction of 17 restaurants and bars, and 13 pools with total water surface of more than 2,000 m 2 . The new features included a brand-new Maro club and various children playgrounds, two entertainment centers, a wellness facility, indoor and outdoor fitness facilities, a bike center and other sports amenities. Almost 600 staff members attended to over 2,700 guests daily. The investments included various improvements of beaches and promenades as well as a total landscape redesign. Croatian contractors and suppliers were hired to carry out most of the construction work and about 50% of them were local, Istrian entrepreneurs. These investments repositioned Rabac as a leading high-end

Family Life Bellevue Resort 4*, Rabac leisure destination. The 3-year strategic partnerships with the leading European tour operators – TUI and DER Touristik Köln (seasons: 2017, 2018 and 2019) helped secure occupancy. Consequently, more than 100,000 guests are expected to visit Rabac in the next three years, thus improving the promotion of Istrian tourism. Moreover, new opportunities for season prolongation will emerge as the number of guests from air travel markets grows.

Besides key investments in Rabac, Valamar Riviera continued investing in the concept of Premium camping. HRK 98 million were focused on upgrades in Camping Resort Lanterna 4*, one of the best European campsites. The reception area with the shops and catering establishments underwent renovation, and the campsite now features new high quality mobile homes and amenities for children. HRK 66 million were invested in upgrading accommodation and services on Krk Island and new high- quality mobile homes for two campsites, Ježevac 4* and Zablaće 3*. In order to improve the quality of other campsites on Krk Island, in Istria and Dubrovnik, a range of investments was focused on improving accommodation, beach amenities, restaurants and bars.

Imperial completed its investments totaling nearly HRK 21 million in 2017. Most of it was invested in a new premium zone and luxury mobile homes at San Marino campsite 3*. Significant investments were made in improving the business communication network and preparing the necessary project documentation for the forthcoming investments.

Moreover, several other projects to create new and upgrade existing features were completed and they will considerably improve the quality and experience at all destinations. They included beaches, Wi-Fi coverage expansion, business digitalization, technological processes and energy efficiency.

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BUSINESS RESULTS 1/1/2017 - 31/12/2017

2018 Investments

In line with the previously announced investments of up to HRK 2 billion until 2020, Valamar Riviera Group is carying out new large investments worth roughly HRK 705 million28 in 2018. The planned investments represent the continuation of Valamar Riviera's strategy to reposition the portfolio towards products and services with high added value. With the planned completion of Valamar Girandella Resort 4*&5*, Rabac will be repositioned as leading leisure destination for high-end guests. HRK 116 million have been earmarked for the opening of first Kinderhotel in Valamar's portfolio-Valamar Girandella Maro Resort Hotel 5* in Rabac. Kinderhotels Europa is a marketing association that brings together high-quality premium family hotels under the Austrian "Kinderhotels" brand. Valamar Girandella Maro Resort Hotel 5* is a premium hotel offering 149 keys, with services and design tailored according to the needs of families with children of various age groups. The concept of the lobby, restaurant and pool complex as well as the interior design of hotel accommodation is centered around the idea of family holidays.

Nearly one third of total investments will focus on Istra Camping Resort in Funtana, Camping Resort Lanterna in Poreč and two campsites on Krk Island, Camping Ježevac and Camping Zablaće. The first phase of repositioning Istra Camping Resort as premium accommodation is planned for 2018. The investments include improvements in the communal infrastructure, one part of the camping pitches and the construction of a new sanitary block. The investments planned in Camping Resort Lanterna 4* will focus on improving accommodation and quality. In the forthcoming season, the resort will feature a new premium mobile home zone designed according to the "Maro" brand standards and two new swimming pools. "Maro" is a Valamar brand that is family-oriented and includes child-friendly services

and facilities. Moreover, the glamping zone will be completed, the sports zone will be renovated and will feature new facilities and services. The investments in Camping Ježevac 4* will also include the expansion of the mobile home zone and two new swimming pools. The investments in Camping Zablaće are focused on improving services and upgrading the campsite from 3* to 4* with new high–quality mobile homes, a new sanitary block and other amenities. Investments in Dubrovnik focus on repositioning Valamar Argosy 4* hotel: HRK 60 million have been earmarked to improve the quality of accommodation and develop new facilities and services for an "adult friendly" premium product. Investment maintenance totals HRK 64 million. Plans include numerous other investments in improving the competitiveness and quality of guest amenities and products. Valamar is especially focused on further investments in increasing the capacity and quality of accommodation for seasonal employees, with nearly HRK 45 million earmarked for this purpose. Imperial's investments planned for 2018 are HRK 72 million. New investments include the renovation and repositioning of Grand hotel Imperial 4* as "adults only" accommodation. Investments planned in the camping segment include the completion of the Premium Mobile Home zone in San Marino 3* and the expansion of the Premium Mobile Home zone in Padova III 3*.

As stated in our strategic goals, by continuously raising the quality of the portfolio properties and services, we create added value both for our guests and all company stakeholders. However, numerous factors reduce the competitiveness of Croatian tourism and hinder further investment potential: VAT (one of the highest rates in the Mediterranean), the rate of total contributions to salaries, the still unresolved issue of tourism land, skilled labor shortages, the likely introduction of property tax and tourist tax increase. While global trends report low interest rates and market demand focuses on safe tourist destinations, Croatia has the opportunity to reposition its tourism by incentivizing investments in products and services with high added value that stimulate employment and economic growth. Unfortunately, tourism is still not sufficiently recognized as an opportunity for the Croatian economy. Apart from the current financing programs offered by HBOR (Croatian Bank for Reconstruction and Development), tax incentives prescribed by the Act on Investment Promotion and Improvement, and the decrease in the income tax rate (from 20% to 18%, January 2017) there are no other measures that could significantly increase the growth pace and contribute to level Croatia's position with other destinations in the Mediterranean.

The Risks of the Camping Ježevac 4*, Krk Island Company and the Group

Tourism is a global industry, closely connected with the real and financial economy, geopolitical position and environmental sustainability. The integrity of this industry will determine its future growth. Given the importance of tourism and its overall impact on society, the Company and the Group monitor and assess risks at micro and macro levels. Moreover, when defining the strategy, particular attention is given to the short and medium–term risk impact in order to maintain business sustainability over time.

When monitoring and assessing risks the Company and Group use a proactive approach thus assessing the potential impact of each individual risk. The Company and Group consider risk management to be a key factor of differentiation among competitors. Risk management aims at creating sustainable value, thus offering reliability and security to numerous stakeholders.

There are five key steps in a risk management process:

  • 1) Identifying potential risks;
  • 2) Assessing identified risks;
  • 3) Determining actions and responsibilities for efficient risk management;
  • 4) Monitoring and overseeing preventive actions;
  • 5) Exchanging information on risk management results conducted by the Management board.

The different types of risks facing Valamar Riviera can be classified into the following groups:

• Financial risks

  • related to financial variables, can have a negative impact on meeting liabilities for the company and the Group, liquidity, debt management etc.;

  • Business risks

  • related to the way company business is conducted in terms of supply and demand, competition, adapting to market trends, investments, growth etc.;
  • Operational risks
  • can arise form errors in business operations, human error, IT system etc.;
  • Global risks
  • can arise from natural disasters, pandemics, food shortage, social unrest, wars and other force majeure events beyond Valamar Riviera's control;
  • Compliance risks
  • can arise from failure to comply with state laws and local regulations; risks related to changes in tax and other regulations.

Financial risks

In their day-to-day business activities, the Company and Group face a number of financial threats, especially:

  • 1) Foreign exchange risk;
  • 2) Interest rate risk;
  • 3) Credit risk;
  • 4) Price risk;
  • 5) Liquidity risk;
  • 6) Share-related risks.

The Company and Group have a proactive approach in mitigating interest rate and foreign exchange risks, by employing available market instruments. Internal risk management goals and policies aim at protecting foreign currency inflows during seasonal activity and partial interest hedging of the principal loan amount.

1) Foreign exchange risk

The Company and Group conduct their business operations across national borders and are exposed to foreign exchange risks. They mainly result from changes in the euro/ kuna exchange rate. Foreign exchange risk arises from future commercial transactions and recognized assets and liabilities. Most of the sales revenue generated abroad is denominated in euros, and so is the major part of longterm debt. Hence, for the most part the Company and Group are naturally hedged from exchange rate risks. Since some liabilities are denominated in kunas, the Company and Group actively manage risks by using derivative instruments available on the financial market. The instruments are used according to operating assessments and expected market trends. In this way the assets, liabilities and cash flow are protected from the risk impact.

2) Interest rate risk

Variable rate loans expose the Company and Group to cash flow interest rate risk. Periodically, the Company and Group resort to derivative instruments in order to hedge cash flow and interest rate by applying interest rate swaps. The economic effect of such swaps is the conversion of variable interest rate loans into fixed interest rate loans for a precommitted hedged part of the loan principal. The Company and Group have interest-bearing assets (cash assets and deposits) so their revenue and cash flow depend on changes in market interest rates. This becomes evident especially during the season when the Company and Group have significant cash surpluses at their disposal.

3) Credit risk

Credit risk arises from cash assets, time deposits and receivables. According to the Company and Group sales policy, business transactions are conducted only with customers with suitable credit history, i.e. by agreeing advances, bank securities and (for individual customers) payments made through major credit card companies. The Company and Group continuously strive to monitor their exposure towards other parties and their credit rating as well as obtain security instruments (bills of exchange, promissory notes) in order to reduce bad debt risks related to services provided.

4) Price risk

The Company and Group hold equity securities and are exposed to equity price risk due to security price volatility. Valamar Riviera is not an active participant in the market trade in terms of trading in equity and debt securities. However, with the HRK 291 million invested in buying Imperial shares, the company is exposed to the said risk to a certain extent.

5) Liquidity risk

The Company and Group have a sound liquidity risk management. Sufficient funds for meeting liabilities are available at any given moment through adequate amounts from contracted credit lines and by ensuring credit line availability in the future. Liquidity risk is managed by generating strong positive net operating cash flows, while capital investments are financed by credit lines. All the credit lines in 2017 have already been arranged with financial institutions. The repayment of the major credit lines coincides with periods of strong cash inflows from operations. The Company and Group monitor the level of available funds through daily cash and debt reports. Long-term cash flow forecasts as well as annual (monthly) forecasts are based on the set budget. After meeting the needs of working capital management the surplus is deposited in the treasury. From there the funds are invested in interest-bearing current accounts, time deposits, money market deposit accounts and marketable securities. Only instruments with suitable maturities and sufficient liquidity are selected, according to the forecast needs for liquid funds.

6) Share-related risks

The market value of shares is the riskiest asset class due to its volatility resulting from the volatile nature of the whole capital market, macroeconomic trends on markets where the Company and Group operate and discrepancies between the expectations of financial analysts and the actual results.

in the dividend policy, various activities in the segment of consolidations, mergers, acquisitions and forming of strategic partnership, the instability of the business model of the Company and Group as well as the fluctuations in the financial results for the Company and Group. In case any negative implications happen to be associated with these factors there is a considerable risk of market value drop that will in turn prevent investors from selling their shares at a fair market price.

Business risk

The Company and Group are constantly exposed to risks threatening its competitiveness and future stability. Since the Company and Group own real estate, this business model requires a large amount of capital in order to maintain high product and service standards. Various large capital investments in the upgrade of products and services can surpass budget expectations, delay the end of construction works, as well as the town-planning regulations and fiscal policy may be changed. These risks can increase costs for the Company and Group, and have a negative impact on the cash flow and revenues. In the previous period, the company and Group's business decisions improved their results and operating efficiency in the demanding Mediterranean market. These positive trends are expected to continue in the future through a prudent long-term strategic management.

Over 95% of Valamar Riviera's guests come from other countries and they are very careful when choosing their vacation destination in the competitive Mediterranean environment. Stable domicile countries macroeconomic indicators are important decision-making factors especially those relating to exchange rates and the price of goods and services because they directly affect the guests' purchasing power. However small, the share of

Grand Hotel Imperial 4*, Rab Island Furthermore, other contributing factors are also changes domestic guests is also important; it is a segment directly influenced by various other macroeconomic indicators: employment/ unemployment rate, GNP rise/fall, industrial production and others. They all have a direct impact not only on the purchasing power of Croatian residents but they also determine whether they will choose to spend their vacation on the Adriatic.

When considering risks related to the tourism and hospitality industry, in previous years, the Croatian economy has been afflicted by the consequences of a global financial crisis and economic standstill. In this period, the tourism and hospitality industry has been among the rare growing industries in Croatia. Moreover, the marked seasonality of this industry leads to insufficient use of the Company and Group's resources. After joining the European Union, the Croatian market became part of a large European market, while safety risks decreased after joining the NATO. The Croatian Tourism Development strategy until 2020 (a government document published in the Official Gazette no. 55/13) defines the kind of tourism Croatia wants and needs to develop using the country's comparative advantages and expertise in order to improve the competitiveness of Croatian tourism. Maintaining the current tourism growth rates in the following years is of vital importance. It can be achieved by strategically developing tourism products and investing in the creation of additional values, which will help distinguish Croatian tourism from its competitors by emphasizing its uniqueness, appeal and quality.

Good management of human resources is vital for the future growth of the Company and Group. Risks related to shortages of specific skills, expertise and jobs are connected with the opening and expansion of the labor market. Valamar Riviera is one of the largest and most desirable employers in tourism. The active approach towards HR management develops key talents and

supports investments in training opportunities (HRK 2.5 million invested in training and professional development during 2017). We determine the needs for new skills and expertise by following emerging global trends in tourism. In this way, we are able to respond to challenges effectively. Through a continual dialogue with our social partners, we have ensured a high level of workers' rights in terms of competitive salaries, reward systems, career development, employees' wellbeing and cooperation with training institutions from all parts of Croatia.

Operational risks

Operational risks are risks connected with direct or indirect losses that arise form inadequate or wrong internal or external processes within the Company and the Group. They include the creation and analysis of finanical reporting data, and also inadequate information sharing. When implementing the system of operational risk management, the Company and Group focused on its continuity and complexity due to the size of the organization. The benefits of the system include i) defining and identifying the Company and Group risk profile in relation to the operating risk ii) identifying and managing the known risk occurrences in order to decrease the Company and Group costs and iii) data analysis which

24

Camping Krk 5*, Krk Island indicates the business trends for the Company and Group and trends in the domestic economy.

The Company and Group are aware of the reliability of IT business solutions and safety in the cyber world. Hence, they continually upgrade, develop and implement new technologies in everyday business operations. A special focus is given to providing sufficient resources for the development and implementation of new technologies related to ICT, data protection, and upgrade of the current business systems and implementation of new ones.

Global risks

Despite improved security and political conditions, which have encouraged to a certain extent investments into tourism and hospitality, there are challenges that the Croatian tourism has to face, such as:

  • • Periods of global financial crisis which reduce the purchasing power of the travelling-prone population;
  • • Security issues related to globally escalating terrorism threats;
  • • Security and political instability in the immediate environment of the neighboring countries.

Environmental risks can also have an adverse effect on the Company and Group's business results, primarily in terms of customer satisfaction with the whole experience while staying at one of Valamar's properties and this can affect the number of arrivals. The possible risks can include: sea pollution (caused by oil or chemical spillage), but also long-term water quality reduction and coast pollution due to inadequate waste disposal and waste water treatment as well as extensive use of agricultural fertilizers. Other environmental conditions typical for climate changes such as long drought periods or long rainy periods can directly influence the guests' length

of stay in the hotels and campsites as well as increasing the operating costs. A number of other natural disasters and calamities (earthquakes, fires, floods and rainstorms), air pollution caused by toxic gas emissions from industrial plants and vehicles, as well excessive urbanization and the introduction of invasive species should also be taken into consideration.

Compliance risks

Changes in tax laws and other regulations pose a very serious threat and represent a demanding segment in risk management because in this particular situation the possibilities for the Company and Group are limited. In previous years, there has been a number of important changes in tax and non-tax charging regulations, which have adversely affected the Company and Group profitability:

• In March 2012 the standard VAT rate grew from 23% to 25%, in January 2013 a new 10% VAT rate was introduced only to be replaced within a year by a 13% VAT rate applicable to the tourism and hospitality industry (January 2014), while in January 2017 a new 25% VAT rate was introduced for F&B (a la carte) services;

Camping San Marino 3*, Rab Island

  • In May 2012 the health insurance employer contribution rate fell from 15% to 13% and then in April 2014 it grew back to 15%;
  • Frequent increases in various fees and charges regarding water distribution and the like;
  • Tourist tax increase in 2018 ranging between HRK 2.5 and HRK 8.0 per person per overnight, depending on the class of the destination and utilization period (August 2017).

Such frequent changes in laws regulating taxes and parafiscal charges often take place only after the business policy and budget for the next financial year have been approved and commercial terms and conditions with partners agreed. All this jeopardizes the Company and Group financial position and future investment plans as well as credibility towards shareholders. The Company and Group are also threatened by changes in regulations governing concession fees for maritime domain and tourism land use, the latter still presenting unresolved legal issues. Given the nature of the Company and Group's business, the right to use parts of the maritime domain as well as land for tourism purposes is of vital importance for future growth, especially for campsiterelated operations.

Corporate Governance

The Company and the Group continuously strive to develop and operate according to good practices of corporate governance. The business strategy, corporate policy, key corporate regulations and business practice are all geared towards creating a transparent and efficient business operation while forging solid bonds with the local community. In order to foster further growth and set high corporate governance standards, the Company adopted its own Corporate Governance Code in 2008 and the Management Board fully complies with its provisions. After the company was listed on the Official market of the Zagreb Stock Exchange, the Company has also complied with the Zagreb Stock Exchange Governance Code. The Company respects and implements the prescribed corporate governance measures (as reported in detail in the prescribed annual questionnaire and published as prescribed on the Zagreb Stock Exchange and Valamar Riviera websites).

The major direct shareholders according to the Central Depository and Clearing Company data are listed in the table in the "Valamar Riviera Share" section.

The Company defined the process of preparing and disclosing financial reports in a detailed internal document. With this, the financial reporting procedure is set within a system of internal review and risk management. Moreover, in order to monitor and mitigate the financial reporting risk, the Company uses the measures described in "The Risks of the Company and the Group".

The Companies Act and the Company Statute define the General Assembly's authority and prescribe how it meets and works. The meeting invitation, proposals and the adopted resolutions are made public according to the provisions of the Companies Act, Capital Market Act and the Zagreb Stock Exchange Rules. There is a time limit related to the voting right at the General Assembly: according to the provisions of the Croatian Companies Act, shareholders are required to register their participation within the prescribed time limit in order to attend the General Assembly. Under no circumstances can the financial right arising from securities be separated from holding the securities. There are no securities with special control rights nor are there any limitations to voting rights at the Company (one share, one vote). The Company Statute complies with the Croatian Companies Act and defines the procedure of appointing and recalling members of the Management Board and Supervisory Board. There are no limitations based on gender, age, education, profession or similar. According to the General Assembly's decision dated 17 November 2014, the Company can acquire its own shares. The Companies Act determines any amendments to the Company Statute, without any additional limitations. The Management Board members' authority fully complies with the regulations prescribed by the Companies Act.

The Company's Corporate Bodies Are:

Management Board: Mr. Željko Kukurin, President of the Management Board, and Mr. Marko Čižmek, Member of the Management Board.

Pursuant to the provisionss of the Capital Market Act and Regulation (EU) no. 596/2014, the Company has determined its senior management, consisting of the key company management: four vice presidents (David Poropat, Davor Brenko, Alen Benković i Ivana Budin Arhanić) and 21 sector directors (Andrea Štifanić, Miro Dinčić, Ljubica Grbac, Sebastian Palma, Tomislav Dumančić, Željko Jurcan, Sandi Sinožić, Mile Pavlica, Ivan Karlić, Bruno Radoš, Dario Kinkela, Mauro Teković, Stjepko Devčić Ivičić, Martina Šolić, Ivica Vrkić, Mirella Premeru, Marin Gulan, Tomislav Poljuha, Flavio Gregorović, Dragan Vlahović and Vlastimir Ivančić).

Supervisory Board: As the term of office for the Supervisory Board members expired on 6 July 2017 (Mr. Gustav Wurmböck - Chairman, Mr. Franz Lanschützer - Deputy Chairman, Mr. Mladen Markoč - Deputy Chairman, and members: Mr. Georg Eltz, Ms. Mariza Jugovac, Mr. Hans Dominik Turnovszky and Mr. Vicko Ferić), the following were appointed for a new 4 – year term of office: Mr. Gustav Wurmböck - Chairman, Mr. Franz Lanschützer - Deputy Chairman, Mr. Mladen Markoč - Deputy Chairman, and members: Mr. Georg Eltz, Mr. Hans Dominik Turnovszky, Mr. Vicko Ferić, and Mr. Valter Knapić - employee representative appointed by the Works Council. The term of office for the newly appointed Supervisory Board members started on 7 July 2017.

In order to perform efficiently its function and duties as prescribed by the Audit Act, the Supervisory Board has formed the following bodies:

Presidium of the Supervisory Board: Mr. Gustav Wurmböck, Chairman, Mr. Franz Lanschützer and Mr. Mladen Markoč, Presidium Members.

Audit Committee: Mr. Georg Eltz, Chairman, and members: Mr. Franz Lanschützer, Mr. Mladen Markoč, Mr. Vicko Ferić, and Mr. Dubravko Kušeta.

Investment Committee: Mr. Franz Lanschützer, Chairman and members: Mr. Georg Eltz, Mr. Vicko Ferić, Mr. Hans Dominik Turnovszky, and Mr. Gustav Wurmböck.

Compliant to effective regulations and Company bylaws, The Management and Supervisory Board primarily act through meetings and by correspondence in their decision-making. The Management Board held 26 meetings, the Supervisory Board held 14 meetings, while the Supervisory Board committees held 16 meetings.

Related-party transactions

Transactions between related parties within the Group are conducted under standard commercial terms and conditions and at current market prices.

In the reviewed period, revenues from related party transactions totaled HRK 13.9 million29 (2016: HRK 646 thousand) for the Company, and HRK 21 thousand (2016: HRK 17 thousand) for the Group. Costs were HRK 31.2 million (2016: HRK 30.1 million) for the Company, and HRK 1.5 million (2016: HRK 1.3 million) for the Group.

As at 31 December 2017, related-party receivables and payables were as follows: receivables totaled HRK 3.4 million for the Company (year-end 2016: HRK 138.5 million), and none for the Group (year-end 2016: none). Payables totaled HRK 604 thousand (year-end 2016: HRK 279 thousand) for the Company, and HRK 425 thousand for the Group (yearend 2016: HRK 154 thousand).

In accordance with the provision of Article 497 of the Companies Act, on 20 February 2018 the Management Board prepared a separate report on the Company's relatedparty transactions and in accordance with Paragraph 3 of Article 497, the Management Board declares that in line with circumstances known at the time when certain legal transactions or actions were undertaken, the Company received suitable consideration and was not harmed.

Branch Offices of the Company

The following branch offices were registered on 2 September 2011: Podružnica za turizam RABAC, with registered office in Rabac, Slobode 80, Podružnica za turizam ZLATNI OTOK, with registered office in Krk, Vršanska 8. The following branch office was registered on 4 October 2013: Podružnica za turizam DUBROVNIK BABIN KUK, with registered office in Dubrovnik, Dr. Ante Starčevića 45. The following branch office was registered on 1 October 2014: Podružnica za savjetovanje u vezi s poslovanjem i upravljanjem ZAGREB, with registered office in Zagreb, Miramarska 24. The following branch office was registered on 1 April 2017: Podružnica za turizam BRIONI, with registered office in Pula, Puntižela 155.

The branch offices of Rabac, Zlatni otok, Dubrovnik-Babin kuk and Brioni are the drivers of economic growth in their local communities. They operate at their destinations and support their development by promoting further investments and the development of tourism while participating in social and business activities.

The Company also established an office in the Town of Rab on Rab Island to increase the efficiency and streamline the management of operations as determined by the provisions of the concluded Management contract

29 The most part represents the fee regarding the management of Imperial's properties and services. The implementation of the Management contract started on 4 January 2017.

BUSINESS RESULTS 1/1/2017 - 31/12/2017

Valamar Riviera Share

The Company did not acquire its own shares in the period from 1 January 2017 to 31 December 2017. In the respective period the Company released 62,583 own shares, of which 24,182 shares were for dividend payout. As at 31 December 2017, the Company held a total of 1,794,451 own shares, representing 1.42% of the share capital.

In 2017, the highest recorded share price in regular trading on the regulated market was HRK 48.60, while the lowest was HRK 34.68. The Company's share price increased by 24.6%, exceeding both CROBEX and CROBEX 10 indices trends, which recorded a decrease of -7.5% and -7.0% respectively. Valamar Riviera is the most traded share on the Zagreb Stock Exchange in 2017 with a regular trading turnover of HRK 1.3 million per day30.

Apart from the Zagreb Stock Exchange indices, the share is also part of the Vienna Stock Exchange indices (CROX31 and SETX32), and SEE Link indices33 (SEELinX and SEELinX EWI). In 2H 2017 the Valamar Riviera share was listed in MSCI Frontier Markets Indexes, a global index measuring share performance in a particular market. Zagrebačka banka d.d. and Interkapital vrijednosni papiri d.o.o. are responsible for market making in ordinary Valamar Riviera shares listed on the Official Market of the Zagreb Stock Exchange. They provide support to Valamar Riviera's share turnover, which in the period under review was an average 23.6%34.

The Company is active in holding meetings, presentations and conference calls with domestic and foreign investors. This approach supports high-level transparency, creates additional liquidity, increases share value and the involvement of potential investors. More than 80 meetings were held in 2017, including those held at US financial centers, the London Stock Exchange, the Zagreb and Ljubljana Stock Exchange

30 Block transactions are excluded from the calculation.

  • 31 Croatian Traded Index (CROX) is a capitalization-weighted price index and is made up of 12 most liquid and highest capitalized shares of Zagreb Stock Exchange.
  • 32 South-East Europe Traded Index (SETX) is a capitalization-weighted price index

Performance of Valamar Riviera's share and CROBEX and CROBEX 10 indices

conference, Wood&Co brokerage firm conferences in Bucharest, Belgrade and Prague, Auerbach Grayson in New York and the Erste Group conference in Stegersbach. Valamar Riviera will continue with this active approach in 2018 to grow further value for all its stakeholders and promote Valamar Riviera's share as one of the leading shares on the Croatian capital market and among other tourism shares on the Mediterranean.

consisting of blue chip stocks traded on stock exchanges in the region of South-eastern Europe (shares listed in Bucharest, Ljubljana, Sofia, Belgrade

and Zagreb). 33 SEE Link is a regional platform for securities trading. It was founded by Bulgarian, Macedonian, and Zagreb Stock Exchange. SEE LinX and SEE LinX EWI are two The analytical coverage of Valamar Riviera is provided by:

  • 1) Alta invest d.d., Ljubljana;
  • 2) ERSTE bank d.d., Zagreb;
  • 3) FIMA vrijednosnice d.o.o., Varaždin;
  • 4) Interkapital vrijednosni papiri d.o.o., Zagreb;
  • 5) Raiffeisenbank Austria d.d., Zagreb;
  • 6) UniCredit Group Zagrebačka banka d.d., Zagreb.

"blue chip" regional indices composed of ten most liquid regional companies listed on three Stock Exchanges: five from Croatia, three from Bulgaria, and two from Macedonia.

34 Block transactions are excluded from the calculation. Data refers to the period 1/1 - 31/12/2017.

the 2016 Integrated Annual Report and Corporate Social Responsibility

The grand opening of Valamar's two resorts in Rabac on 8 June 2017 was a great introduction to the second Valamar Riviera Investors Day. Management Board President Željko Kukurin and Management Board Member Marko Čižmek presented an update on the business operations, development and strategy to create new value for Valamar Riviera. After the presentations, a tour of the new resorts, Valamar Girandella Resort 4*&5* and Bellevue Family Life Resort 4*, was organized for nearly 40 participants in this year's Investors Day.

On this occasion, the 2016 Integrated Annual Report and Corporate Social Responsibility was presented to the investors. This report was created in accordance with the Global Reporting Initiative G4 guidelines. The aim of this report is to give a long-term insight into the company business and strategy to all key stakeholders (shareholders, employees and guests) as well as partners, local communities and the general public. The report is particularly focused on corporate social responsibility, which represents the foundation of the company's sustainable business and further development. The report is available from the Zagreb Stock Exchange website and at: www.valamar-riviera.com.

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Additional Information

As one of the largest employers in Croatia (as at 31 December 2017, the Group employed 2,864 people of which 1,371 were permanent employees; the Company employed 2,575 people of which 1,166 were permanent employees), the Company and the Group systematically and continuously invest in the development of human resources. An integral strategic approach to human resources management and top practices applied include transparent hiring processes, clear objectives and employees' performance measurement, rewarding systems, opportunities for career advancement, investment in employees' development and encouraging two-way communication.

In the course of the fourth quarter of 2017 (including the period 1 January 2017 – 31 December 2017), the Company's Management Board managed and represented the company pursuant to regulations and the provisions of the Company Statute, and planned a business policy that was implemented with prudent care. The Company's Management Board will continue to undertake all the necessary measures in order to ensure sustainability and business growth. The quarterly separate and consolidated fnancial statements for the fourth quarter of 2017 (including the period 1 January 2017 to 31 December 2017) were adopted by the by the Management Board on 20 February 2018. The Management Board expresses its gratitude to all shareholders, business partners, and guests for their support and trust, and particularly to all employees for their contribution.

Management Board of the Company

Responsibility for the quarterly Financial Statemetns

In Poreč, 20 February 2018

In accordance with provisions of Law on Capital Market, Marko Čižmek, Management board member responsible for finance, treasury and IT business as well as relations with institutional investors and Ljubica Grbac director of Department of Finance and Accounting, procurator and person responsible for finance and accounting, together as persons responsible for the preparation of quarterly and annual report of company VALAMAR RIVIERA d.d. seated in Poreč, Stancija Kaligari 1, OIB 36201212847 (hereinafter: Company), hereby make the following

S T A T E M E N T

According to our best knowledge

  • the set of audited, consolidated and unconsolidated fnancial statements for 2017 includes the quarterly reports for the fourth quarter of 2017, prepared in accordance with applicable standards of fnancial reporting gives a true and fair view of the assets and liabilities, proft and loss, fnancial position and operations of the Company and the companies included in consolidation;
  • Report of the Company's Management board for the period from 1 January to 31 December 2017 including the period from 1 October to 31 December 2017 contains the true presentation of development, results and position of the Company and companies included in the consolidation, with description of signifcant risks and uncertainties which the Company and companies included in consolidation are exposed.

Marko Čižmek Ljubica Grbac

Management Board Member Director of Department of Finance and Accounting

Reporting period: from 1/1/2017 to 31/12/2017

Quarterly financial report TFI-POD

Tax number (MB): 3474771
Company registration number
(MBS):
040020883
Personal identification number
(OIB):
36201212847
Issuing company: Valamar Riviera d.d.
Postal code and place 52440 Poreč
Street and house number: Stancija Kaligari 1
E-mail address: [email protected]
Internet address: www.valamar-riviera.com
Municipality/city code and name: 348 Poreč
Number of
employees:
County code and name: 18 Istarska (period end) 2.854
NKD code: 5510
Consolidated report: YES
Companies of the consolidation
subject (according to IFRS):
Seat: MB:
Valamar hotels & resorts GmbH Frankfurt 04724750667
Hoteli Baška d.d. Baška 03035140
Mirta Bašćanska d.o.o. Baška 01841017
Vala Bašćanska d.o.o. Baška 02086131
Baškaturist d.o.o. Baška 03849236
Puntižela d.o.o. Pula 03203379
Bastion upravljanje d.o.o. Zagreb 01877453
Elafiti Babin kuk d.o.o. Dubrovnik 01273094
Magične stijene d.o.o. Dubrovnik 02315211
Palme turizam d.o.o. Dubrovnik 02006103
Pogača Babin Kuk d.o.o. Dubrovnik 02236346
Bugenvilia d.o.o. Dubrovnik 02006120
Imperial d.d. Rab 03044572
Accounting firm:
Contact person: Sopta Anka
(please insert only the contact's full name)
Telephone: 052/408 188 Fax: 052/408 110
E-mail address: [email protected]
Family name and name: Kukurin Željko, Čižmek Marko
(authorized representative)

Documents disclosed:

  1. Financial statements (Balance Sheet, Income Statement, Cash Flow Statement, Statement of Changes in Equity and notes to financial statements)

  2. Management Interim Report;

  3. Declaration of the persons responsible for preparing the issuer's statements;

L.S. (authorized representative's signature)

Balance Sheet (as per 31/12/2017)

Taxpayer: 36201212847; Valamar Riviera d.d.

ADP Preceding Current
Item code year year
1 2 3 4
A) SUBSCRIBED CAPITAL UNPAID 001
B) NON CURRENT ASSETS (ADP 003+010+020+031+036) 002 4.105.084.164 4.632.400.572
I. INTANGIBLE ASSETS (ADP 004 to 009) 003 24.080.361 45.224.706
1. Research and Development expenditure 004
2. Patents, licences, royalties, trademarks and service marks, software and similar rights 005 17.238.280 37.949.592
3. Goodwill 006 6.567.609 6.567.609
4. Prepayments for intangible assets 007
5. Intangible assets under construction 008 274.472 707.505
6. Other intangible assets 009
II. TANGIBLE ASSETS (ADP 011 to 019) 010 3.941.768.572 4.440.260.536
1. Land 011 873.211.455 874.708.080
2. Property 012 2.522.990.552 2.871.712.565
3. Plants and equipment 013 225.945.122 367.257.268
4. Tools, plants and vehicles 014 81.203.324 101.131.434
5. Biological asset 015
6. Prepayments for tangible assets 016 31.783.971 24.768.328
7. Assets under construction 017 168.568.553 149.431.796
8. Other tangible assets 018 27.197.353 40.996.707
9. Investments property 019 10.868.242 10.254.358
III. NON-CURRENT FINANCIAL ASSETS (ADP 021 to 030) 020 6.601.376 5.417.132
1. Stakes (shares) in undertakings in a Group 021 1.365.316 1.435.245
2. Investments in other securities of undertakings in a Group 022
3. Loans, deposits etc given to undertakings in a Group 023
4. Stakes (shares) in undertakings with participating interest 024
5. Investments in other securities of undertakings with participating interest 025
6. Loans, deposits etc given to undertakings with participating interest 026
7. Investments in securities 027 4.766.325 3.620.830
8. Given loans, deposits and similar 028 299.735 191.057
9. Other investments accounted for using the equity method 029
10. Other non-current financial assets 030 170.000 170.000
IV. TRADE RECEIVABLES (ADP 032 to 035) 031 995.869 834.499
1. Receivables from undertakings in a Group 032
2. Receivables from undertakings with participating interests 033
3. Trade receivables 034 43.750
4. Other receivables 035 995.869 790.749
V. DEFERRED TAX ASSETS 036 131.637.986 140.663.699
C) CURENT ASSETS (ADP 038+046+053+063) 037 336.880.206 343.822.386
I. INVENTORIES (ADP 039 to 045) 038 19.245.740 24.496.814
1. Raw materials and consumables 039 18.967.510 24.296.180
2. Work in progress 040
3. Finished products 041
4. Merchandise 042 236.606 156.426
5. Prepayments for inventories 043 41.624 44.208
6. Other available-for-sale assets 044
7. Biological asset 045
II. RECEIVABLES (ADP 047 to 052) 046 42.229.932 30.637.890
1. Receivables from undertakings in a Group 047 204 231.675
2. Receivables from undertakings with participating interest 048 253
3. Trade receivables 049 17.711.198 13.742.895
4. Receivables from employees and members of the undertaking 050 657.014 1.226.272
5. Receivables from Government and other institutions 051 21.012.831 13.614.153
6. Other receivables 052 2.848.432 1.822.895
III. CURRENT FINANCIAL ASSETS (ADP 054 to 062) 053 753.886 850.728
1. Stakes (shares) in undertakings in a Group 054
2. Investments in other securities of undertakings in a Group 055
3. Loans, deposits etc given to undertakings in a Group 056
4. Stakes(shares) in undertakings with participating interest 057
5. Investments in other securities of undertakings with participating interest 058
6. Loans, deposits etc given to undertakings with participating interest 059
7. Investments in securities 060
8. Given loans, deposits and similar 061 753.886 746.646
9. Other financial assets 062 104.082
IV. CASH AND CASH EQUIVALENTS 063 274.650.648 287.836.954
D) PREPAYMENTS AND ACCRUED INCOME 064 23.369.940 20.382.090
E) TOTAL ASSETS (ADP 001+002+037+064) 065 4.465.334.310 4.996.605.048
F) OFF-BALANCE SHEET ITEMS 066 54.631.638 54.545.066

Balance Sheet (as per 31/12/2017) (continued) Taxpayer: 36201212847; Valamar Riviera d.d.

Item ADP code Preceding year Current year 1 2 3 4 LIABILITIES A) CAPITAL AND RESERVES (ADP 068 to 070+076+077+081+084+087) 067 2.373.637.039 2.516.174.910 I. SHARE CAPITAL 068 1.672.021.210 1.672.021.210 II. CAPITAL RESERVES 069 2.204.690 3.602.906 III. RESERVES FROM PROFIT (ADP 071+072-073+074+075) 070 84.401.862 102.055.847 1. Legal reserves 071 67.198.750 83.601.061 2. Reserves for own shares 072 44.815.284 44.815.284 3. Own stocks and shares (deductible items) 073 37.141.295 35.889.621 4. Statutory reserves 074 5. Other reserves 075 9.529.123 9.529.123 IV. REVALUATION RESERVES 076 V. FAIR VALUE RESERVES (ADP 078 to 080) 077 273.313 634.097 1. Fair value of financial assets available for sale 078 273.313 634.097 2. Efficient portion of cash flow hedge 079 3. Efficient portion of foreign net investment hedge 080 VI. RETAINED EARNINGS OR LOSS CARRIED FORWARD (ADP 082-083) 081 36.580.064 263.138.894 1. Retained earnings 082 36.580.064 263.138.894 2. Loss carried forward 083 VII. PROFIT OR LOSS FOR THE FINANCIAL YEAR (ADP 085-086) 084 342.313.777 243.596.016 1. Profit for the financial year 085 342.313.777 243.596.016 2. Loss for the financial year 086 VIII. MINORITY INTEREST 087 235.842.123 231.125.940 B) PROVISIONS (ADP 089 to 094) 088 49.709.322 58.356.183 1. Provisions for pensions, severance pay and similar libabilities 089 5.446.558 2. Provisions for tax obligations 090 3. Provisions for litigations in progress 091 49.709.322 52.909.625 4. Provisions for renewal of natural resources 092 5. Provision for costs within warranty period 093 6. Other provisions 094 C) NON-CURRENT LIBILITIES (ADP 096 to 106) 095 1.556.069.066 1.915.658.762 1. Liabilites to related parties 096 2. Liabilities for loans, deposits etc of undertakings in a Group 097 3. Liabilities to undertakings with participating interest 098 4. Liabilities for loans, deposits etc of undertakings with participating interest 099 5. Liabilities for loans, deposits and other 100 9.149.000 9.046.000 6. Liabilities to banks and other financial institutions 101 1.488.677.568 1.852.267.505 7. Liabilities for advance payments 102 8. Trade payables 103 9. Amounts payable for securities 104 10. Other non-current liabilities 105 2.044.339 1.585.824 11. Deffered tax 106 56.198.159 52.759.433 D) CURRENT LIABILITIES (ADP 108 to 121) 107 394.111.168 402.912.295 1. Liabilities to undertakings in a Group 108 70.197 198.872 2. Liabilities for loans, deposits etc of undertakings in a Group 109 3. Liabilities to undertakings with participating interest 110 4. Liabilities for loans, deposits etc of undertakings with participating interest 111 5. Liabilities for loans, deposits and other 112 103.000 103.000 6. Liabilities to banks and other financial institutions 113 180.344.025 203.141.559 7. Amounts payable for prepayment 114 23.380.655 31.365.529 8. Trade payables 115 154.542.693 132.651.065 9. Liabilities upon loan stocks 116 10. Liabilities to emloyees 117 20.674.590 22.455.819 11. Taxes, contributions and similar liabilities 118 11.615.356 11.077.721 12. Liabilities arising from share in the result 119 235.003 230.130 13. Liabilities arising from non-current assets held for sale 120 14. Other current liabilities 121 3.145.649 1.688.600 E) ACCRUED EXPENSES AND DEFERRED INCOME 122 91.807.715 103.502.898 F) TOTAL LIABILITIES (ADP 067+088+095+107+122) 123 4.465.334.310 4.996.605.048 G) OFF-BALANCE SHEET ITEMS 124 54.631.638 54.545.066

Income Statement (for 1/1/2017 to 31/12/2017) Taxpayer: 36201212847; Valamar Riviera d.d.

Item ADP
code
Preceding period Current period
1 2 Cummulative
3
Quarter
4
Cummulative
5
Quarter
6
I. OPERATING INCOME (ADP 126+127+128+129+130) 125 1.488.610.601 82.698.503 1.778.395.862 97.520.679
1. Revenues from sales with undertakings in a Group 126 189.245 189.245
2. Sales revenues (outside the Group) 127 1.454.862.418 72.365.647 1.755.097.476 88.745.906
3. Revenues from use of own products, goods and services 128 2.739.517 794.159 5.211.178 2.063.777
4. Other operating revenues with undertakings in a Group 129 1
5.Other operating revenues (outside the Group) 130 31.008.666 9.538.696 17.897.963 6.521.751
II. OPERATING EXPENSES (ADP 132+133+137+141+142+143+146+153) 131 1.241.906.080 295.592.386 1.518.893.175 347.127.089
1. Changes in inventories of finished products and work in progress 132
2. Material costs (ADP 134 to 136) 133 450.374.431 90.428.327 519.753.525 91.416.971
a) Cost of raw materials & consumables 134 247.421.054 39.546.162 299.650.484 36.174.344
b) Cost of goods sold 135 2.417.204 181.289 2.952.180 105.472
c) Other costs 136 200.536.173 50.700.876 217.150.861 55.137.155
3. Staff costs (ADP 138 to 140) 137 371.316.789 82.344.500 480.161.466 108.584.858
a) Net salaries 138 222.429.876 41.321.323 292.865.456 68.380.156
b) Employee income tax 139 95.492.803 27.363.381 119.910.409 24.983.965
c) Tax on payroll 140 53.394.110 13.659.796 67.385.601 15.220.737
4. Depreciation and amortisation 141 265.188.188 68.084.255 346.413.599 83.233.814
5. Other expenditures 142 128.500.052 38.636.265 143.755.460 41.698.690
6. Value adjustment (ADP 144+145) 143 690.979 419.496 126.181 56.544
a) non-current assets (without financial assets) 144 0
b) current asssets (without financial assets) 145 690.979 419.496 126.181 56.544
7. Provisions (ADP 147 to 152) 146 1.854.405 1.854.405 9.486.384 9.486.384
a) Provision for pensions, severance payments and other employment
benefits
147 5.446.558 5.446.558
b) Provisions for tax liabilities 148
c) Provisions for litigations in progress 149 1.854.405 1.854.405 3.653.477 3.653.477
d) Provisions for renewal of natural resources 150
e) Provision for costs within warranty period 151
f) Other provisions 152 386.349 386.349
8. Other operating expenses 153 23.981.236 13.825.138 19.196.560 12.649.828
III. FINANCIAL INCOME (ADP 155 to 164) 154 90.889.300 9.435.421 63.640.247 4.545.531
1. Income from stakes (shares) in undertakings in a Group 155
2 Income from stakes (shares) in undertakings with participating interest 156
3. Income from other non-current financial investments and loans to
undertakings in a Group
157
4. Other interest income from undertakings in a Group 158
5. Foreign exchange differences and other financial income from
undertakings in a Group 159 -2.323.649
6. Income from other non-current financial investments and loans 160
7. Other interest income 161 4.161.232 3.865.846 655.416 363.204
8. Foreign exchange differences and other financial income 162 39.238.318 6.262.708 52.405.389 3.376.879
9. Unrealized gains (income) from the financial assets 163 9.107.883 957.141 7.520.020 421.969
10. Other financial income 164 38.381.867 673.375 3.059.422 383.479
IV. FINANCIAL COSTS (ADP 166 to 172) 165 65.684.632 21.876.845 84.499.175 16.222.070
1. Interest expenses and similar expenses with undertakings in a Group 166
2. Foreign exchange differences and other expenses with undertakings
in a Group
167
3. Interest expenses and similar 168 34.276.801 9.836.406 42.218.873 10.099.343
4. Foreign exchange differences and other expenses 169 18.950.580 10.308.280 33.867.818 4.529.850
5. Unrealized loss (expenses) from the financial assets 170 8.256.519 962.763 6.761.354 770.399
6. Value adjustment expense on financial assets (net) 171
7. Other financial expenses 172 4.200.732 769.396 1.651.130 822.478
V. SHARE OF PROFIT FROM UNDERTAKINGS WITH PARTICIPATING INTEREST 173
VI. SHARE OF PROFIT FROM JOINT VENTURES 174
VII. SHARE OF LOSS FROM UNDERTAKINGS WITH PARTICIPATING INTEREST 175
VIII. SHARE OF LOSS FROM JOINT VENTURES 176
IX. TOTAL INCOME (ADP 125+154+173+174) 177 1.579.499.901 92.133.924 1.842.036.109 102.066.210
X. TOTAL EXPENSES (ADP 131+165+175+176) 178 1.307.590.712 317.469.231 1.603.392.350 363.349.159
XI. PROFIT OR LOSS BEFORE TAX (ADP 177-178) 179 271.909.189 -225.335.307 238.643.759 -261.282.949
1. Profit before tax (ADP 177-178) 180 271.909.189 -225.335.307 238.643.759 -261.282.949
2. Loss before tax (ADP 178-177) 181 0 0 0 0
XII. INCOME TAX EXPENSE
XIII. PROFIT OR LOSS FOR THE PERIOD (ADP 179-182)
182
183
-70.404.588
342.313.777
-68.444.935
-156.890.372
-6.443.626
245.087.385
-6.315.423
-254.967.526
1. Profit for the period (ADP 179-182) 184 342.313.777 -156.890.372 245.087.385 -254.967.526
2. Loss for the period (ADP 182-179) 185 0 0 0 0

Income Statement (for 1/1/2017 to 31/12/2017) (continued) Taxpayer: 36201212847; Valamar Riviera d.d.

Item ADP
code
Preceding period Current period
Cummulative Quarter Cummulative Quarter
1 2 3 4 5 6

PROFIT OR LOSS FROM DISCONTINUED OPERATIONS (applicable for entities which use IFRS and have discontinued operations)

XIV. PROFIT OR LOSS FROM DISCONTINUED OPERATIONS BEFORE TAX
(ADP 187-188)
186
1. Profit before tax from discontinued operations 187
2. Loss before tax from discontinued operations 188
XV. INCOME TAX EXPENSE FROM DISCONTINUED OPERATIONS 189
1. Profit for the period from discontinued operations (ADP 186-189) 190
2. Loss for the period from discontinued operations (ADP 189-186) 191

TOTAL PROFIT OR LOSS FOR THE PERIOD (applicable for entities which use IFRS and have discontinued operations)

XVI. PROFIT OR LOSS BEFORE TAX (ADP 179+186) 192
1. Profit before tax (ADP 192) 193
2. Loss before tax (ADP 192) 194
XVII. INCOME TAX EXPENSE (ADP 182+189) 195
XVIII. PROFIT OR LOSS FOR THE PERIOD (ADP 192-195) 196
1. Profit for the period (ADP 192-195) 197
2. Loss for the period (ADP 195-192) 198

APPENDIX TO THE INCOME STATEMENT (to be completed by entities submitting consolidated financial statements)

XIX. PROFIT OR LOSS FOR THE PERIOD (ADP 200+201) 199 342.313.777 -156.890.372 245.087.385 -254.967.526
1. Attributable to parent company's shareholders 200 342.313.777 -156.890.372 243.596.016 -240.026.353
2. Attributable to non-controlling interests 201 1.491.369 -14.941.173

STATEMENT OF OTHER COMPREHENSIVE INCOME (to be completed by entities subject to IFRS)

I. PROFIT OR LOSS FOR THE PERIOD 202 342.313.777 -156.890.372 245.087.385 -254.967.526
II. OTHER COMPREHENSIVE INCOME /LOSS BEFORE TAX
(ADP 204 to 211)
203 -33.642.778 -33.642.778 450.979 450.979
1. Exchange differences arising from foreign operations 204
2. Revaluation of non-current assets and intangible assets 205
3. Gains or loss available for sale investments 206 -33.642.778 -33.642.778 450.979 450.979
4. Gains or loss on net movement on cash flow hedges 207
5. Gains or loss on net investments hedge 208
6. Share of the other comprehensive income/loss of associates 209
7. Acturial gain / loss on post employment benefit obligations 210
8. Other changes in capital (minorities) 211
III. TAX ON OTHER COMPREHENSIVE INCOME OF THE PERIOD 212 -2.726.564 -2.726.564 90.195 90.195
IV. NET OTHER COMPREHENSIVE INCOME OR LOSS FOR THE YEAR
(ADP 203-212)
213 -30.916.214 -30.916.214 360.784 360.784
V. TOTAL COMPREHENSIVE INCOME/LOSS FOR THE PERIOD
(ADP 202+213)
214 311.397.563 -187.806.586 245.448.169 -254.606.742

APPENDIX to the Statement of Comprehensive Income (to be completed by entities submitting consolidated financial statements)

VI. TOTAL COMPREHENSIVE INCOME/LOSS FOR THE PERIOD
(ADP 216+217)
215 311.397.563 -187.806.586 245.448.169 -254.606.742
1. Attributable to parent company's shareholders 216 311.397.563 -187.806.586 243.956.800 -239.665.569
2. Attributable to non-controlling interests 217 0 0 1.491.369 -14.941.173

Cash Flow Statement - Indirect Method (for 1/1/2017 to 31/12/2017) Taxpayer: 36201212847; Valamar Riviera d.d.

ADP Preceding Current
Item code year year
1 2 3 4
CASH FLOW FROM OPERATING ACTIVITIES
1. Profit before taxes 001 271.909.189 238.643.759
2. Adjustments (ADP 003 to 010) 002 251.043.749 396.630.365
a) Depreciation and amortisation 003 265.188.188 346.413.599
b) Profit and loss from sales and value adjustments of non-current tangible and intangible assets 004 10.501.692 10.701.234
c) Profit and loss from sales and unrealised profit and loss and value adjustments of financial assets 005 -34.619.968 -211.830
d) Income from interest and dividends 006 -4.204.750 -625.283
e) Interest expenses 007 39.459.144 43.870.004
f) Provisions 008 -5.071.660 10.681.641
g) Foreign exchange differences (unrealized) 009 -20.723.051 -14.199.000
h) Other adjustments for non-cash transactions and unrealized profit and loss 010 514.154
I. Increase or decrease of cash flow before changes in working capital (ADP 001+002) 011 522.952.938 635.274.124
3. Changes in working capital (ADP 013 to 016) 012 26.010.037 3.955.741
a) Increase or decrease of current liabilities 013 49.286.290 -2.906.436
b) Increase or decrease of current receivables 014 -14.783.702 14.229.358
c) Increase or decrease of inventories 015 -8.492.551 -5.251.075
d) Other increase or decrease of working capital 016 -2.116.106
II. Cash from operating activities (ADP 011+012) 017 548.962.975 639.229.865
4. Interest 018 -35.053.605 -42.778.920
5. Income tax paid 019 257.730 6.749.820
A) NET CASH FLOW FROM OPERATING ACTIVITIES (ADP 017 to 019) 020 514.167.100 603.200.765
CASH FLOW FROM INVESTMENT ACTIVITIES
1. Proceeds from sale of non-current assets 021 5.899.667 3.504.147
2. Proceeds from selling financial instruments 022 40.974.675 1.808.303
3. Proceeds from interest rates 023 4.827.208 829.138
4. Proceeds from dividends 024 74.640
5. Proceeds from repayment of given loans and savings 025 7.242.528 11.226.988
6. Other proceeds from investment activities 026
III. Total cash proceeds from investment activities (ADP 021 to 026) 027 58.944.078 17.443.216
1. Purchase of non-current tangible and intangible assets 028 -353.865.885 -894.589.185
2. Purchase of financial instruments 029
3. Loans and deposits for the period 030 -7.670.676 -10.637.180
4. Acquisition of subsidiary, net of acquired cash 031 -250.371.912 -6.207.552
5. Other payments from investment activities 032 -585.001
IV. Total cash payments from investment activities (ADP 028 to 032) 033 -612.493.474 -911.433.917
B) NET INCREASE OF CASH FLOW FROM INVESTMENT ACTIVITIES (ADP 027+033) 034 -553.549.396 -893.990.701
CASH FLOW FROM FINANCIAL ACTIVITIES
1. Proceeds from increase of subscribed capital 035
2. Proceeds from issuing equity-based and debt-based financial instruments 036
3. Proceeds from loan principal, loans and other borrowings 037 689.895.055 582.241.320
4. Other proceeds from financial activities 038
V. Total proceeds from financial activities (ADP 035 to 038) 039 689.895.055 582.241.320
1. Repayment of loan principals, loans and other borrowings and debt-based financial
instruments
040 -619.590.521 -179.917.851
2. Dividends paid 041 -38.048.245 -98.347.226
3. Payment of finance lease liabilities 042 -270.016
4. Re-purchase of treasury shares and decrease in subscribed share capital 043 -36.708.611
5. Other payments from financial activities 044
VI. Total cash payments from financing activities (ADP 040 to 044) 045 -694.617.393 -278.265.077
C) NET CASH FLOW FROM FINANCIAL ACTIVITIES (ADP 039+045) 046 -4.722.338 303.976.243
1. Cash and cash equivalents-unrealized foreign exchange differences 047
D) NET INCREASE OR DECREASE OF CASH FLOW (ADP 020+034+046+047)
E) CASH AND CASH EQUIVALENTS AT THE BEGINNING OF PERIOD
048
049
-44.104.634
318.755.282
13.186.307
274.650.647
F) CASH AND CASH EQUIVALENTS AT THE END OF PERIOD (ADP 048+049) 050 274.650.648 287.836.954

39 Statement of Changes in Equity (for the period from 1/1/2017 to 31/12/2017)

Taxpayer: 36201212847; Valamar Riviera d.d.

Minority (non-controlling) interest
Description ADP Subscribed
Share capital
Capital re- serves Legal reserves Reserves for own shares Treasury shares
and shares (de-
ductible item)
Statutory re- serves Other reserves Revaluation
reserves
Fair value of
financial assets
available for
sale
Efficient portion
of cash flow
hedge
Efficient portion
of foreign net
investment
hedge
Retained
earnings / loss
carried forward
Net profit/ loss
for the period
Total distribut-
able to majority
owners
Minority
(non-con
trolling) interest
Total capital
and reserves
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 (3 to 6 - 7
+ 8 to 15)
17 18 (16+17)
Previous period
1. Balance at 1 January of the previuos period 01 1.672.021.210 -373.815 61.906.040 34.344.407 33.513.244 0 0 0 31.189.527 30.576.912 105.441.776 1.901.592.813 97.869 1.901.690.682
2. Changes in accounting policies 02 0 0
3. Error correction 03 0 0
4. Balance at 1 January of the previous period (ADP 01 to 03) 04 1.672.021.210 -373.815 61.906.040 34.344.407 33.513.244 0 0 0 31.189.527 0 0
30.576.912
105.441.776 1.901.592.813 97.869 1.901.690.682
5. Profit/loss for the period 05 342.313.777 342.313.777 235.842.123 578.155.900
6. Foreign currency translation differences- foreign operations 06 0 0
7. Changes in revaluation reserves of non-current tangible and intangible assets 07 0 0
8. Profit or loss from re-evaluation of finacial assets held for sale
9. Profit or loss from cash flow hedge
08
09
-33.642.778 -33.642.778
0
-33.642.778
0
10. Profit or loss from foreign net investment hedge 10 0 0
11. Share in other comprehensive income/loss from undertakings with participat-
ing interest 11 0 0
12. Actuarial gains/losses from defined benefit plans 12 0 0
13. Other changes in capital (minorities) 13 0 0
14. Taxation of transactions recognized directly in equity 14 2.726.564 2.726.564 2.726.564
15. Increase/decrease of subscribed share capital (except by reinvested profit and
in pre-bankruptcy settlement)
15 0 0
16. Increase of subscribed share capital by profit reinvestment
17. Increase of subscribed share capital in pre-bankruptcy settlement
16
17
0
0
0
0
18. Repurchase of own shares/ stakes 18 36.708.367 -36.708.367 -36.708.367
19. Share in profit/ dividend payout 19 -32.655.373 -73.650.397 -40.995.024 -40.995.024
20. Other distribution to majority owners 20 2.578.505 -424.943 3.003.448 3.003.448
21. Transfer to reserves according to annual plan 21 5.292.710 10.470.877 9.529.123 -5.292.710 -105.441.776 -85.441.776 -97.869 -85.539.645
22. Increase in reserves in pre-bankruptcy settlement 22 84.946.259 84.946.259 84.946.259
23. Balance at 31 Decemeber of previous period (ADP 04 to 22) 23 1.672.021.210 2.204.690 67.198.750 44.815.284 37.141.295 0 9.529.123 0 273.313 0 0
36.580.064
342.313.777 2.137.794.916 235.842.123 2.373.637.039
ADDITION TO STATEMENT OF CHANGES IN EQUITY (only for IFRS adopters)
I. OTHER COMPREHENSIVE INCOME OF PREVIOUS PERIOD NET OF TAX
(ADP 06 to 14)
II. COMPREHENSIVE INCOME OR LOSS FOR THE PREVIOUS PERIOD
24 0 0 0 0 0 0 0 0 -30.916.214 0 0 0 0
-30.916.214
0 -30.916.214
(ADP 05+24)
III. TRANSACTIONS WITH OWNERS IN THE PREVIOUS PERIOD, RECOGNIZED
25 0 0 0 0 0 0 0 0 -30.916.214 0 0 0
342.313.777
311.397.563 235.842.123 547.239.686
DIRECTLY IN EQUITY (ADP 15 to 22) 26 0 2.578.505 5.292.710 10.470.877 3.628.051 0 9.529.123 0 0 0 0
6.003.152
-105.441.776 -75.195.460 -97.869 -75.293.329
Current period
1. Balance at 1 January of current period 27 1.672.021.210 2.204.690 67.198.750 44.815.284 37.141.295 0 9.529.123 0 273.313 0 0
36.580.064
342.313.777 2.137.794.916 235.842.123 2.373.637.039
2. Changes in accounting policies 28 0 0
3. Error correction 29 0 0
4. Balance at 1 January of current period (ADP 27 to 29) 30 1.672.021.210 2.204.690 67.198.750 44.815.284 37.141.295 0 9.529.123 0 273.313 0 0
36.580.064
342.313.777 2.137.794.916 235.842.123 2.373.637.039
5. Profit/loss for the period
6. Foreign currency translation differences- foreign operations
31
32
243.596.016 243.596.016
0
1.491.369 245.087.385
0
7. Changes in revaluation reserves of non-current tangible and intangible assets 33 0 0
8. Profit or loss from re-evaluation of finacial assets held for sale 34 450.979 450.979 450.979
9. Profit or loss from cash flow hedge 35 0 0
10. Profit or loss from foreign net investment hedge 36 0 0
11. Share in other comprehensive income/loss from undertakings with participat 37 0 0
ing interest
12. Actuarial gains/losses from defined benefit plans
13. Other changes in capital (minorities)
38
39
0
0
0
0
14. Taxation of transactions recognized directly in equity 40 -90.195 -90.195 -90.195
15. Increase/decrease of subscribed share capital (except by reinvested profit and 41 0 0
in pre-bankruptcy settlement)
16. Increase of subscribed share capital by profit reinvestment 42 0 0
17. Increase of subscribed share capital in pre-bankruptcy settlement 43 0 0
18. Repurchase of own shares/ stakes
19. Share in profit/ dividend payout
44
45
-1.251.675 1.251.675
0
1.251.675
0
20. Other distribution to majority owners 46 1.398.216 -99.352.192 -97.953.976 -97.953.976
21. Transfer to reserves according to annual plan 47 16.402.311 325.911.021 -342.313.777 -445 -6.207.552 -6.207.997
22. Increase in reserves in pre-bankruptcy settlement 48 0 0
23. Balance as at 31 December of the current period (ADP 30 to 48) 49 1.672.021.210 3.602.906 83.601.061 44.815.284 35.889.620 0 9.529.123 0 634.097 0 0
263.138.893
243.596.016 2.285.048.970 231.125.940 2.516.174.910
ADDITION TO STATEMENT OF CHANGES IN EQUITY (only for IFRS adopters)
I. OTHER COMPREHENSIVE INCOME OF CURRENT PERIOD, NET OF TAX
(ADP 32 to 40)
50 0 0 0 0 0 0 0 0 360.784 0 0 0 0
360.784
0 360.784
II. COMPREHENSIVE INCOME OR LOSS FOR THE CURRENT PERIOD
(ADP 31 + 50)
51 0 0 0 0 0 0 0 0 360.784 0 0 0
243.596.016
243.956.800 1.491.369 245.448.169
III. TRANSACTIONS WITH OWNERS IN THE CURRENT PERIOD, RECOGNIZED
DIRECTLY IN EQUITY (ADP 41 to 48)
52 0 1.398.216 16.402.311 0 -1.251.675 0 0 0 0 0 0
226.558.829
-342.313.777 -96.702.746 -6.207.552 -102.910.298

Notes

(1) The notes to financial statements include additional and supplemental information not presented in the Balance Sheet, Income Statement, Cash Flow Statement or the Statement of Changes in Equity in accordance with the provisions of the relevant financial reporting standards.

Companies of the consolidation subject Balance sheet-previous period Balance sheet-current period
31/12/2016 31/12/2017
Mirta Bašćanska d.o.o. Yes (merged to Hoteli Baška d.d. 13.1.2016.)
Vala Bašćanska d.o.o. Yes (merged to Hoteli Baška d.d. 13.1.2016.)
Baškaturist d.o.o. Yes (merged to Hoteli Baška d.d. 13.1.2016.)
Hoteli Baška d.d. Yes (merged to Valamar Riviera d.d. 31.3.2016.)
Bastion upravljanje d.o.o. Yes (merged to Valamar Riviera d.d. 30.6.2016.)
Puntižela d.o.o. Yes (merged to Valamar Riviera d.d. 31.3.2017.)
Elafiti Babin kuk d.o.o. Yes (merged to Valamar Riviera d.d. 29.12.2017.)
Valamar hotels & resorts GmbH Yes Yes
Elafiti Babin kuk d.o.o. Yes Yes
Magične stijene d.o.o. Yes Yes
Palme turizam d.o.o. Yes Yes
Pogača Babin Kuk d.o.o. Yes Yes
Bugenvilia d.o.o. Yes Yes
Imperial d.d. Yes Yes
Companies of the consolidation subject: Income statment-previous period
31/12/2016
Income statment-current period
31/12/2017
Mirta Bašćanska d.o.o. 01.01.-13.01.
(merged to Hoteli Baška d.d. 13.1.2016.)
-
Vala Bašćanska d.o.o. 01.01.-13.01.
(merged to Hoteli Baška d.d. 13.1.2016.)
-
Baškaturist d.o.o. 01.01.-13.01.
(merged to Hoteli Baška d.d. 13.1.2016.)
-
Hoteli Baška d.d. 01.01.-31.03.
(merged to Valamar Riviera d.d. 31.3.2016.)
-
Bastion upravljanje d.o.o. 01.01.-30.06.
(merged to Valamar Riviera d.d. 30.6.2016.)
-
Puntižela d.o.o. 01.01.-31.12. 01.01.-31.03.
(merged to Valamar Riviera d.d. 31.3.2017.)
Elafiti Babin kuk d.o.o. 01.01.-31.12. 01.01.-29.12.
(merged to Valamar Riviera d.d. 29.12.2017.)
Valamar hotels & resorts GmbH 01.01.-31.01. -
Magične stijene d.o.o. 01.01.-31.12. 01.01.-31.12.
Palme turizam d.o.o. 01.01.-31.12. 01.01.-31.12.
Pogača Babin Kuk d.o.o. 01.01.-31.12. 01.01.-31.12.
Bugenvilia d.o.o.
Imperial d.d.
01.01.-31.12.
-
01.01.-31.12.
01.01.-31.12.

Reporting period: from 1/1/2017 to 31/12/2017

Quarterly financial report TFI-POD

Tax number (MB): 3474771
Company registration number
(MBS):
040020883
Personal identification number
(OIB):
36201212847
Issuing company: Valamar Riviera d.d.
Postal code and place 52440 Poreč
Street and house number: Stancija Kaligari 1
E-mail address: [email protected]
Internet address: www.valamar-riviera.com
Municipality/city code and name: 348 Poreč
Number of
employees:
County code and name: 18 Istarska (period end) 2.565
NKD code: 5510
Consolidated report: NO
Companies of the consolidation
subject (according to IFRS):
Seat: MB:
Accounting firm:
Contact person: Sopta Anka
(please insert only the contact's full name)
Telephone: 052/408 188 Fax: 052/408 110
E-mail address: [email protected]
Family name and name: Kukurin Željko, Čižmek Marko
(authorized representative)

Documents disclosed:

  1. Financial statements (Balance Sheet, Income Statement, Cash Flow Statement, Statement of Changes in Equity and notes to financial statements)

  2. Management Interim Report;

  3. Declaration of the persons responsible for preparing the issuer's statements;

L.S. (authorized representative's signature)

Balance Sheet (as per 31/12/2017)

Taxpayer: 36201212847; Valamar Riviera d.d.

ADP Preceding Current
Item code year year
1 2 3 4
A) SUBSCRIBED CAPITAL UNPAID 001
B) NON CURRENT ASSETS (ADP 003+010+020+031+036) 002 3.806.830.512 4.321.068.373
I. INTANGIBLE ASSETS (ADP 004 to 009) 003 17.342.793 44.533.715
1. Research and Development expenditure 004
2. Patents, licences, royalties, trademarks and service marks, software and similar rights 005 17.068.321 37.646.206
3. Goodwill 006 6.567.609
4. Prepayments for intangible assets 007
5. Intangible assets under construction 008 274.472 319.900
6. Other intangible assets 009
II. TANGIBLE ASSETS (ADP 011 to 019) 010 2.906.793.288 3.697.439.264
1. Land 011 595.574.908 633.926.337
2. Property 012 1.805.980.339 2.416.617.894
3. Plants and equipment 013 207.011.662 345.844.344
4. Tools, plants and vehicles 014 62.668.696 89.672.494
5. Biological asset 015
6. Prepayments for tangible assets 016 29.697.670 23.166.558
7. Assets under construction 017 167.870.168 137.209.673
8. Other tangible assets 018 27.121.603 40.747.606
9. Investments property 019 10.868.242 10.254.358
III. NON-CURRENT FINANCIAL ASSETS (ADP 021 to 030) 020 675.525.760 456.347.314
1. Stakes (shares) in undertakings in a Group 021 670.319.700 452.395.427
2. Investments in other securities of undertakings in a Group 022
3. Loans, deposits etc given to undertakings in a Group 023
4. Stakes (shares) in undertakings with participating interest 024
5. Investments in other securities of undertakings with participating interest 025
6. Loans, deposits etc given to undertakings with participating interest 026
7. Investments in securities 027 4.766.325 3.620.830
8. Given loans, deposits and similar 028 299.735 191.057
9. Other investments accounted for using the equity method 029
10. Other non-current financial assets 030 140.000 140.000
IV. TRADE RECEIVABLES (ADP 032 to 035) 031 113.553.484 188.176
1. Receivables from undertakings in a Group 032 113.247.689
2. Receivables from undertakings with participating interests 033
3. Trade receivables 034
4. Other receivables 035 305.795 188.176
V. DEFERRED TAX ASSETS 036 93.615.187 122.559.904
C) CURENT ASSETS (ADP 038+046+053+063) 037 319.356.014 291.552.583
I. INVENTORIES (ADP 039 to 045) 038 18.253.553 23.913.513
1. Raw materials and consumables 039 18.026.040 23.767.779
2. Work in progress 040
3. Finished products 041
4. Merchandise 042 227.513 145.734
5. Prepayments for inventories 043
6. Other available-for-sale assets 044
7. Biological asset 045
II. RECEIVABLES (ADP 047 to 052) 046 62.728.000 29.405.487
1. Receivables from undertakings in a Group 047 25.253.754 3.392.515
2. Receivables from undertakings with participating interest 048
3. Trade receivables 049 16.702.108 12.221.884
4. Receivables from employees and members of the undertaking 050 649.460 1.171.905
5. Receivables from Government and other institutions 051 18.294.801 10.812.531
6. Other receivables 052 1.827.877 1.806.652
III. CURRENT FINANCIAL ASSETS (ADP 054 to 062) 053 726.764 832.773
1. Stakes (shares) in undertakings in a Group 054
2. Investments in other securities of undertakings in a Group 055
3. Loans, deposits etc given to undertakings in a Group 056 23.800 25.800
4. Stakes (shares) in undertakings with participating interest 057
5. Investments in other securities of undertakings with participating interest 058
6. Loans, deposits etc given to undertakings with participating interest 059
7. Investments in securities 060
8. Given loans, deposits and similar 061 702.964 702.891
9. Other financial assets 062 104.082
IV. CASH AND CASH EQUIVALENTS 063 237.647.697 237.400.810
D) PREPAYMENTS AND ACCRUED INCOME 064 21.820.614 19.416.287
E) TOTAL ASSETS (ADP 001+002+037+064) 065 4.148.007.140 4.632.037.243
F) OFF-BALANCE SHEET ITEMS 066 54.631.638 54.545.066

Balance Sheet (as per 31/12/2017) (continued) Taxpayer: 36201212847; Valamar Riviera d.d.

Item ADP code Preceding year Current year 1 2 3 4 LIABILITIES A) CAPITAL AND RESERVES (ADP 068 to 070+076+077+081+084+087) 067 2.324.082.480 2.395.468.296 I. SHARE CAPITAL 068 1.672.021.210 1.672.021.210 II. CAPITAL RESERVES 069 2.204.690 3.602.906 III. RESERVES FROM PROFIT (ADP 071+072-073+074+075) 070 84.401.862 102.055.847 1. Legal reserves 071 67.198.750 83.601.061 2. Reserves for own shares 072 44.815.284 44.815.284 3. Own stocks and shares (deductible items) 073 37.141.295 35.889.621 4. Statutory reserves 074 5. Other reserves 075 9.529.123 9.529.123 IV. REVALUATION RESERVES 076 V. FAIR VALUE RESERVES (ADP 078 to 080) 077 273.313 634.097 1. Fair value of financial assets available for sale 078 273.313 634.097 2. Efficient portion of cash flow hedge 079 3. Efficient portion of foreign net investment hedge 080 VI. RETAINED EARNINGS OR LOSS CARRIED FORWARD (ADP 082-083) 081 228.523.684 385.175.162 1. Retained earnings 082 228.523.684 385.175.162 2. Loss carried forward 083 VII. PROFIT OR LOSS FOR THE FINANCIAL YEAR (ADP 085-086) 084 336.657.721 231.979.074 1. Profit for the financial year 085 336.657.721 231.979.074 2. Loss for the financial year 086 VIII. MINORITY INTEREST 087 B) PROVISIONS (ADP 089 to 094) 088 26.578.807 31.597.492 1. Provisions for pensions, severance pay and similar libabilities 089 4.665.359 2. Provisions for tax obligations 090 3. Provisions for litigations in progress 091 26.578.807 26.932.133 4. Provisions for renewal of natural resources 092 5. Provision for costs within warranty period 093 6. Other provisions 094 C) NON-CURRENT LIBILITIES (ADP 096 to 106) 095 1.351.548.203 1.739.431.226 1. Liabilites to related parties 096 2. Liabilities for loans, deposits etc of undertakings in a Group 097 3. Liabilities to undertakings with participating interest 098 4. Liabilities for loans, deposits etc of undertakings with participating interest 099 5. Liabilities for loans, deposits and other 100 6. Liabilities to banks and other financial institutions 101 1.332.585.946 1.721.763.614 7. Liabilities for advance payments 102 8. Trade payables 103 9. Amounts payable for securities 104 10. Other non-current liabilities 105 2.044.339 1.585.824 11. Deffered tax 106 16.917.918 16.081.788 D) CURRENT LIABILITIES (ADP 108 to 121) 107 361.331.313 369.130.888 1. Liabilities to undertakings in a Group 108 195.394 377.577 2. Liabilities for loans, deposits etc of undertakings in a Group 109 3. Liabilities to undertakings with participating interest 110 4. Liabilities for loans, deposits etc of undertakings with participating interest 111 5. Liabilities for loans, deposits and other 112 6. Liabilities to banks and other financial institutions 113 159.263.170 184.701.848 7. Amounts payable for prepayment 114 22.878.112 30.708.993 8. Trade payables 115 150.726.630 121.224.757 9. Liabilities upon loan stocks 116 10. Liabilities to emloyees 117 18.821.064 20.606.875 11. Taxes, contributions and similar liabilities 118 7.640.156 10.270.639 12. Liabilities arising from share in the result 119 59.985 72.403 13. Liabilities arising from non-current assets held for sale 120 14. Other current liabilities 121 1.746.802 1.167.796 E) ACCRUED EXPENSES AND DEFERRED INCOME 122 84.466.337 96.409.341 F) TOTAL LIABILITIES (ADP 067+088+095+107+122) 123 4.148.007.140 4.632.037.243 G) OFF-BALANCE SHEET ITEMS 124 54.631.638 54.545.066

Income Statement (for 1/1/2017 to 31/12/2017) Taxpayer: 36201212847; Valamar Riviera d.d.

Item ADP
code
Preceding period Current period
Cummulative Quarter Cummulative Quarter
1
I. OPERATING INCOME (ADP 126 to 130)
2
125
3
1.470.965.788
4
82.564.374
5
1.636.413.207
6
94.113.701
1. Revenues from sales with undertakings in a Group 126 587.914 83.328 13.865.641 4.434.601
2. Sales revenues (outside the Group) 127 1.439.839.388 72.051.789 1.602.798.436 82.611.424
3. Revenues from use of own products, goods and services 128 2.739.517 794.159 5.191.926 2.055.831
4. Other operating revenues with undertakings in a Group 129 41.709 17.487 46.785 4.544
5.Other operating revenues (outside the Group) 130 27.757.260 9.617.611 14.510.419 5.007.301
II. OPERATING EXPENSES (ADP 132+133+137+141+142+143+146+153) 131 1.233.233.856 296.069.014 1.396.220.124 315.847.272
1. Changes in inventories of finished products and work in progress 132
2. Material costs (ADP 134 to 136) 133 474.135.719 96.959.546 511.785.310 93.141.886
a) Cost of raw materials & consumables 134 245.716.305 39.412.456 274.645.200 33.043.011
b) Cost of goods sold 135 2.417.204 181.289 2.850.429 100.984
c) Other costs 136 226.002.210 57.365.801 234.289.681 59.997.891
3. Staff costs (ADP 138 to 140) 137 365.349.927 81.735.791 443.751.031 99.266.955
a) Net salaries 138 219.441.890 40.956.230 269.924.542 62.910.131
b) Employee income tax 139 93.854.219 26.650.228 111.612.209 22.453.475
c) Tax on payroll 140 52.053.818 14.129.333 62.214.280 13.903.349
4. Depreciation and amortisation 141 243.228.097 62.979.843 283.465.960 67.852.811
5. Other expenditures 142 126.732.255 38.362.661 133.772.749 38.232.183
6. Value adjustment (ADP 144+145) 143 690.979 419.496 112.132 42.495
a) non-current assets (without financial assets) 144
b) current asssets (without financial assets) 145 690.979 419.496 112.132 42.495
7. Provisions (ADP 147 to 152) 146 1.854.405 1.854.405 5.086.540 5.086.540
a) Provision for pensions, severance payments and other employment 147 4.665.359 4.665.359
benefits
b) Provisions for tax liabilities 148
c) Provisions for litigations in progress 149 1.854.405 1.854.405 421.181 421.181
d) Provisions for renewal of natural resources 150
e) Provision for costs within warranty period 151
f) Other provisions 152
8. Other operating expenses 153 21.242.474 13.757.272 18.246.402 12.224.402
III. FINANCIAL INCOME (ADP 155 to 164) 154 88.144.060 9.420.273 59.584.924 3.962.094
1. Income from stakes (shares) in undertakings in a Group 155
2 Income from stakes (shares) in undertakings with participating interest
3. Income from other non-current financial investments and loans to
156
undertakings in a Group 157
4. Other interest income from undertakings in a Group 158
5. Foreign exchange differences and other financial income from 159
undertakings in a Group
6. Income from other non-current financial investments and loans 160
7. Other interest income 161 4.152.605 3.865.656 467.081 306.044
8. Foreign exchange differences and other financial income 162 36.899.712 3.924.101 48.589.480 2.872.190
9. Unrealized gains (income) from the financial assets 163 9.107.883 957.141 7.520.020 421.969
10. Other financial income 164 37.983.860 673.375 3.008.343 361.891
IV. FINANCIAL COSTS (ADP 166 to 172) 165 60.817.483 21.113.772 82.068.385 14.668.555
1. Interest expenses and similar expenses with undertakings in a Group 166
2. Foreign exchange differences and other expenses with undertakings
in a Group
167
3. Interest expenses and similar 168 32.410.766 9.404.498 37.199.453 9.192.669
4. Foreign exchange differences and other expenses 169 17.070.046 10.164.374 31.145.877 4.101.469
5. Unrealized loss (expenses) from the financial assets 170 8.256.519 962.763 6.761.354 770.400
6. Value adjustment expense on financial assets (net) 171 5.629.924 0
7. Other financial expenses 172 3.080.152 582.137 1.331.777 604.017
V. SHARE OF PROFIT FROM UNDERTAKINGS WITH PARTICIPATING INTEREST 173
VI. SHARE OF PROFIT FROM JOINT VENTURES 174
VII. SHARE OF LOSS FROM UNDERTAKINGS WITH PARTICIPATING INTEREST 175
VIII. SHARE OF LOSS FROM JOINT VENTURES 176
IX. TOTAL INCOME (ADP 125+154+173+174) 177 1.559.109.848 91.984.647 1.695.998.131 98.075.795
X. TOTAL EXPENSES (ADP 131+165+175+176) 178 1.294.051.339 317.182.786 1.478.288.509 330.515.827
XI. PROFIT OR LOSS BEFORE TAX (ADP 177-178) 179 265.058.509 -225.198.139 217.709.622 -232.440.032
1. Profit before tax (ADP 177-178) 180 265.058.509 -225.198.139 217.709.622 -232.440.032
2. Loss before tax (ADP 178-177) 181 0 0 0 0
XII. INCOME TAX EXPENSE 182 -71.599.212 -71.599.212 -14.269.452
XIII. PROFIT OR LOSS FOR THE PERIOD (ADP 179-182) 183 336.657.721 -153.598.927 231.979.074 -232.440.032
1. Profit for the period (ADP 179-182) 184 336.657.721 -153.598.927 231.979.074 -232.440.032
2. Loss for the period (ADP 182-179) 185 0 0 0 0

Income Statement (for 1/1/2017 to 31/12/2017) (continued) Taxpayer: 36201212847; Valamar Riviera d.d.

Item ADP
code
Preceding period Current period
Cummulative Quarter Cummulative Quarter
1 2 3 4 5 6

PROFIT OR LOSS FROM DISCONTINUED OPERATIONS (applicable for entities which use IFRS and have discontinued operations)

XIV. PROFIT OR LOSS FROM DISCONTINUED OPERATIONS BEFORE TAX
(ADP 187-188)
186
1. Profit before tax from discontinued operations 187
2. Loss before tax from discontinued operations 188
XV. INCOME TAX EXPENSE FROM DISCONTINUED OPERATIONS 189
1. Profit for the period from discontinued operations (ADP 186-189) 190
2. Loss for the period from discontinued operations (ADP 189-186) 191

TOTAL PROFIT OR LOSS FOR THE PERIOD (applicable for entities which use IFRS and have discontinued operations)

XVI. PROFIT OR LOSS BEFORE TAX (ADP 179+186) 192
1. Profit before tax (ADP 192) 193
2. Loss before tax (ADP 192) 194
XVII. INCOME TAX EXPENSE (ADP 182+189) 195
XVIII. PROFIT OR LOSS FOR THE PERIOD (ADP 192-195) 196
1. Profit for the period (ADP 192-195) 197
2. Loss for the period (ADP 195-192) 198

APPENDIX TO THE INCOME STATEMENT (to be completed by entities submitting consolidated financial statements)

XIX. PROFIT OR LOSS FOR THE PERIOD (ADP 200+201) 199 336.657.721 -153.598.927 231.979.074 -232.440.032
1. Attributable to parent company's shareholders 200 336.657.721 -153.598.927 231.979.074 -232.440.032
2. Attributable to non-controlling interests 201

STATEMENT OF OTHER COMPREHENSIVE INCOME (to be completed by entities subject to IFRS)

I. PROFIT OR LOSS FOR THE PERIOD 202 336.657.721 -153.598.927 231.979.074 -232.440.032
II. OTHER COMPREHENSIVE INCOME /LOSS BEFORE TAX
(ADP 204 to 211)
203 -34.190.767 -34.190.767 450.979 450.979
1. Exchange differences arising from foreign operations 204
2. Revaluation of non-current assets and intangible assets 205
3. Gains or loss available for sale investments 206 -34.190.767 -34.190.767 450.979 450.979
4. Gains or loss on net movement on cash flow hedges 207
5. Gains or loss on net investments hedge 208
6. Share of the other comprehensive income/loss of associates 209
7. Acturial gain / loss on post employment benefit obligations 210
8. Other changes in capital (minorities) 211
III. TAX ON OTHER COMPREHENSIVE INCOME OF THE PERIOD 212 -2.726.295 -2.726.295 90.195 90.195
IV. NET OTHER COMPREHENSIVE INCOME OR LOSS FOR THE YEAR
(ADP 203-212)
213 -31.464.472 -31.464.472 360.784 360.784
V. TOTAL COMPREHENSIVE INCOME/LOSS FOR THE PERIOD
(ADP 202+213)
214 305.193.249 -185.063.399 232.339.858 -232.079.248

APPENDIX to the Statement of Comprehensive Income (to be completed by entities submitting consolidated financial statements)

VI. TOTAL COMPREHENSIVE INCOME/LOSS FOR THE PERIOD
(ADP 216+217)
215 0 0 0 0
1. Attributable to parent company's shareholders 216
2. Attributable to non-controlling interests 217

Cash Flow Statement - Indirect Method (for 1/1/2017 to 31/12/2017) Taxpayer: 36201212847; Valamar Riviera d.d.

ADP
Preceding
Current
Item
code
year
year
1
2
3
4
CASH FLOW FROM OPERATING ACTIVITIES
1. Profit before taxes
001
265.058.509
217.709.622
002
226.318.352
2. Adjustments (ADP 003 to 010)
323.378.635
a) Depreciation and amortisation
003
243.228.097
283.465.960
b) Profit and loss from sales and value adjustments of non-current tangible and intangible assets
004
10.496.519
10.492.924
c) Profit and loss from sales and unrealised profit and loss and value adjustments of financial assets
005
-35.155.437
-211.830
d) Income from interest and dividends
006
-4.126.318
-436.947
e) Interest expenses
007
35.491.173
38.531.230
f) Provisions
008
-3.412.883
6.707.753
g) Foreign exchange differences (unrealized)
009
-18.583.434
-13.101.550
h) Other adjustments for non-cash transactions and unrealized profit and loss
010
-1.619.365
-2.068.905
I. Increase or decrease of cash flow before changes in working capital (ADP 001+002)
011
491.376.861
541.088.257
3. Changes in working capital (ADP 013 to 016)
012
53.034.890
33.035.631
a) Increase or decrease of current liabilities
013
46.934.092
1.433.296
b) Increase or decrease of current receivables
014
14.593.148
37.262.296
c) Increase or decrease of inventories
015
-8.492.350
-5.659.961
d) Other increase or decrease of working capital
016
II. Cash from operating activities (ADP 011+012)
017
544.411.751
574.123.888
4. Interest
018
-30.070.461
-38.109.984
5. Income tax paid
019
312.063
102.419
A) NET CASH FLOW FROM OPERATING ACTIVITIES (ADP 017 to 019)
020
514.653.353
536.116.323
CASH FLOW FROM INVESTMENT ACTIVITIES
1. Proceeds from sale of non-current assets
021
5.898.667
3.469.847
2. Proceeds from selling financial instruments
022
39.024.276
1.808.303
3. Proceeds from interest rates
023
4.750.479
639.234
4. Proceeds from dividends
024
579.153
5. Proceeds from repayment of given loans and savings
025
7.137.978
11.143.895
6. Other proceeds from investment activities
026
4.639.935
338.416
III. Total cash proceeds from investment activities (ADP 021 to 026)
027
61.451.335
17.978.848
1. Purchase of non-current tangible and intangible assets
028
-343.698.596
-860.324.118
2. Purchase of financial instruments
029
3. Loans and deposits for the period
030
-7.593.973
-10.615.679
4. Acquisition of subsidiary, net of acquired cash
031
-285.527.212
-6.207.552
5. Other payments from investment activities
032
IV. Total cash payments from investment activities (ADP 028 to 032)
033
-636.819.781
-877.147.349
B) NET INCREASE OF CASH FLOW FROM INVESMENT ACTIVITIES (ADP 027+033)
034
-575.368.446
-859.168.501
CASH FLOW FROM FINANCIAL ACTIVITIES
1. Proceeds from increase of subscribed capital
035
2. Proceeds from issuing equity-based and debt-based financial instruments
036
3. Proceeds from loan principal, loans and other borrowings
037
618.507.365
582.241.802
4. Other proceeds from financial activities
038
V. Total proceeds from financial activities (ADP 035 to 038)
039
618.507.365
1. Repayment of loan principals, loans and other borrowings and debt-based financial
582.241.802
040
-546.673.519
instruments
-161.094.158
2. Dividends paid
041
-38.297.245
-98.342.353
3. Payment of finance lease liabilities
042
-262.524
4. Re-purchase of treasury shares and decrease in subscribed share capital
043
-36.708.367
5. Other payments from financial activities
044
VI. Total cash payments from financing activities (ADP 040 to 044)
045
-621.941.655
-259.436.511
C) NET CASH FLOW FROM FINANCIAL ACTIVITIES (ADP 039+045)
046
-3.434.290
322.805.291
1. Cash and cash equivalents-unrealized foreign exchange differences
047
D) NET INCREASE OR DECREASE OF CASH FLOW (ADP 020+034+046+047)
048
-64.149.383
-246.887
E) CASH AND CASH EQUIVALENTS AT THE BEGINNING OF PERIOD
049
301.797.080
237.647.697
F) CASH AND CASH EQUIVALENTS AT THE END OF PERIOD (ADP 048+049)
050
237.647.697
237.400.810

47 Statement of Changes in Equity (for the period from 1/1/2017 to 31/12/2017)

Taxpayer: 36201212847; Valamar Riviera d.d.

Minority (non-controlling) interest
Description ADP Subscribed
Share capital
Capital re- serves Legal reserves Reserves for own shares Treasury shares
and shares (de-
ductible item)
Statutory re- serves Other reserves Revaluation
reserves
Fair value of
financial assets
available for
sale
Efficient portion
of cash flow
hedge
Efficient portion
of foreign net
investment
hedge
Retained
earnings / loss
carried forward
Net profit/ loss
for the period
Total distribut-
able to majority
owners
Minority
(non-con
trolling) interest
Total capital
and reserves
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 (3 to 6 - 7
+ 8 to 15)
17 18 (16+17)
Previous period
1. Balance at 1 January of the previuos period 01 1.672.021.210 109.139 61.906.040 34.344.407 29.046.586 0 31.431.842 211.961.240 105.854.201 2.088.581.493 2.088.581.493
2. Changes in accounting policies 02 0 0
3. Error correction 03 0 0
4. Balance at 1 January of the previous period (ADP 01 to 03) 04 1.672.021.210 109.139 61.906.040 34.344.407 29.046.586 0 0 0 31.431.842 0
0
211.961.240 105.854.201 2.088.581.493 0 2.088.581.493
5. Profit/loss for the period 05 336.657.721 336.657.721 336.657.721
6. Foreign currency translation differences- foreign operations 06 0 0 0
7. Changes in revaluation reserves of non-current tangible and intangible assets 07 0 0
8. Profit or loss from re-evaluation of finacial assets held for sale 08 -34.190.767 -34.190.767 -34.190.767
9. Profit or loss from cash flow hedge 09 0 0 0
10. Profit or loss from foreign net investment hedge 10 0 0
11. Share in other comprehensive income/loss from undertakings with participat-
ing interest
11 0 0
12. Actuarial gains/losses from defined benefit plans 12 0 0
13. Other changes in capital (minorities) 13 -482.954 305.943 -177.011 -177.011
14. Taxation of transactions recognized directly in equity 14 2.726.295 2.726.295 2.726.295
15. Increase/decrease of subscribed share capital (except by reinvested profit and
in pre-bankruptcy settlement)
15 0 0
16. Increase of subscribed share capital by profit reinvestment 16 0 0
17. Increase of subscribed share capital in pre-bankruptcy settlement 17 0 0
18. Repurchase of own shares/ stakes 18 36.708.367 -36.708.367 -36.708.367
19. Share in profit/ dividend payout 19 -32.655.373 -73.910.156 -41.254.783 -41.254.783
20. Other distribution to majority owners 20 2.578.505 4.041.715 -1.463.210 -1.463.210
21. Transfer to reserves according to annual plan 21 5.292.710 10.470.877 9.529.123 90.472.600 -105.854.201 9.911.109 9.911.109
22. Increase in reserves in pre-bankruptcy settlement 22 0 0
23. Balance at 31 Decemeber of previous period (ADP 04 to 22) 23 1.672.021.210 2.204.690 67.198.750 44.815.284 37.141.295 0 9.529.123 0 273.313 0
0
228.523.684 336.657.721 2.324.082.480 0 2.324.082.480
ADDITION TO STATEMENT OF CHANGES IN EQUITY (only for IFRS adopters)
I. OTHER COMPREHENSIVE INCOME OF PREVIOUS PERIOD NET OF TAX
(ADP 06 to 14)
24 0 -482.954 0 0 0 0 0 0 -31.158.529 0
0
0 0 -31.641.483 0 -31.641.483
II. COMPREHENSIVE INCOME OR LOSS FOR THE PREVIOUS PERIOD
(ADP 05+24)
25 0 -482.954 0 0 0 0 0 0 -31.158.529 0
0
0 336.657.721 305.016.238 0 305.016.238
III. TRANSACTIONS WITH OWNERS IN THE PREVIOUS PERIOD, RECOGNIZED
DIRECTLY IN EQUITY (ADP 15 to 22)
26 0 2.578.505 5.292.710 10.470.877 8.094.709 0 9.529.123 0 0 0
0
16.562.444 -105.854.201 -69.515.251 0 -69.515.251
Current period
1. Balance at 1 January of current period 27 1.672.021.210 2.204.690 67.198.750 44.815.284 37.141.295 0 9.529.123 0 273.313 0
0
228.523.684 336.657.721 2.324.082.480 0 2.324.082.480
2. Changes in accounting policies 28 0 0
3. Error correction
4. Balance at 1 January of current period (ADP 27 to 29)
29
30
1.672.021.210 2.204.690 67.198.750 44.815.284 37.141.295 0 9.529.123 0 273.313 0
0
228.523.684 0
336.657.721 2.324.082.480
0
0 2.324.082.480
5. Profit/loss for the period 31 231.979.074 231.979.074 231.979.074
6. Foreign currency translation differences- foreign operations 32 0 0
7. Changes in revaluation reserves of non-current tangible and intangible assets 33 0 0
8. Profit or loss from re-evaluation of finacial assets held for sale 34 450.979 450.979 450.979
9. Profit or loss from cash flow hedge 35 0 0
10. Profit or loss from foreign net investment hedge 36 0 0
11. Share in other comprehensive income/loss from undertakings with participat
ing interest 37 0 0
12. Actuarial gains/losses from defined benefit plans 38 0 0
13. Other changes in capital (minorities) 39 0 0
14. Taxation of transactions recognized directly in equity 40 -90.195 -90.195 -90.195
15. Increase/decrease of subscribed share capital (except by reinvested profit and
in pre-bankruptcy settlement)
41 0 0
16. Increase of subscribed share capital by profit reinvestment 42 0 0
17. Increase of subscribed share capital in pre-bankruptcy settlement 43 0 0
18. Repurchase of own shares/ stakes 44 -1.251.674 1.251.674 1.251.674
19. Share in profit/ dividend payout 45 0 0
20. Other distribution to majority owners 46 1.398.216 -99.352.193 -97.953.977 -97.953.977
21. Transfer to reserves according to annual plan 47 16.402.311 256.003.671 -336.657.721 -64.251.739 -64.251.739
22. Increase in reserves in pre-bankruptcy settlement 48 0 0
23. Balance as at 31 December of the current period (ADP 30 to 48) 49 1.672.021.210 3.602.906 83.601.061 44.815.284 35.889.621 0 9.529.123 0 634.097 0
0
385.175.162 231.979.074 2.395.468.296 0 2.395.468.296
ADDITION TO STATEMENT OF CHANGES IN EQUITY (only for IFRS adopters)
I. OTHER COMPREHENSIVE INCOME OF CURRENT PERIOD, NET OF TAX
(ADP 32 to 40)
50 0 0 0 0 0 0 0 0 360.784 0
0
0 0 360.784 0 360.784
II. COMPREHENSIVE INCOME OR LOSS FOR THE CURRENT PERIOD
(ADP 31 + 50)
51 0 0 0 0 0 0 0 0 360.784 0
0
0 231.979.074 232.339.858 0 232.339.858
III. TRANSACTIONS WITH OWNERS IN THE CURRENT PERIOD, RECOGNIZED
DIRECTLY IN EQUITY (ADP 41 to 48)
52 0 1.398.216 16.402.311 0 -1.251.674 0 0 0 0 0
0
156.651.478 -336.657.721 -160.954.042 0 -160.954.042

Valamar Riviera d.d. Stancija Kaligari 1 52440 Poreč, Hrvatska T +385 (52) 408 002 F +385 (52) 451 608 E [email protected] W www.valamar.com

Investor relations Stancija Kaligari 1 52440 Poreč, Hrvatska T +385 (52) 408 159 F +385 (52) 451 608 E [email protected] W www.valamar-riviera.com

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