Jadranka d.d., 28.11.2007
Tatjana Braškić – Project manager

Back JADRANKA GROUP OPERATING STRATEGY IN 2007

Jadranka d.d. is a 100% owner of a daughter company Jadranka hotels d.o.o., Jadranka commerce d.o.o. and Jadranka campsites d.o.o.

In 2006 Jadranka's activities were directed towards debt restructuring, in form of issuing 75.000.000 kn of shares for a 5 year period with 6% annual interests. The main goal was to create enough space for making investments in future development.

In 2006 all members of Jadranka Group made preparations for introducing the quality control system ISO 9001 and control system for environmental protection ISO 14001 and implementation of HACCP. The certificate is expected to be obtained at the beginning of 2008 for ISO 9001 and ISO 14001, whereas for HACCP it is planned by the end of the year.

In September 2007 Jadranka d.d. and Jadranka hotels d.o.o. signed a letter of intention with EBRD for entering into minority ownership of Jadranka Hotels.

The negotiations were carried out successfully, therefore we anticipate the contract to be concluded by the end of the year or at the beginning of 2008. Entering of EBRD is expected to significantly speed up the developing path of Jadranka hotels by way of investing 80,0 mill.EUR in 5 years for the hotel reconstruction, upgrading 80% of capacity to 4*, 5% to 5* and the rest to high 3*standard.

BUSINESS RESULTS 01-10.2007 AND BUSINESS PLANS FOR THE YEAR

Jadranka hotels d.o.o.

The amount of the basic revenue for the period of 01-10.2007 was 123,1 million kunas, an increase of 4% over the year 2006, and by the end of the year the expected amount is 126,5 million kunas i.e. an increase of 5% over the year 2006.

Prior to taxation the profit for the period 01-10.2007 amounted 9,3 million kunas, 19% less than in 2006., however in 2006 revenue was made due to property sale which equals the returns with those made in 2006. By the end of the year the profit is estimated to 3,2 million kunas whilst in 2006 it was 167.000 kunas. If we compare the returns, the same will be increased for 5,0 million kunas.

In 2007 the hotels started running the process of market restructuring to capture an increased share of the more wealthy guests, considering the planned investments for upgrading the hotel categories. Hard work was reduced for 9 % and a number of 14% increase in profit per night shows that it has become more effective.

In October 2007 Jadranka Hotels started investing in Hotel Aurora approx.18,0 million EUR, by way of upgrading the hotel from 391 accomm.unit from 3* to 4*, opening new wellness and beauty center, external swimming pool and congress center accommodationg 350 visitors. The anticipated reopening date of the new hotel is May 2008.

Jadranka commerce d.o.o.

The basic revenue of 144,1 million kunas was made in the first ten months of 2007 which was on a level with 2006. By the end of the year the estimated amount is 159,3 million kunas which is also on a level with 2006.

Prior to taxation the profit for the period of the first 10 months was 9,4 million kunas, an increase of 27% over the year 2006. By the end of the year the profit is estimated to 624.000 kunas, whereas in 2006 it amounted 111.000 kunas.

The expenses of the commerce have been rationalized.

Jadranka commerce has not increased its profit since the Retail shop Centar, one of its biggest supermarkets, underwent the complete rennovation and was closed for 8 months. However an immense space valued at more than 1,2 million € is expected to increase the profit in 2008.

Jadranka campsites d.o.o.

In the first ten months of 2007, the basic revenue of 30,6 million kunas was made, or 17% more than in 2006. By the end of the year the estimated amount is 30,63 million kunas or an increase of 17% over 2006.

Prior to taxation the profit for that period amounted 5,78 million kunas, 45% more than in 2006. By the end of the year the profit is estimated to reach 3,8 million kunas, whereas in 2006 it was 1,83 million kunas.

The campsites revived their business in Campsite Bijar in Osor (after being let out on hire) and an increase of 10% occupancy rate compared to 2006, and also 7% increase in room revenue.

In 2007 the campsites invested 12,0 million kunas, of which 10,0 million kunas for reconstruction of toilet facilities and arrangement of new parcels, and 2,0 million kunas for the property purchase.

CONSOLIDATED RESULTS OF JADRANKA GROUP

Consolidated revenue for Jadranka Group for 2007 is estimated to 11,51 million kunas, which is 20% more than in 2006, whereas the operating revenue (without property sale) in 2007 is estimated to 9,41 million kunas, 29% more than 2006.

OPERATING PLANS FOR 2008

The most important business event in 2008 is entering of EBRD into the minority ownership of Jadranka hotels do.o. which is furthermore related to redevelopment of Jadranka hotels, completion of new Aurora, preparation for investment in hotel Vespera and external swimming pools between Aurora and Vespera and upgrading of the hotel with 391 accommm.units from 3* to 4*. The investment value is estimated to 14,0 million €.

Jadranka campsites are carrying on with improvement of toilet facilities, whereas Jadranka commerce considers investing into Central food preparation unit, especially in bakery and pastry units.

Hotels are estimating 12% revenue increase, campsites and commerce 5%.

The significant increase of gross profit is planned to be achieved by all members: Jadranka hotels from 1.600.000,00 in 2007. to 21.700.000,00 kn in 2008., Jadranka commerce d.o.o. from 520.000,00 kn to 3.300.000,00 in 2008., Jadranka campsites d.o.o from 3.100.00,00 kn in 2007. to 7.400.000,00 kn in 2008.

The consolidated profit of the Group in 2008 is estimated to 31,3 million kunas in comparison to 2007 when it reached 11,8 kunas.

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