Plava laguna d d : Remuneration report 2021 (pdf)

Independent limited assurance report on the Remuneration Report of Plava Laguna d.d.

We were engaged by the Management Board of Plava Laguna d.d. ("Company") to express limited assurance on the Remuneration Report for the year ended 31 December 2021, attached as an appendix. Our engagement is to form an independent limited assurance conclusion, based on our work performed and evidence obtained, that nothing has come to our attention that causes us to believe that the attached Remuneration Report is not prepared in accordance with the requirements specified in Paragraphs 1 and 2 of Article 272r of the Companies Act applicable in the Republic of Croatia ("Reporting Criteria").

Management and Supervisory Board responsibilities

Management and Supervisory Board are responsible for the preparation and presentation of the Remuneration Report that is free from material misstatement in accordance with Paragraphs 1 and 2 of Article 272r of the Companies Act and for the information contained therein.

Management is responsible for:

• designing, implementing and maintaining internal control relevant to the preparation and presentation of the Remuneration Report that is free from material misstatement, whether due to fraud or error;
• measurement and reporting of compensations in accordance with the Reporting Criteria;
• selecting and applying policies as well as making judgments and estimates that are reasonable in relation to the preparation of the Remuneration Report.

Our responsibility

Our responsibility is to examine the Remuneration Report and to report thereon in the form of an independent limited assurance conclusion based on the evidence obtained. We conducted our engagement in accordance with International Standard on Assurance Engagements (ISAE) 3000 - Assurance Engagements Other Than Audits or Reviews of Historical Financial Information issued by the International Auditing and Assurance Standards Board. ISAE 3000 requires that we plan and perform our procedures to obtain a meaningful level of assurance about whether the Remuneration Report is prepared in accordance with the Reporting Criteria, in all material respects, as the basis for our limited assurance conclusion.

KPMG Croatia d.o.o. za reviziju complies with the Code of Ethics for Professional Accountants issued by the International Ethics Standards Board for Accountants and applies the International Standard on Quality Control 1 (ISQM 1). Accordingly, we maintain a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements and professional standards, including independence and other requirements founded on the fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour as well as applicable legal and regulatory requirements.

The procedures performed in a limited assurance engagement vary in nature and timing from, and are less in extent than for, a reasonable assurance engagement. Consequently, the level of assurance obtained in a limited assurance engagement is substantially lower than the assurance that would have been obtained had a reasonable assurance engagement been performed.

As part of this engagement, we have not performed any procedures by way of audit or review of the Remuneration Report nor of the underlying accounting and other records from which it was compiled.

This version of the report is a translation from the original, which was prepared in Croatian language. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or opinions, the original language version of the report takes precedence over translation.

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Independent limited assurance report on the Remuneration Report of Plava Laguna d.d. (continued)

Reporting Criteria

The Reporting Criteria for the preparation of the Remuneration Report are the required information as specified in Paragraphs 1 and 2 of Article 272r of the Companies Act.

Limitations in the preparation of the Remuneration Report

The interpretation of performance results is to some extent subjective because it takes into account both qualitative and quantitative aspects. Due to the inherent subjectivity in interpreting qualitative reward criteria, but also subjectivity applied in measuring quantitative goals (for example, related to measuring results for the year), different acceptable methodologies for measuring the achievement of individual goals are possible. Furthermore, various other estimates and judgments were used in the preparation of the Remuneration Report, including, but not limited to: compliance with the remuneration policy; the manner in which the members of the Management Board and the Supervisory Board support the long-term success of the Company and the manner in which the benchmarks for assessing that performance have been applied; an explanation of how workers' remuneration was taken into account in calculating average remuneration and what is the composition of workers included in that calculation.

Statement of Management and Supervisory Board

The Management Board and the Supervisory Board state that the Remuneration Report for the year ended 31 December 2021 is accurate and complete and includes all required information as specified in Paragraphs 1 and 2 of Article 272r of the Companies Act.

Our conclusion

Based on the procedures performed and evidence obtained, nothing has come to our attention that causes us to believe that the Remuneration Report for the year ended 31 December 2021 is not prepared, in all material respects, in compliance with the requirements specified in Paragraphs 1 and 2 of Article 272r of the Companies Act.

This conclusion should be considered in context with the remainder of our limited assurance report, especially in context with the Limitations in the preparation of the Remuneration Report and the Restrictions on the use of our report paragraphs.

Restrictions on the use of our report

Our report is intended solely for the purpose specified in Article 272r of the Companies Act. To the fullest extent permitted by law, we accept or assume no responsibility and deny any liability to any party other than the Company for our work, for this independent limited assurance report, or for the conclusions we have reached.

KPMG Croatia d.o.o. za reviziju	30 June 2022
Croatian registered auditors
Eurotower, 17th floor
Ivana Lučića 2a
10000 Zagreb
Croatia

This version of the report is a translation from the original, which was prepared in Croatian language. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or opinions, the original language version of the report takes precedence over translation.

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Appendix: Remuneration report for 2021

Pursuant to Art. 272.r. of the Companies Act, the Corporate Governance Code (CGC) of the Zagreb Stock Exchange j.s.c. and the Croatian Financial Services Supervisory Agency, the Management Board and the Supervisory Board of PLAVA LAGUNA joint stock company for hospitality and tourism, submit the following to the General Assembly:

REMUNERATION REPORT

of Supervisory and Management Board members during the financial year 2021

INTRODUCTION

In accordance with regulatory obligations, CGC recommendations and on the basis of the adopted remuneration policy, Company's Management Board and Supervisory Board prepare once a year a report on all the compensations paid by the Company to each member of the Management Board and of the Supervisory Board during the financial year 2021.

Guided by the principle of a conscientious and accountable businessman, the adjustments made in the area of remunerations for members of the Supervisory Board and members of the Management Board during 2020, continued to be implemented in the early 2021 until the period when the estimates indicated the stabilization of the main part of the tourist season.

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Appendix: Remuneration report for 2021 (continued)

SUPERVISORY BOARD MEMBERS' REMUNERATION

The Supervisory Board of Plava laguna j.s.c. is composed of 7 (seven) members, where six members are appointed by the General Assembly and one member is appointed through the Workers' Council in the capacity of workers' representative.

The Supervisory Board acts by having regular meetings, usually once a month, and 13 meetings were held during 2021 of which one was the constituent meeting. Considering the expiration of the four-year mandate of the members of the Supervisory Board, at the General Assembly held on 26 August 2021, the Supervisory Board was re-elected in the same composition and the Workers' Council of PLAVA LAGUNA d.d. validated the term of the previous member - the workers' representative. The constituent meeting was held on 2 September 2021 and Mr. Davor Luksic Lederer was elected President of the Supervisory Board and Mr. Patricio Tomas Balmaceda Tafra was elected Vice President of the Supervisory Board.

Davor Lukšić Lederer	President, since June 2012
Patricio Tomas Balmaceda
Tafra	Vice President, since October 2006
Davor Domitrović Grubišić	Member, since April 2000
Joseph Ignace Bulnes	Member, since December 2014
Neven Staver	Member, since October 2019
Duncan Graham Bramwell	Member, since October 2019
Marica Kurtek	Member - workers' representative, since November 2019

Based on the Decision of the Extraordinary General Assembly of 31.10.2019, members of the Supervisory Board are entitled to a compensation for their work in the fixed amount of EUR 2,000.00 net (kuna equivalent where applicable) per held Supervisory Board meeting in which the member participated, which amount reflects estimated time requirements and responsibilities of members.

Remuneration to Supervisory Board members does not include a variable component ie. it is not related to business performance.

Based on the voluntary waiver of full remuneration started in 2020 due to significant business disruptions and reduced income during 2020, for the meetings held in December 2020, January, February and two meetings held in April 2021, compensations to the members of the Supervisory Board were reduced by 15%. Payments recorded as remuneration in 2021 which relate to the following seven meetings were paid based on the Decision of the Extraordinary General Assembly of 31.10.2019.

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Appendix: Remuneration report for 2021 (continued)

The members of the Supervisory Board in year 2021 (regardless of the period to which the payment relates) were paid gross I amounts in HRK, as shown below:

	Gross I - fixed	%
Supervisory Board member	remuneration
Davor Luksic Lederer		100
Patricio Tomas Balmaceda Tafra		100
Neven Staver		100
Davor Domitrović Grubisic		100
Joseph Ignace Bulnes		100
Duncan Graham Bramwell		100
Marica Kurtek		100

Stated remuneration does not include payments to Supervisory Board members in the form of reimbursement of expenses incurred by attending meetings (travel and accommodation expenses) to which Supervisory Board members are entitled under the Company's Statute.

The companies within the Plava laguna Group did not enter into transactions with the members of the Supervisory Board nor did they make payments to the members of the Supervisory Board on any basis other than those mentioned above, and also there are no financial obligations of any nature to the appointed members. Members of the Supervisory Board are not entitled to shares or share options.

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