Valamar Riviera

Valamar's corporate governance model comprises a set of regulations, rules, policies, protocols, processes, and procedures based on the principles of transparency and best corporate governance practices. Valamar's senior management is responsible for overseeing key functional business areas and activities. Their role includes cross-functional management and leadership, implementing corporate strategy, and providing executive support to the Management Board. Valamar's legal experts and strategic teams play a crucial role in ensuring business transparency and compliance with relevant regulations. Through their expertise and proactive approach, they safeguard the company's stability and long-term sustainability.

Management Board and Supervisory Board Role

Franz Lanschützer, Ph.D. serves as Supervisory Board Chairman, while Željko Kukurin, Ph.D. serves as CEO of the Management Board. The Supervisory Board provides oversight and strategic guidance, while the Management Board is responsible for operational management and strategy implementation.

The Management Board's role includes implementing corporate strategy, overseeing key functional business areas, and ensuring compliance with corporate governance principles. The Board focuses on creating value for stakeholders while maintaining transparency and accountability in all business operations.

The Supervisory Board and Management Board actively address sustainability matters through the company's strategic framework. The 2026 strategy explicitly incorporates sustainability objectives, including achieving a gold-tier ESG rating and maintaining leadership in sustainable tourism development.

Strategic Sustainability Oversight

At the start of 2024, Valamar published its strategic objectives for 2026, which include:

• ESG Leadership: Goal to achieve a gold-tier ESG rating, further strengthening leadership in sustainable tourism development in Croatia • Sustainable Investment Focus: EUR 450 million investment plan includes significant allocations to environmental protection, energy efficiency, and sustainable tourism projects • Social Responsibility Commitment: Continued focus on being recognized as a leader in socially responsible and sustainable business

Sustainability Integration in Business Strategy

The company's mission statement reflects commitment to creating holidays which are good for guests, destinations, employees and the environment while creating value for stakeholders. This sustainability focus is embedded in the strategic decision-making process and monitored through regular ESG performance assessments.

EcoVadis, the global agency for sustainability ratings, awarded Valamar a high silver ESG rating, reaffirming success in decarbonisation, sustainable practices, corporate social responsibility, and governance.

Integration of sustainability-related performance in incentive schemes

Disclosure statement

In accordance with the Remuneration policy and pursuant to the Remuneration report for 2024, management board members do not receive any variable remuneration that includes sustainability-related performance.

Members of the Supervisory Board, in accordance with the Remuneration Policy, do not receive a variable remuneration.

Climate-related considerations in remuneration (E1.GOV-3)

In accordance with the Remuneration policy and pursuant to the Remuneration report for 2024, management board members do not receive any variable remuneration that includes sustainability-related performance.

Members of the Supervisory Board, in accordance with the Remuneration Policy, do not receive a variable remuneration.

Valamar has implemented comprehensive risk management and internal controls over sustainability reporting through its corporate governance framework and legal compliance systems.

Internal Control Framework

Valamar's corporate governance model comprises a set of regulations, rules, policies, protocols, processes, and procedures based on the principles of transparency and best corporate governance practices. Valamar's senior management is responsible for overseeing key functional business areas and activities, including sustainability reporting.

Legal and Regulatory Compliance

Valamar's legal experts and strategic teams play a crucial role in ensuring business transparency and compliance with relevant regulations. Through their expertise and proactive approach, they safeguard the company's stability and long-term sustainability. This includes compliance with the Corporate Sustainability Reporting Directive (CSRD) requirements.

ESG Performance Monitoring

The company has established systems to monitor and report on ESG performance, as evidenced by achieving a high silver ESG rating from EcoVadis. This rating system evaluates the effectiveness of sustainable tourism-oriented business model and corporate governance practices.

Risk Management Integration

Sustainability risks are integrated into the overall risk management framework, with particular attention to climate-related risks, environmental impacts, and social responsibility considerations that could affect business operations and stakeholder value creation.

Business Model

Valamar Riviera is committed to delivering a comprehensive tourist experience for its guests. This encompasses the development and maintenance of tourism assets, the operational management of hotels, resorts, and campsites, as well as the continuous enhancement of the destination's tourism offering.

By managing the entire destination value chain, maintaining operational excellence, and fostering strong partnerships with destinations, the Company ensures a high standard of service quality, optimises business performance, and ultimately delivers strong returns on investment.

Value Chain Structure

The Valamar business model consists of three core components:

1. Development and Maintenance of Hospitality Assets: Continuous investment in tourism infrastructure and facilities
2. Operating Management of Hotels, Resorts and Campsites: Day-to-day operational excellence across the portfolio
3. Management of Destination Services: Enhancing overall destination tourism offering

This integrated approach enables:

• Managing the complete guest experience at a destination
• Managing the product portfolio
• Increased profitability due to the horizontal and vertical integration at destination level
• Increased revenue per guest due to active value chain management
• Optimal investment and return on assets

Portfolio Overview

Valamar's portfolio includes:

• 36 hotels and resorts with approximately 8,920 accommodation units
• 15 camping resorts with approximately 11,681 accommodation units
• Total capacity: Around 21,000 accommodation units accommodating around 58,000 guests per day

Strategic Investment Approach

With total investments of over a billion euros in the last 21 years, Valamar has grown into one of the leading regional investors. The company maintains its position as the largest and most desirable employer in tourism in Croatia.

Destination Focus

Valamar operates in first-class destinations:

• Istria: Poreč, Rabac
• Croatian Islands: Krk, Rab, Hvar
• Dalmatian Coast: Makarska, Dubrovnik
• International: Obertauern, Austria

The 2026 strategy includes planned investments of EUR 450 million in enhancing portfolio quality and preparing for the next investment cycle with potential investment exceeding EUR 1 billion.

Stakeholder Engagement Framework

Valamar fosters long-term relationships and two-way communication with key stakeholders. The company's mission is to create holidays that are good for guests, destinations, employees and the environment while aiming to create value for shareholders and partners.

Key Stakeholder Groups and Engagement

Guests

• Guest Experience Focus: Each guest is unique, so holidays should be too. By crafting holiday experiences tailored for the individual, Valamar ensures every guest feels welcome, valued and amazed
• Loyalty Programme: Total number of guests in Valamar's active marketing database has exceeded 1.3 million, with 656 thousand loyalty members. In 2024 alone, 98 thousand new members joined the loyalty programme
• Guest Satisfaction: Returning guests accounted for a significant 29% of Valamar's total visitors in 2024
• Quality Commitment: Goal to achieve exceptionally high guest satisfaction with a quality score of 89% and an NPS of 65

Employees

• Proud Employer Approach: Valamar believes employees breathe life into assets and strives to offer more than just a job, ensuring purpose and growth for every team member
• Best Employer Recognition: Valamar was recognised as the most desirable employer in tourism and hospitality in 2024, maintaining its position for the eighth consecutive year as the only tourism company ranked among the top 20 employers in Croatia
• Employee Composition: Particular emphasis is placed on retaining local employees, who accounted for 78% of the workforce in 2024
• Seasonal Worker Retention: High return rate of seasonal workers was recorded, with 53% choosing to return to work at Valamar

Local Communities and Destinations

• Community Commitment: Committed to sustainability, Valamar advocates for eco-friendly strategies aimed to efficiently manage and preserve resources, protecting locals for future generations
• Local Economic Impact: Collaboration with destinations contributes to the development of the local economy
• Infrastructure Investment: Maintaining and enhancing public tourism infrastructure, such as beaches, promenades, playgrounds, and cycling trails
• Local Sourcing: Supporting local producers by sourcing domestic products, resulting in 78% locally sourced food and beverages in Valamar's offerings

Shareholders and Investors

• Value Creation: Valamar creates superior returns and value for investors and shareholders, distributing sustainable dividends
• Target Returns: Fundamental shareholder value target of EUR 1 billion (9 EUR per share) and dividend yield of 4%
• Investor Partners: Business plans developed with investor partners including AZ, PBZCo, WB GmbH

Suppliers and Partners

• Partnership Development: Establishes partnerships with global partners thus enhancing international recognition and competitiveness
• Supplier Engagement: 80% of suppliers have committed to implementing sustainable business practices, following Valamar's sustainability leadership

Material Impacts, Risks and Opportunities

Valamar has identified several material impacts, risks and opportunities that interact with its strategy and business model:

Climate Change and Environmental Impacts

Material Impacts

• Energy Consumption: Valamar sourced 100% of electricity in 2024 from renewable sources and continued to invest in solar energy
• Carbon Footprint Reduction: Particular emphasis is placed on reducing the Group's carbon footprint and ongoing investment in renewable energy sources
• Natural Resource Management: Continued care about natural resources in destinations, including further investments in saving water and implementing green building practices in investment projects

Strategic Response

• Renewable Energy Investment: Continued investment in solar energy and renewable electricity sourcing
• Sustainable Construction: Green building practices implementation in investment projects
• Water Conservation: Further investments in water-saving initiatives

Social Impacts and Opportunities

Employee-Related Impacts

• Labor Market Challenges: As the labour market becomes more challenging, reputation as the best employer in tourism has become a key competitive advantage
• Year-round Employment: Plan to maintain over 50% of jobs with year-round income
• Local Employment: Goal to ensure at least 70% of workforce consists of local employees

Community Impacts

• Local Economic Development: Creating over 700 new jobs through major investments like the Pical Hotel project
• Quality of Life: Investments contribute to improved quality of life for residents in destinations
• Infrastructure Development: Enhancement of public tourism infrastructure benefits both tourists and local communities

Business and Financial Opportunities

Growth Strategy Integration

• Investment Cycle: EUR 450 million investment plan by 2026 to enhance portfolio quality
• Market Position: Strengthening position as leading hospitality company on the Adriatic and in the Alps
• Revenue Diversification: Target of 50% revenue generation outside peak tourist season
• Direct Sales Growth: Goal to achieve two-thirds of revenue from direct sales

Sustainability as Competitive Advantage

• ESG Leadership: Goal to achieve gold-tier ESG rating, strengthening leadership in sustainable tourism development
• Brand Differentiation: Recognition as leader in sustainable practices across initiatives
• Stakeholder Value Creation: Creating value for guests, destinations, employees, shareholders, and partners through sustainable business practices

Risk Management Integration

The identified material impacts, risks and opportunities are integrated into Valamar's strategic planning through:

• Regular ESG performance monitoring and reporting
• Investment allocation prioritizing sustainability and social responsibility
• Operational excellence programs focusing on environmental efficiency
• Stakeholder engagement strategies addressing material concerns
• Long-term strategic planning incorporating climate and social considerations

Description of the process to identify and assess material impacts, risks and opportunities

Overview of the double materiality assessment

Double materiality analysis was conducted in three phases:

1. Understanding the context

   • Overview of activities and business relationships in the context of sustainability
   • Understanding of affected stakeholders

2. Identification of the actual and potential impacts, risks and opportunities related to sustainability matters

   • Identification of impacts
   • Identification of risks and opportunities
   • Results of the IRO identification analysis

3. Materiality assessment

   • Impact materiality assessment
   • Financial materiality assessment
   • Business sectors assessment
   • Sustainability Committee assessment
   • Consolidation of results

Phase 1: Understanding the context

In the first phase of assessing the material impacts, risks, and opportunities of Valamar Group, an initial review of business activities and relationships, as well as the sustainability context in which these activities take place, was conducted. This established the foundation for further identification of actual and potential impacts, risks, and opportunities.

Activities conducted in this phase include the review and analysis of activities such as:

• business model
• organizational structure
• mission, vision, and core values
• current ESG strategy, goals and initiatives
• employee structure
• value chain and geographical context of business activities
• impacts and challenges related to the tourism and hospitality sector
• memberships and initiatives that Valamar Riviera has joined
• Regulatory and legislative environment related to sustainability issues
• Stakeholders and shareholder groups whose interests are affected or may be affected by Valamar Group's activities
• satisfaction surveys
• media content

Phase 2: Identification of impacts, risks and opportunities

Valamар Group performed a relevance analysis of all topics in accordance with paragraph AR 16 in ESRS 1 standard. Following the results of initial review of business activities and relationships, as well as the sustainability context, in the next phase of the process a short-list of impacts, risk and opportunities was performed.

Identification and evaluation of impacts, risks and opportunities was performed by including Sustainability Committee and the following organizational units:

a) Technical sector b) Legal affairs sector c) Procurement sector d) Quality and sustainability sector e) Sector of corporate affairs f) Investment sector g) Finance sector h) Controlling sector i) Beverage and food sector j) Human resources sector

Inputs to the assessment

The implemented methodology identifies and evaluates the adverse impacts of Valamar Group's activities through a structured approach that considers various factors, including specific activities, business relationships, and geographic contexts. During the identification process, the interrelationships between impacts and dependencies, along with their associations with risks and opportunities, were thoroughly examined. Each impact was assessed to ascertain its potential financial implications for the company, and where applicable, it was classified as either a risk or an opportunity.

Sector benchmarks and standards: Impacts within the value chain were identified through a benchmark analysis of the hospitality sector by using Sustainability Accounting Standards Board as source.

Internal experts: The assessment was complemented by interviews with internal stakeholders across various departments that engage with stakeholders, including business partners, suppliers, customers and guests.

Supplier analysis: Additionally, an analysis of the current supplier structure was conducted.

This methodology was adopted in light of the challenges encountered in data collection from the value chain. Valamar Group plans to implement a procedure for collecting information within its value chain and to incorporate this data into its reporting in the upcoming reporting periods and update the results of double materiality accordingly.

Internal stakeholder participation: All sustainability matters were evaluated by the relevant business units (sectors) so that every sector evaluates impacts, risks and opportunities related to their work, responsibilities and business relationships.

Stakeholder consultation

Valamар Group did not engage in consultations with external stakeholders, affected parties, or external experts for the purposes of DMA analysis for 2024. Instead, insights were gathered through consultations with internal departments within Valamar Group, leveraging their expertise and day-to-day operational knowledge relevant to stakeholder perspectives. Valamar Group is committed to conducting stakeholder engagement in alignment with sustainability reporting requirements for the year 2025, in accordance with the European Sustainability Reporting Standards (ESRS).

Use of value chain mapping

The methodology incorporates a comprehensive approach to assess both the company's operations and its business relationships throughout the value chain. This methodology identifies where impacts occur by prompting companies to evaluate impacts stemming from their own operations as well as from both upstream and downstream activities in the value chain. The value chain materiality assessment does not evaluate individual actors within the value chain. Instead, it groups the value chain into two major segments: upstream and downstream. By focusing on the broader value chain rather than individual actors, the methodology allows the company to identify critical impact areas ("hotspots") and prioritize their actions effectively, which is essential for addressing significant sustainability issues.

Phase 3: Materiality assessment

Impact materiality assessment

In impact materiality assessment, existing impacts that have already occurred and/or are occurring, as well as potential impacts that may occur in the future, have been considered. Also, both positive and negative impacts were considered through short-term, medium-term and long-term time period.

Scoring criteria for impact materiality:

Impacts were evaluated according to their scale, scope and probability of occurrence on a 4-point scale, while for potential negative impacts, their irreparability and relation to human rights violation were taken into account.

• Scale was assessed to evaluate the consequent damage or benefit of the impact
• Scope was evaluated based on the prevalence of the impact, specifically in terms of the area of effect or the number of affected stakeholders
• Irreparability was assessed by the amount of effort required to restore the damage caused by the impact to its original state
• Probability was evaluated based on the frequency of occurrence

Financial materiality assessment

The criteria for evaluating risks and opportunities are related to:

• the scale of positive or negative financial consequences
• impact on profitability (effects on EBITDA)
• reputational impact
• legal risk
• probability of occurrence

A 4-point scale was used to rate both financial magnitude and probability of occurrence. These ratings were considered collectively to derive an average score.

The methodology applied by DMA differs from the existing enterprise risk management framework. At present, there is no specialized system for the identification and prioritization of sustainability-related risks in comparison to other risk categories, nor are there tools available for such evaluations. Valamar Group is committed to integrating sustainability into its enterprise risk management system for future reporting purposes.

Threshold for materiality

Valamар Group set a materiality threshold of 7.5 out of maximal 10 for the first year of reporting. This threshold applies to both impact materiality and financial materiality assessment.

Consolidation of results and governance

After collecting the evaluation results from all of the sectors, results were consolidated so that the average value of each individual answer obtained from the relevant sector was taken, which resulted in an average value for each of the above-mentioned criteria according to which every impact, risk and opportunity materiality was evaluated.

After sustainability issues were assessed by relevant sectors within Valamar Group, a six-member Sustainability committee also provided evaluations. The overall assessment of each individual impact, risk, and opportunity is taken as the median value of the average sector assessments and the average assessments of the sustainability committee.

Frequency and review

Currently, there is no formal written procedure for the double materiality assessment, and the decision-making process is still being developed. The Management Board actively engages with the Sustainability Committee, which communicates relevant matters to them. It is important to note that the Audit Committee has not yet been involved in this process. The Management Board has been kept informed about the double materiality process and its findings. Looking ahead, Valamar Group is committed to establishing a formalized process for future reporting, which will align sustainability risks and opportunities with the enterprise risk management system, enhancing its overall approach to sustainability.

This is the first year of reporting in accordance with ESRS standards (2024).

Material sustainability matters identified

Based on the results of the double materiality assessment, Valamar Group's most important sustainability matters are:

• E1 Energy (Reduction of energy consumption and production of own renewable energy)
• E1 Climate change mitigation (Reduction of GHG emissions)
• E3 Water and marine resources (Responsible water management)
• S1 Own workforce (Appropriate wages)
• G1 Business conduct (Corporate governance and risk management)

Threshold for determining what qualifies as material information for reporting purposes is set at equal or above 7.5 on a 1-10 scale.

This Annual Report for 2024 combines Valamar's business report with the wider framework of the Corporate Sustainability Reporting Directive (CSRD) which has become obligatory for large companies as of 2024. It therefore reflects an integrated and unified view of business and sustainability results and achievements, including indicators prescribed by the EU Taxonomy Regulation.

The sustainability report (pages 51-107) covers the material topics and disclosures required under the European Sustainability Reporting Standards (ESRS), including:

• General information on sustainability strategy and governance
• Environmental information covering climate change, pollution, water resources, biodiversity, and circular economy
• Social information addressing own workforce, value chain workers, affected communities, and consumers
• Governance information on business conduct

The report includes an independent auditor's limited assurance report on the Sustainability Statement (pages 107-109) providing external verification of the disclosed sustainability information.

Transition plan for climate change mitigation

Status of Transition Plan

Currently, Valamar Group does not have a transition plan for climate change mitigation, ensuring its strategy and business model are compatible with the transition to a sustainable economy and limiting global warming to 1.5 degrees in line with the Paris Agreement, but have initiated work to assess how to best approach this.

As part of the development of the new strategy 2027-2030, a comprehensive transition plan will also be created.

Valamar Group will develop a transition plan in line with the new ESG strategy for a period 2027-2030. The transition plan will define actions, measures and targets for Scope 3.

Scope of Emissions Reduction

The company has adopted a Supplier Code of Conduct as a requirement for its suppliers, which includes taking steps to calculate and/or reduce greenhouse gas emissions (Scope 3 value chain activities).

Process screening covers Valamar Group's three-year strategic investment and portfolio development plan including investments in renewable energy and resource-use efficiency in operations across 44 Valamar Group properties (hotels, resorts and camps).

Target Year

The strategic planning and capital allocation plan are set for a period until 2026.

A comprehensive transition plan will be created as part of the development of the new strategy 2027-2030.

Targets Related to Climate Change Mitigation (E1-4)

Current targets (until 2026):

• By 2026, reduce GHG emissions in Scope 1 and 2 by 75% per occupied room compared to 2015. Target is aligned with the 1.5°C trajectory. The target is the sum of market base Scope 1 and Scope 2 emissions, with 99.7% attributed to Scope 1 and 0.3% to Scope 2. The greenhouse gases covered by the target are CO₂, CH₄, and N₂O.

• By 2026, produce 15% of electricity from on-site solar systems at Valamar Group properties and through long-term partnerships.

Progress to date:

Between 2015 and 2024, Valamar Group reduced direct and indirect greenhouse gas emissions (Scope 1 and 2) by more than 69% per occupied accommodation unit, or by 63% in gross GHG emissions. This includes a 14% reduction in Scope 1 emissions and a 99% reduction in Scope 2 emissions compared to 2015.

The base year for these reductions is 2015, and the gross amount of GHG emissions in that year was 25,044 tCO2e.

Future targets:

GHG emission reduction targets for 2030 will be set as part of the Transition Plan, which is scheduled to be adopted with the new ESG strategy for the period 2027-2030.

The plan will define actions, measures and targets for Scope 3.

Alignment with 1.5°C / SBTi Validation Status

The target to reduce GHG emissions in Scope 1 and 2 by 75% per occupied room compared to 2015 is aligned with the 1.5°C trajectory.

In 2023, Valamar Riviera joined the Science Based Targets Initiative (SBTi). The next phase is to submit the targets to the SBTi within two years of joining.

Key Decarbonization Levers

Energy efficiency and renewable energy:

• Replacing fossil fuel-based equipment with heat pumps
• Installing LED lighting
• Integrating energy monitoring systems
• Building photovoltaic power plants on Valamar Group's facilities
• Sourcing electricity from certified renewable sources through power purchase agreements
• Upgrading air conditioning and refrigeration systems to those using environmentally friendly refrigerants

Process and operations:

• Transitioning to e-vehicles and electric boats
• Replacing fuel oil boilers with gas boilers and heat pumps
• Upgrading pool equipment (including heating systems and pool covers)
• Participation in virtual power plant concept with KOER d.o.o., connecting energy producers, consumers, and storage units across the distribution network
• KOER generators, with a total capacity of 4 MW, serve as backup power sources and help reduce load on electrical grid during peak demand periods

Building portfolio:

• Upgrading, reconstructing and repositioning existing assets in accordance with green building standards
• Investment in nZEB construction

Supply chain:

• Motivation of strategic suppliers to transition towards sustainable business practices
• Supplier Code of Conduct requiring suppliers to take steps to calculate and/or reduce greenhouse gas emissions

CapEx / Investment Commitments

2024 investments:

During 2024, Valamar Group invested a total of €4.8 million in climate mitigation actions, with €4.4 million allocated to CAPEX.

Planned 2025 investments:

Planned resources for investments in 2025 are €3.6 million, allocated in CAPEX and are part of CAPEX plan.

Future investments include:

• Replacing fossil fuel-powered equipment with heat pumps
• Transitioning to electric boats
• Upgrading pool equipment (including heating systems and pool covers)
• Purchasing new air conditioning units with models that use environmentally friendly refrigerants
• Investing in increasing energy efficiency

Climate Risk Assessment

Valamar Group used a climate risk quantification and reporting software provided by external advisor to assess key climate hazards (water stress/droughts, wildfires, coastal and riverine flooding, extreme winds and sea water quality/algal bloom) and transition risks (changing energy prices, carbon price and change in flight pricing).

Assessment methodology:

• Data used: 44 Valamar Group properties site locations, site occupancy levels, site values, historic annual consumption, yearly consumption plans until 2027 (including energy, carbon emissions and water), mode of transport used by customers, and historic damages from physical risks
• Risk formula: Risk = Impact × Probability
• Climate scenarios: 3 IPCC scenarios (SSP1-2.6, SSP2-4.5 and SSP5-8.5)
• Time horizons: 2030, 2040, 2050

Results:

Climate value at risk averages at 1.1% of turnover in 2030. This increased to 3.5% in 2040 and 7.4% by 2050.

The most of this impact is generated by changes in flight pricing followed by the risk of wildfire, rising energy prices, declining sea quality due to algal bloom, and the price of carbon.

Conclusion:

Physical and transition risks assessed as a result of this analysis were not deemed material. Nevertheless, Valamar Group will continue to monitor climate-related risks by revisiting the assessment in due time.

Locked-in Emissions and Stranded Assets

Valamar Group has not identified any assets and business activities that are incompatible with a transition to a carbon-neutral economy or that require significant effort to be compatible with a transition to a carbon-neutral economy.

No critical climate-related assumptions have been used to date to measure assets and liabilities in the consolidated financial statements.

The time horizons used in climate risk analysis are not fully aligned with the expected lifetime of Valamar Group's assets, as the land and buildings, which constitute a significant portion of its assets, have a longer lifespan than the time horizons being used.

Use of Carbon Credits / Removals

Not disclosed in the excerpts provided.

Valamar has implemented comprehensive policies related to climate change mitigation and adaptation as part of its sustainable tourism strategy.

Climate Change Mitigation Policies

Renewable Energy Transition

• 100% Renewable Electricity: In 2024, Valamar sourced 100% of electricity from renewable sources
• Solar Energy Investment: Continued investment in solar energy infrastructure across properties
• Energy Efficiency Projects: Over EUR 500 thousand invested in various energy efficiency projects in the 2024/25 investment cycle

Carbon Footprint Reduction

• Decarbonization Strategy: Particular emphasis placed on reducing the Group's carbon footprint through ongoing investment in renewable energy sources
• Green Building Practices: Implementation of green building practices in investment projects
• Sustainable Construction: Integration of environmental considerations into new development projects

Climate Adaptation Measures

Infrastructure Resilience

• Sustainable Investment Planning: EUR 450 million investment plan includes significant allocations to environmental protection and climate resilience
• Destination Infrastructure: Maintaining and enhancing public tourism infrastructure to improve climate adaptability
• Water Management: Further investments in water-saving initiatives to address potential water scarcity

Operational Adaptation

• Energy Efficiency Enhancement: Installation of new heat pumps at various properties including Valamar Sanfior Hotel & Casa and Girandella Resort
• Technology Integration: Digitalisation and innovation projects to improve operational efficiency and reduce environmental impact

Policy Integration

These climate policies are integrated into Valamar's overall sustainability strategy and 2026 business plan, supporting the goal to achieve a gold-tier ESG rating and maintain leadership in sustainable tourism development in Croatia.

Valamar has implemented comprehensive actions and allocated significant resources to support its climate change policies.

Actions Implemented in 2024

Renewable Energy Transition

• 100% Renewable Electricity Sourcing: Successfully transitioned to sourcing 100% of electricity from renewable sources in 2024
• Solar Energy Installations: Continued investment and installation of solar energy systems across properties
• Energy-Efficient Equipment: Installation of new heat pumps at Valamar Sanfior Hotel & Casa 4* and Girandella Resort 4*/5*, Valamar Collection

Operational Improvements

• Electric Vehicle Fleet: Procurement of electric vehicles as part of sustainability initiatives
• Energy Management: From 1 June 2024 to 31 December 2024, applied electricity supply contract with lower price compared to comparable period of previous year
• Green Building Implementation: Integration of green building practices in investment projects

Resource Allocation

2024/25 Investment Cycle Climate Actions

• Energy Efficiency Projects: Over EUR 500,000 allocated specifically for energy efficiency projects
• Sustainability Initiatives: EUR 3.7 million allocated for various sustainability initiatives including:
  • Procurement of electric vehicles
  • Tree planting programs
  • Landscaping improvements
  • Bio-waste recycling systems
  • Installation of new heat pumps
  • Acquisition of aerators and percolators

Infrastructure Investments

• Heat Pump Systems: New installations at multiple properties to improve energy efficiency
• Building Efficiency: Energy efficiency enhancements integrated into renovation and new construction projects
• Water Conservation: Further investments in water-saving technologies and systems

Monitoring and Evaluation

Valamar tracks the effectiveness of these actions through:

• ESG Performance Monitoring: Regular assessment of environmental performance metrics
• EcoVadis Rating: Achieved high silver ESG rating recognizing success in decarbonization and sustainable practices
• Energy Consumption Tracking: Monitoring of renewable energy usage and efficiency improvements

These actions support Valamar's strategic objective to achieve a gold-tier ESG rating and maintain leadership in sustainable tourism development.

Valamar has established specific targets related to climate change mitigation and adaptation as part of its 2026 strategic objectives.

Climate-Related Strategic Targets for 2026

ESG Leadership Target

• Gold-Tier ESG Rating: Valamar aims to achieve a gold-tier ESG rating by 2026, further strengthening its leadership in sustainable tourism development in Croatia
• Sustainability Recognition: Goal to be recognized as a leader in socially responsible and sustainable business that focuses on localization and reducing CO2 emissions

Energy and Carbon Reduction Targets

• 100% Renewable Energy Maintenance: Continue sourcing 100% of electricity from renewable sources (achieved in 2024)
• Carbon Footprint Reduction: Ongoing commitment to reducing the Group's carbon footprint through continued investment in renewable energy sources
• Energy Efficiency Improvement: Systematic enhancement of energy efficiency across all properties through heat pump installations and other energy-saving technologies

Investment Targets

• Sustainable Investment Allocation: Within the EUR 450 million investment plan by 2026, significant portions are dedicated to:
  • Environmental protection projects
  • Energy efficiency improvements
  • Renewable energy infrastructure
  • Green building practices in new constructions

Operational Targets

• Electric Vehicle Fleet Expansion: Continued procurement and expansion of electric vehicle fleet
• Sustainable Construction Standards: Implementation of green building practices as standard in all investment projects
• Water Conservation: Further investments in water-saving initiatives across all properties

Monitoring Framework

Valamar monitors progress toward these targets through:

• Annual ESG Assessments: Regular evaluation of environmental performance
• EcoVadis Rating System: External verification of sustainability progress
• Investment Tracking: Monitoring of climate-related investment allocations and outcomes
• Energy Performance Metrics: Tracking renewable energy usage and efficiency improvements

These targets are integrated into Valamar's overall business strategy and are designed to support both climate mitigation and adaptation while maintaining business growth and profitability.

Energy consumption and mix

Energy consumption by source (2024)

Scope and methodology

Valamar Riviera reports that 100% of electricity in 2024 was sourced from renewable sources. Total energy from renewable sources is stated as 75% of total energy consumption in 2024 (compared to 74% in 2023).

The company does not provide a full ESRS E1-5 compliant disaggregated energy consumption table with absolute MWh values by fuel type or source category. No breakdown of fossil fuel consumption by type (coal, oil, natural gas) is disclosed. No data on nuclear energy consumption is provided. Self-generated renewable energy production and purchased renewable energy volumes are not quantified in absolute terms.

No energy intensity metrics (per revenue or per net revenue) are disclosed for 2024.

The company has chosen not to disclose phased-in disclosure requirements as outlined in ESRS Appendix C (p. 82).

Gross Scopes 1, 2, 3 and Total GHG emissions

Summary of GHG Emissions (tCO₂eq)

Scope 1: Direct GHG Emissions (tCO₂eq)

Scope 2: Indirect GHG Emissions from Purchased Energy (tCO₂eq)

Note: Valamar Group sources 100% of electricity from renewable sources with Guarantees of Origin, resulting in zero market-based Scope 2 emissions.

Scope 3: Indirect GHG Emissions from Value Chain (tCO₂eq)

Note: Categories 8-15 not applicable or not material to Valamar Group's operations.

GHG Intensity Metrics

Biogenic CO₂ Emissions

Biogenic CO₂ emissions are reported separately and amount to 245 tCO₂ in 2024 (2023: 238 tCO₂).

Methodology and Scope Notes

• Consolidation approach: Operational control
• Scope 1: Includes stationary combustion (heating systems, boilers), mobile combustion (company-owned vehicles), and fugitive emissions (refrigerants, air conditioning)
• Scope 2: 100% renewable electricity since 2015; market-based method shows zero emissions due to Guarantees of Origin
• Scope 3: Covers categories 1-7 based on materiality assessment and data availability. Categories 8-15 assessed as not applicable or not material
• Emission factors: DEFRA 2024, IEA 2024, local grid factors
• Base year: 2019 (pre-pandemic baseline)
• Recalculations: Base year emissions recalculated in 2024 to reflect portfolio changes and improved methodology
• Coverage: Valamar Riviera d.d., Imperial Riviera d.d., Bugenvilia d.o.o., and Praona d.o.o.
• Exclusions: Helios Faros d.d. and Valamar A GmbH (associated companies not under operational control)

Anticipated financial effects from material physical and transition risks and potential climate-related opportunities

Assessment of materiality

In the data point reference table, the following E1-9 disclosure requirements are marked as "Not relevant":

• ESRS E1-9 (66): Exposure of the benchmark portfolio to climate-related physical risks
• ESRS E1-9 (66(a)): Disaggregation of monetary amounts by acute and chronic physical risk
• ESRS E1-9 (66(c)): Location of significant assets at material physical risk
• ESRS E1-9 (67(c)): Breakdown of the carrying value of its real estate assets by energy-efficiency classes
• ESRS E1-9 (69): Degree of exposure of the portfolio to climate-related opportunities

Climate risk quantification methodology

Valamar Group used a climate risk quantification and reporting software provided by an external advisor to assess key climate hazards and transition risks.

Climate scenarios used:

• SSP1-2.6: A sustainable development scenario with low greenhouse gas emissions, leading to a radiative forcing of 2.6 W/m² and limited global warming (around 1.3°C by 2100)
• SSP2-4.5: A middle-of-the-road scenario with moderate emissions, resulting in a radiative forcing of 4.5 W/m² and higher warming (around 2.7°C by 2100)
• SSP5-8.5: A fossil-fuel-intensive, very high-emissions scenario with a radiative forcing of 8.5 W/m², leading to severe global warming (potentially exceeding 4°C by 2100)

Note: SSP1 used in this analysis does not qualify as a climate scenario in line with limiting global warming to 1.5°C with no or limited overshoot but is aligned with the Paris Agreement.

Risk assessment method: Valamar Group used a widely adopted method from the World Bank, summarised by the formula Risk = Impact x Probability. Both climate hazards and transition risks were assessed against 3 IPCC climate scenarios and reflected in financial quantification of impacts in 2030, 2040 and 2050.

Climate hazards assessed:

• Water stress (droughts)
• Wildfires
• Coastal and riverine flooding
• Extreme winds
• Sea water quality (algal bloom)

Time horizons

Financial impacts were quantified for three time horizons:

• 2030
• 2040
• 2050

The time horizons are not fully aligned with the expected lifetime of Valamar Group's assets, as the land and buildings, which constitute a significant portion of its assets, have a longer lifespan than the time horizons being used. The strategic planning and capital allocation plan are set for a period until 2026, which does not align with the time horizon used in the climate risk analysis.

Quantified financial effects

Climate value at risk as percentage of turnover:

• 2030: 1.1% of turnover (average)
• 2040: 3.5% of turnover
• 2050: 7.4% of turnover

Key contributors to financial impact: Most of this impact is generated by:

1. Changes in flight pricing
2. Risk of wildfire
3. Rising energy prices
4. Declining sea quality due to algal bloom
5. Price of carbon

Materiality assessment outcome

Physical and transition risks assessed as a result of this analysis were not deemed material. Nevertheless, Valamar Group will continue to monitor climate-related risks by revisiting the assessment in due time.

Assets and business activities assessment

Valamar Group has not identified any assets and business activities that are incompatible with a transition to a carbon-neutral economy or that require significant effort to be compatible with a transition to a carbon-neutral economy.

No critical climate-related assumptions have been used to date to measure assets and liabilities in the consolidated financial statements.

Valamar has implemented comprehensive pollution prevention policies as part of its sustainability and environmental protection strategy.

Waste Management and Circular Economy Policies

Bio-Waste Management

• Composting Programs: Launch of bio-waste composting projects at Lanterna Resort apartments, Valamar Diamant Hotel & Residence 3*/4*, and President Hotel 5*, Valamar Collection
• Recycling Infrastructure: Development of recycling centers, including construction of a recycling centre on the island of Rab as part of the 2024/25 investment cycle
• Eco Corners Initiative: Expansion of the Eco Corners initiative at Valamar Camping Lanterna 4* to promote waste separation and environmental awareness

Water Pollution Prevention

• Water Conservation: Implementation of water-saving technologies and systems across properties
• Wastewater Management: Investment in aerators and percolators as part of water treatment and pollution prevention measures
• Marine Protection: Collaboration with WWF Adria to motivate sustainable fishing in the Adriatic through strategic partnerships

Sustainable Resource Management

Chemical and Material Management

• Green Building Practices: Implementation of environmentally friendly construction materials and practices in all investment projects
• Sustainable Procurement: Focus on sourcing environmentally responsible products and materials
• Local Sourcing: Supporting local producers with 78% locally sourced food and beverages, reducing transportation-related pollution

Air Quality Protection

• Electric Vehicle Fleet: Procurement of electric vehicles to reduce air pollution from transportation
• Renewable Energy: 100% renewable electricity sourcing to eliminate pollution from fossil fuel-based energy generation
• Energy Efficiency: Installation of heat pumps and energy-efficient systems to reduce emissions

Pollution Prevention Integration

These pollution prevention policies are integrated into:

• Investment Planning: EUR 3.7 million allocated in 2024/25 cycle for sustainability initiatives including pollution prevention measures
• Operational Procedures: Daily operations incorporate waste reduction, water conservation, and pollution prevention practices
• Supplier Engagement: 80% of suppliers committed to implementing sustainable business practices
• Community Partnerships: Collaboration with environmental organizations like WWF Adria for broader pollution prevention impact

Valamar has implemented comprehensive actions and allocated significant resources to pollution prevention and environmental protection.

Waste Management Actions

Bio-Waste and Recycling Programs

• Composting Implementation: Launched bio-waste composting projects at multiple properties:
  • Lanterna Resort apartments
  • Valamar Diamant Hotel & Residence 3*/4*
  • President Hotel 5*, Valamar Collection
• Recycling Infrastructure Development: Construction of recycling centre on the island of Rab (2024/25 investment cycle)
• Eco Corners Expansion: Extended the Eco Corners initiative at Valamar Camping Lanterna 4* to promote waste separation

Water Pollution Prevention Actions

• Water Conservation Systems: Implementation of water-saving technologies across properties
• Water Treatment Equipment: Acquisition of aerators and percolators for improved water management
• Sustainable Fishing Partnership: Strategic partnership with fisherman cooperative on Vis island through WWF Adria collaboration

Resource Allocation for Pollution Prevention

2024/25 Investment Cycle Allocations

EUR 3.7 million allocated specifically for sustainability initiatives including:

• Bio-waste recycling systems
• Tree planting programs
• Landscaping improvements
• Aerators and percolators acquisition
• Electric vehicle procurement
• Heat pump installations

Operational Improvements

• Electric Vehicle Fleet: Continued procurement of electric vehicles to reduce transportation emissions
• Energy Efficiency: Installation of new heat pumps at Valamar Sanfior Hotel & Casa 4* and Girandella Resort 4*/5*
• Renewable Energy: Maintained 100% renewable electricity sourcing in 2024

Supply Chain Actions

• Supplier Sustainability: 80% of suppliers committed to implementing sustainable business practices
• Local Sourcing: Maintained 78% locally sourced food and beverages, reducing transportation-related pollution
• Sustainable Procurement: Focus on environmentally responsible products and materials

Monitoring and Effectiveness

Valamar tracks pollution prevention effectiveness through:

• EcoVadis Assessment: High silver ESG rating recognizing environmental management success
• Waste Reduction Metrics: Monitoring of waste generation and recycling rates
• Water Usage Tracking: Measurement of water consumption and conservation achievements
• Energy Performance: Tracking of renewable energy usage and efficiency improvements

Valamar has established specific targets related to pollution prevention and environmental protection as part of its comprehensive sustainability strategy.

Pollution Reduction Targets

ESG Performance Targets

• Gold-Tier ESG Rating: Target to achieve gold-tier ESG rating by 2026, which includes enhanced pollution prevention and environmental management standards
• Environmental Leadership: Goal to be recognized as a leader in socially responsible and sustainable business with focus on environmental protection

Waste Management Targets

• Circular Economy Implementation: Systematic expansion of bio-waste composting and recycling programs across all properties
• Zero Waste to Landfill: Progressive reduction of waste sent to landfills through enhanced recycling and composting programs
• Eco Corners Expansion: Extension of waste separation and environmental awareness initiatives across the entire portfolio

Water Pollution Prevention Targets

• Water Conservation Enhancement: Continued investment in water-saving technologies and systems
• Marine Environment Protection: Strengthened partnerships with environmental organizations like WWF Adria for marine ecosystem preservation
• Wastewater Quality Improvement: Enhanced water treatment through aerators, percolators, and other advanced systems

Air Quality Improvement Targets

• Electric Fleet Expansion: Progressive replacement of conventional vehicles with electric alternatives
• 100% Renewable Energy Maintenance: Continued commitment to sourcing 100% electricity from renewable sources
• Energy Efficiency Enhancement: Systematic improvement of energy efficiency across all properties

Resource Allocation Targets

Investment Commitments

• Sustainability Investment: Within the EUR 450 million investment plan by 2026, significant allocation for pollution prevention measures
• Annual Sustainability Budget: Continued allocation of 3-5% of annual revenue to environmental and sustainability initiatives

Supply Chain Targets

• Supplier Sustainability Compliance: Target to achieve 100% supplier commitment to sustainable business practices (currently at 80%)
• Local Sourcing Maintenance: Maintain high percentage of locally sourced food and beverages to reduce transportation pollution

These pollution-related targets are integrated into Valamar's 2026 strategic objectives and monitored through regular ESG assessments and external verification systems.

Pollution of air, water and soil

Disclosure Status

Valamár Riviera has assessed ESRS E2-4 (data point 28) regarding the amount of each pollutant listed in Annex II of the E-PRTR Regulation (European Pollutant Release and Transfer Register) emitted to air, water and soil as not material.

No quantified emissions data for air pollutants (NOx, SOx, SO2, PM, VOC, heavy metals), water pollutants (heavy metals, nutrients, BOD/COD), or soil pollutants (heavy metals, microplastics) are disclosed in the sustainability statement.

Valamar has implemented comprehensive policies related to water and marine resources conservation as part of its sustainability strategy.

Water Conservation Policies

Water Resource Management

• Water-Saving Investments: Further investments in saving water across all properties as part of natural resource conservation efforts
• Water Efficiency Technologies: Implementation of water-saving technologies and systems throughout the portfolio
• Water Treatment Enhancement: Investment in aerators and percolators to improve water management and quality

Marine Resource Protection

Marine Ecosystem Conservation

• Sustainable Fishing Partnership: Strategic partnership with WWF Adria to motivate sustainable fishing in the Adriatic
• Fisherman Cooperative Collaboration: Direct partnership with fisherman cooperative on Vis island to promote sustainable marine practices
• Marine Environment Stewardship: Commitment to protecting marine ecosystems in destination areas

Coastal Infrastructure Development

• Beach Development: Enhancement of beaches with environmental considerations
• Marine Infrastructure: Development of water sports centres and marine facilities with sustainability focus
• Coastal Protection: Investment in sustainable coastal tourism infrastructure

Integrated Water Management

Operational Integration

• Property-Level Implementation: Water conservation measures implemented across all hotels, resorts, and camping facilities
• New Construction Standards: Integration of water-efficient systems in all new development projects
• Renovation Upgrades: Water conservation improvements included in property renovation projects

Destination-Level Approach

• Community Water Infrastructure: Support for public water-related infrastructure improvements
• Local Ecosystem Protection: Collaboration with destinations to protect local water resources
• Stakeholder Engagement: Partnership with local communities and environmental organizations on water conservation

These water and marine resource policies support Valamar's goal to achieve a gold-tier ESG rating and maintain leadership in sustainable tourism development while ensuring the long-term protection of marine ecosystems in the Adriatic region.

Valamar has implemented specific actions and allocated resources for water and marine resource conservation.

Water Conservation Actions

Technology Implementation

• Water-Saving Systems: Continued investment in water-saving technologies and systems across all properties
• Water Treatment Equipment: Acquisition of aerators and percolators as part of the EUR 3.7 million sustainability initiatives in 2024/25 investment cycle
• Efficiency Upgrades: Integration of water-efficient systems in property renovations and new constructions

Operational Improvements

• Property-Level Conservation: Implementation of water conservation measures across hotels, resorts, and camping facilities
• Smart Water Management: Integration of water conservation into digitalisation and innovation projects
• Monitoring Systems: Implementation of water usage tracking and optimization systems

Marine Resource Protection Actions

Strategic Partnerships

• WWF Adria Collaboration: Active partnership with WWF Adria to motivate sustainable fishing practices in the Adriatic Sea
• Fisherman Cooperative Partnership: Strategic partnership with fisherman cooperative on Vis island to promote sustainable marine resource management
• Marine Conservation Programs: Support for marine ecosystem protection initiatives

Coastal Development

• Sustainable Beach Development: Enhancement of beach facilities with environmental protection considerations
• Marine Infrastructure: Development of water sports centres with sustainability focus
• Coastal Infrastructure: Investment in sustainable coastal tourism infrastructure

Resource Allocation

Financial Investments

• Water Conservation Budget: Significant portion of EUR 3.7 million sustainability allocation dedicated to water-related initiatives
• Infrastructure Investment: Integration of water conservation measures in EUR 450 million overall investment plan
• Technology Upgrades: Continued investment in water-efficient technologies across portfolio

Partnership Investments

• Marine Conservation: Financial and operational support for marine ecosystem protection through WWF partnership
• Community Collaboration: Investment in local water infrastructure and conservation programs
• Research and Development: Support for sustainable fishing and marine conservation research

Monitoring and Effectiveness

Valamar tracks water and marine conservation effectiveness through:

• Water Usage Metrics: Monitoring of water consumption across properties
• Marine Impact Assessment: Evaluation of marine conservation partnership outcomes
• ESG Performance: Water and marine conservation included in EcoVadis ESG rating assessment
• Stakeholder Feedback: Regular communication with conservation partners on program effectiveness

Valamar has established specific targets related to water and marine resources as part of its sustainability strategy and 2026 objectives.

Water Conservation Targets

Efficiency Improvement Targets

• Systematic Water Conservation: Progressive implementation of water-saving technologies across all properties
• Technology Integration: Comprehensive deployment of water-efficient systems in all renovation and new construction projects
• Operational Optimization: Enhancement of water management through digitalisation and smart monitoring systems

Resource Management Targets

• Sustainable Water Usage: Continuous reduction in water consumption per guest night through efficiency improvements
• Water Quality Enhancement: Improved water treatment and management through aerators, percolators, and advanced systems
• Infrastructure Resilience: Development of water-efficient infrastructure to address potential water scarcity challenges

Marine Resource Protection Targets

Ecosystem Conservation Goals

• Adriatic Marine Protection: Long-term commitment to marine ecosystem conservation through WWF Adria partnership
• Sustainable Fishing Support: Expansion of sustainable fishing initiatives beyond current Vis island partnership
• Marine Biodiversity: Protection and enhancement of marine biodiversity in destination areas

Coastal Sustainability Targets

• Sustainable Coastal Development: Integration of marine protection considerations in all coastal tourism infrastructure projects
• Beach Environmental Standards: Implementation of environmentally responsible beach development practices
• Marine Tourism: Development of sustainable marine tourism offerings that protect marine resources

Strategic Integration Targets

ESG Performance Goals

• Gold-Tier ESG Rating: Water and marine conservation contribute to achieving gold-tier ESG rating by 2026
• Sustainability Leadership: Recognition as leader in marine and water resource conservation in tourism sector

Investment Allocation Targets

• Water Conservation Investment: Dedicated portion of EUR 450 million investment plan for water and marine resource protection
• Partnership Expansion: Strengthened and expanded partnerships with marine conservation organizations
• Technology Advancement: Continued investment in innovative water conservation and marine protection technologies

Monitoring Framework

Progress toward these targets will be tracked through:

• Water Usage Metrics: Regular monitoring of water consumption and efficiency improvements
• Marine Conservation Outcomes: Assessment of marine ecosystem protection partnership results
• ESG Rating Progress: Integration of water and marine metrics in overall ESG performance evaluation
• Stakeholder Reporting: Regular communication of progress to conservation partners and stakeholders

Water consumption

Water recycling and consumption metrics (2024)

Groundwater and water supply (2024)

Water discharge by destination (2024)

Water intensity

Water stress areas

Valamar Group has no operations in areas of high water stress.

Target and performance

Valamar Group has established a voluntary target for water withdrawal intensity of 0.55 m³ per occupied room by 2026 (baseline year 2023 at 0.55 m³). In 2024, due to an exceptionally warm period and slightly extended operational hours, an increase in water consumption was recorded, resulting in a value of 0.59 m³ per occupied guestroom, compared to the set target.

Methodology notes

Water consumption is monitored across all facilities through the facility maintenance management level (EMIS). There are no changes to metrics, methodologies and definitions reported in 2024 compared to prior years.

Valamar has implemented comprehensive policies related to biodiversity and ecosystems protection as part of its sustainability commitment.

Biodiversity Conservation Policies

Marine Ecosystem Protection

• Adriatic Marine Conservation: Strategic partnership with WWF Adria to protect marine biodiversity through sustainable fishing practices
• Marine Ecosystem Stewardship: Commitment to preserving marine ecosystems in the Adriatic Sea through responsible tourism practices
• Sustainable Fishing Support: Promotion of sustainable fishing practices through partnerships with local fishing cooperatives

Terrestrial Biodiversity Protection

Green Infrastructure Development

• Tree Planting Programs: Systematic tree planting initiatives as part of sustainability projects
• Landscaping Improvements: Enhanced landscaping that supports local biodiversity
• Native Species Preservation: Focus on using native plant species in landscaping and development projects

Natural Habitat Conservation

• Eco-Friendly Development: Implementation of green building practices that minimize impact on natural habitats
• Destination Ecosystem Protection: Conservation of natural environments in tourism destinations
• Public Space Enhancement: Development of cycling trails and natural areas that support biodiversity

Sustainable Tourism Practices

Low-Impact Tourism

• Sustainable Infrastructure: Development of tourism infrastructure with minimal environmental impact
• Natural Resource Conservation: Efficient management and preservation of natural resources
• Ecosystem Integration: Tourism development that complements and supports existing ecosystems

Community Engagement

• Local Conservation Partnerships: Collaboration with local communities on biodiversity conservation
• Environmental Education: Promotion of environmental awareness among guests and staff
• Conservation Advocacy: Support for broader biodiversity conservation initiatives in destination regions

These biodiversity and ecosystem policies are integrated into Valamar's overall sustainability strategy and support the company's goal to achieve a gold-tier ESG rating while maintaining its leadership position in sustainable tourism development.

Valamar has implemented specific actions and allocated resources for biodiversity and ecosystem conservation.

Marine Biodiversity Conservation Actions

Strategic Partnerships

• WWF Adria Collaboration: Active partnership with WWF Adria to motivate sustainable fishing in the Adriatic and protect marine ecosystems
• Fisherman Cooperative Partnership: Strategic partnership with fisherman cooperative on Vis island to promote sustainable marine practices that protect marine biodiversity
• Marine Conservation Programs: Direct support for marine ecosystem protection initiatives

Marine Habitat Protection

• Sustainable Coastal Development: Development of coastal tourism infrastructure with consideration for marine habitat protection
• Beach Conservation: Enhancement of beaches with environmental protection measures that preserve coastal ecosystems
• Water Quality Protection: Investment in water treatment systems (aerators, percolators) to protect marine water quality

Terrestrial Biodiversity Actions

Green Infrastructure Development

• Tree Planting Programs: Implementation of tree planting initiatives across properties as part of EUR 3.7 million sustainability budget
• Landscaping Improvements: Enhanced landscaping projects that support local flora and fauna
• Native Species Integration: Use of native plant species in landscaping and development projects

Habitat Conservation Measures

• Green Building Practices: Implementation of environmentally friendly construction practices that minimize habitat disruption
• Natural Area Preservation: Protection and enhancement of natural areas within property boundaries
• Cycling Trail Development: Creation of cycling trails that integrate with natural environments

Resource Allocation for Biodiversity

Financial Investments

• Sustainability Budget: Significant portion of EUR 3.7 million allocated in 2024/25 cycle for biodiversity-related initiatives including:
  • Tree planting programs
  • Landscaping improvements
  • Marine conservation partnerships
  • Green infrastructure development

Infrastructure Investments

• Green Construction: Integration of biodiversity considerations in EUR 450 million overall investment plan
• Natural Infrastructure: Development of green spaces and natural areas as part of property enhancements

Partnership Investments

• Conservation Partnerships: Financial and operational support for biodiversity conservation through WWF and local partnerships
• Research Support: Investment in biodiversity conservation research and monitoring

Monitoring and Effectiveness

Valamar tracks biodiversity conservation through:

• Ecosystem Health Metrics: Monitoring of marine and terrestrial ecosystem health in destination areas
• Partnership Outcomes: Assessment of conservation partnership effectiveness
• ESG Performance: Biodiversity conservation included in EcoVadis ESG rating evaluation
• Environmental Impact Assessment: Regular evaluation of tourism activities' impact on local ecosystems

Valamar has established specific targets related to biodiversity and ecosystem conservation as part of its 2026 sustainability strategy.

Marine Biodiversity Targets

Ecosystem Protection Goals

• Adriatic Marine Conservation: Long-term commitment to marine ecosystem protection through expanded WWF Adria partnership
• Sustainable Fishing Expansion: Extension of sustainable fishing initiatives beyond current Vis island partnership to support broader marine biodiversity
• Marine Habitat Restoration: Support for marine habitat restoration and conservation projects in tourism destination areas

Coastal Ecosystem Targets

• Sustainable Coastal Development: Integration of marine biodiversity protection in all coastal infrastructure projects
• Beach Ecosystem Conservation: Implementation of beach development practices that preserve coastal biodiversity
• Water Quality Improvement: Enhanced water treatment to protect marine ecosystem health

Terrestrial Biodiversity Targets

Green Infrastructure Goals

• Tree Planting Expansion: Systematic expansion of tree planting programs across all properties
• Native Species Integration: Increased use of native plant species in all landscaping and development projects
• Green Space Enhancement: Development of green corridors and natural areas that support local biodiversity

Habitat Conservation Targets

• Ecosystem Integration: Tourism development that enhances rather than degrades local ecosystems
• Natural Area Protection: Preservation and enhancement of natural habitats within property boundaries
• Wildlife Conservation: Support for local wildlife conservation initiatives in destination areas

Strategic Biodiversity Objectives

ESG Performance Goals

• Gold-Tier ESG Rating: Biodiversity and ecosystem conservation contribute to achieving gold-tier ESG rating by 2026
• Conservation Leadership: Recognition as leader in tourism sector biodiversity conservation
• Sustainability Innovation: Development of innovative approaches to tourism-biodiversity integration

Investment Targets

• Conservation Investment: Dedicated allocation within EUR 450 million investment plan for biodiversity protection measures
• Partnership Expansion: Strengthened and expanded partnerships with conservation organizations
• Green Technology: Investment in technologies that support biodiversity conservation

Monitoring and Accountability

Progress toward biodiversity targets will be tracked through:

• Ecosystem Health Indicators: Regular monitoring of biodiversity indicators in destination areas
• Conservation Partnership Outcomes: Assessment of conservation partnership effectiveness and expansion
• Environmental Impact Metrics: Measurement of tourism activities' impact on local ecosystems
• Stakeholder Reporting: Regular reporting to conservation partners and environmental organizations

These biodiversity targets are integrated into Valamar's overall sustainability framework and contribute to the company's goal of sustainable tourism leadership while protecting the natural heritage of its destination areas.

Impact metrics related to biodiversity and ecosystems change

Land use footprint

The Company and the Group have recognised right-of-use assets for tourist land with a lease period of 50 years (2020-2069). As at 31 December 2024:

Right-of-use assets - Tourist land:

Right-of-use assets - Land:

Lease additions for tourist land in 2024 amounted to EUR 62,802 thousand for the Group and EUR 57,994 thousand for the Company, with conditions for asset recognition acquired at the beginning of 2024.

Other biodiversity metrics

No specific metrics disclosed for:

• Land use footprint in hectares or km²
• Deforestation footprint
• Operations/sites in or near protected areas or Key Biodiversity Areas (KBAs)
• Species impact metrics (Red List species affected)
• Ecosystem condition metrics
• Restoration metrics

Valamar has implemented comprehensive policies related to resource use and circular economy as part of its sustainability strategy.

Circular Economy Policies

Waste Management and Recycling

• Bio-Waste Composting: Implementation of bio-waste composting projects at multiple properties including Lanterna Resort apartments, Valamar Diamant Hotel & Residence, and President Hotel Valamar Collection
• Recycling Infrastructure: Development of recycling centers, including construction of recycling centre on island of Rab
• Eco Corners Initiative: Expansion of waste separation and recycling programs through Eco Corners at Valamar Camping Lanterna

Sustainable Resource Sourcing

Local Sourcing Strategy

• Local Product Procurement: Supporting local producers by sourcing domestic products, achieving 78% locally sourced food and beverages
• Regional Supply Chain: Focus on regional suppliers to reduce transportation impact and support local economies
• Sustainable Procurement: Integration of sustainability criteria in supplier selection and procurement processes

Material Efficiency

• Green Building Practices: Implementation of sustainable construction materials and practices in all investment projects
• Resource Optimization: Efficient use of materials and resources across all operations
• Sustainable Design: Integration of circular economy principles in facility design and renovation

Resource Conservation Policies

Water Resource Management

• Water Conservation: Systematic implementation of water-saving technologies and systems
• Water Recycling: Investment in water treatment and recycling systems including aerators and percolators
• Efficient Water Use: Optimization of water usage across all properties and operations

Energy Resource Efficiency

• Renewable Energy: 100% renewable electricity sourcing to minimize resource depletion
• Energy Efficiency: Installation of energy-efficient systems including heat pumps and smart technologies
• Resource Optimization: Integration of resource efficiency in digitalisation and innovation projects

These resource use and circular economy policies support Valamar's goal to achieve a gold-tier ESG rating and maintain leadership in sustainable tourism while minimizing environmental impact and promoting responsible resource consumption.

Valamar has implemented comprehensive actions and allocated significant resources for resource use optimization and circular economy initiatives.

Circular Economy Actions

Waste Management Implementation

• Bio-Waste Composting Programs: Launched composting projects at multiple properties:
  • Lanterna Resort apartments
  • Valamar Diamant Hotel & Residence 3*/4*
  • President Hotel 5*, Valamar Collection
• Recycling Infrastructure Development: Construction of recycling centre on the island of Rab (2024/25 investment cycle)
• Eco Corners Expansion: Extended waste separation initiative at Valamar Camping Lanterna 4*

Sustainable Procurement Actions

• Local Sourcing Achievement: Maintained 78% locally sourced food and beverages across operations
• Supplier Sustainability Program: Achieved 80% supplier commitment to implementing sustainable business practices
• Regional Supply Chain: Strengthened partnerships with local and regional suppliers

Resource Conservation Implementation

Water Resource Actions

• Water-Saving Technologies: Implementation of water-saving systems across all properties
• Water Treatment Systems: Acquisition of aerators and percolators for improved water management and recycling
• Conservation Technology: Integration of water conservation measures in renovation and new construction projects

Energy Resource Optimization

• 100% Renewable Energy: Successfully sourced 100% of electricity from renewable sources in 2024
• Energy Efficiency Upgrades: Installation of new heat pumps at Valamar Sanfior Hotel & Casa 4* and Girandella Resort 4*/5*
• Smart Energy Systems: Integration of energy optimization in digitalisation projects

Resource Allocation

Financial Investment in Resource Efficiency

EUR 3.7 million allocated in 2024/25 investment cycle for sustainability initiatives including:

• Bio-waste recycling systems
• Tree planting and landscaping
• Water treatment equipment (aerators and percolators)
• Energy efficiency equipment
• Electric vehicle procurement

Operational Resource Investments

• Technology Integration: Over EUR 6.2 million allocated for digitalisation projects that optimize resource use
• Infrastructure Efficiency: Integration of resource optimization in EUR 450 million overall investment plan
• Green Construction: Implementation of sustainable materials and practices in all construction projects

Supply Chain Resource Actions

• Local Economy Support: Prioritized local sourcing to reduce transportation resources and support regional economies
• Supplier Sustainability: Achieved 80% supplier commitment to sustainable practices
• Procurement Optimization: Implementation of circular economy principles in procurement processes

Monitoring and Effectiveness

Valamar tracks resource efficiency through:

• Resource Usage Metrics: Monitoring of water, energy, and material consumption
• Waste Reduction Tracking: Measurement of waste generation and recycling rates
• Supply Chain Impact: Assessment of local sourcing and supplier sustainability performance
• ESG Performance: Resource efficiency included in EcoVadis ESG rating evaluation

Valamar has established specific targets related to resource use and circular economy as part of its 2026 sustainability strategy.

Circular Economy Targets

Waste Management Goals

• Zero Waste to Landfill: Progressive implementation of comprehensive waste separation and recycling across all properties
• Bio-Waste Composting Expansion: Systematic rollout of composting programs to all suitable properties
• Recycling Infrastructure: Completion of recycling centers across key destinations
• Eco Corners Extension: Expansion of waste separation initiatives throughout the entire property portfolio

Resource Efficiency Targets

• Material Optimization: Systematic reduction in material consumption through circular economy practices
• Sustainable Procurement: Target to achieve 100% supplier commitment to sustainable practices (currently at 80%)
• Local Sourcing Enhancement: Maintain and potentially increase the 78% share of locally sourced food and beverages

Resource Conservation Targets

Water Resource Goals

• Water Efficiency Improvement: Continuous reduction in water consumption per guest through advanced conservation technologies
• Water Recycling Enhancement: Expansion of water treatment and recycling systems across all properties
• Smart Water Management: Implementation of digital monitoring and optimization systems

Energy Resource Targets

• 100% Renewable Energy Maintenance: Continued commitment to sourcing 100% electricity from renewable sources
• Energy Efficiency Enhancement: Systematic improvement of energy efficiency through heat pumps and smart technologies
• Resource Optimization: Integration of resource efficiency in all digitalisation and innovation projects

Strategic Resource Objectives

ESG Performance Goals

• Gold-Tier ESG Rating: Resource use and circular economy contribute to achieving gold-tier ESG rating by 2026
• Circular Economy Leadership: Recognition as leader in tourism sector circular economy implementation
• Resource Innovation: Development of innovative resource efficiency and circular economy solutions

Investment Allocation Targets

• Resource Efficiency Investment: Dedicated portion of EUR 450 million investment plan for resource optimization projects
• Circular Economy Technology: Investment in technologies that support circular economy principles
• Infrastructure Efficiency: Integration of resource efficiency in all construction and renovation projects

Supply Chain Targets

Sustainable Procurement Goals

• Supplier Sustainability: Target 100% supplier commitment to sustainable business practices
• Local Economy Support: Maintain high levels of local sourcing to optimize resource use
• Circular Supply Chain: Development of circular economy principles throughout supply chain

Monitoring Framework

Progress toward resource use and circular economy targets will be tracked through:

• Resource Consumption Metrics: Regular monitoring of water, energy, and material usage efficiency
• Waste Generation Tracking: Measurement of waste reduction and recycling performance
• Circular Economy Indicators: Assessment of circular economy implementation across operations
• Supply Chain Performance: Evaluation of sustainable procurement and local sourcing achievements
• ESG Rating Progress: Integration of resource metrics in overall sustainability performance evaluation

These targets support Valamar's commitment to sustainable tourism development while optimizing resource use and implementing circular economy principles across all operations.

Waste

ESG Projects and Achievements – Environment

Valamar manages waste through composting initiatives and bio-waste recycling programs:

• Composting of bio-waste is implemented at Valamar Camping Lanterna 4*, Lanterna Resort apartments, Valamar Diamant Hotel & Residence 3*/4*, and President Hotel 5*, Valamar Collection.

• In 2024, investments included EUR 990 thousand allocated to composting of bio-waste under the Climate Change Mitigation (CCM) and Climate Change Adaptation (CCA) environmental objectives (CapEx table, activity 5.8).

• In the 2024/25 investment cycle, over EUR 3.7 million is allocated to sustainability initiatives including bio-waste recycling, alongside other measures such as electric vehicle procurement, tree planting, landscaping, installation of heat pumps, and acquisition of aerators and percolators.

Material Impact Assessment

Valamar has identified waste management as a material topic:

• Material Impact: Ensuring responsible water management includes investment in measures for wastewater treatment and water consumption management.

• Material Impact: Reduction of Greenhouse Gas Emissions – Scope 3 includes actions related to bio-waste composting (CCM/CCA 5.8), with EUR 10 thousand OpEx allocated in 2024.

Waste Generation and Treatment (Scope 3 Emissions Calculation)

Category 5: Waste generated in operations

GHG emissions associated with waste produced on-site are estimated using the weight (tons) of the waste and the waste stream (recycling, composting, incineration, disposal, etc.). In 2024, Scope 3 emissions from waste generated in operations were 3,182.57 tCO₂eq, representing a 13% increase compared to 2023 (2,818.44 tCO₂eq).

Category 12: End-of-life treatment of sold products

Emissions related to end-of-life treatment of sold products were calculated on a sample of sold products, using average recycling rates by country to estimate emission factors. In 2024, emissions were 0.10 tCO₂eq, a 98% reduction compared to 2023 (4.25 tCO₂eq).

Waste Policy and Approach

Valamar's Environmental Protection Policy emphasizes:

• Prevention of pollution as a fundamental approach to environmental protection management
• Continuous improvement of ecological and energy performance and management systems
• Preservation and rational use of natural resources
• Mitigation and adaptation to climate change

The policy applies to all Valamar Group facilities in all destinations, operations, and business activities. It is publicly available on the Valamar Riviera website (https://esg.valamar-riviera.com/hr/).

Sustainability Certifications

In 2024, Valamar maintained:

• ISO 14001 environmental protection certificates for all facilities
• 28 hotels with Travelife sustainability certification
• 6 campsites with EU Ecolabel
• 16 beaches with Blue Flag certificates

Valamar was awarded the Croatian Sustainability Index (HRIO) award for excellence in the environmental management category in 2024.

Quantitative Waste Data

No detailed breakdown of total waste generated by type (hazardous vs. non-hazardous) or waste treatment method (landfill, incineration, recycling) is disclosed in quantitative tonnes. Waste data is primarily reported through Scope 3 GHG emissions calculations rather than direct waste mass metrics.

Valamar has implemented comprehensive policies related to its own workforce, focusing on being the best employer in the tourism sector.

Employment and Working Conditions Policies

Best Employer Strategy

• Industry Leadership: Valamar was recognised as the most desirable employer in tourism and hospitality in 2024, maintaining its position for the eighth consecutive year as the only tourism company ranked among the top 20 employers in Croatia
• Year-Round Employment: Goal to maintain over 50% of jobs with year-round income
• Competitive Compensation: Provision of competitive, year-round remuneration and benefits

Employee Development and Career Policies

Training and Education

• Continuous Learning: Ensuring continuous learning and career development opportunities
• Professional Development: Investment in ongoing training and education programs
• Career Progression: Clear career development paths in tourism sector

Working Environment

• Motivating Work Environment: Creation of supportive and inspiring work environment
• Work-Life Balance: Support for employees in organizing their lives within destinations
• Employee Well-being: Focus on employee well-being and job satisfaction

Workforce Composition Policies

Local Employment Focus

• Local Workforce Priority: Goal to ensure at least 70% of workforce consists of local employees (achieved 78% in 2024)
• Community Integration: Focus on hiring from local communities in destinations
• Regional Development: Contributing to local economic development through employment

Seasonal Worker Retention

• Returning Worker Program: High return rate of seasonal workers with 53% choosing to return to work at Valamar
• Seasonal Worker Support: Enhanced programs to retain seasonal employees
• Employee Loyalty: Focus on building long-term relationships with seasonal workforce

Employee Satisfaction and Engagement

Corporate Culture

• People-Centered Approach: Valamar believes employees breathe life into assets and strives to offer more than just a job
• Employee Recognition: Regular employee satisfaction surveys and feedback programs
• Purpose and Growth: Ensuring purpose and growth opportunities for every team member

Communication and Feedback

• Two-Way Communication: Regular communication channels between management and employees
• Employee Voice: Mechanisms for employee input and feedback on workplace policies
• Satisfaction Monitoring: Annual employee satisfaction surveys to monitor corporate climate and culture

These workforce policies support Valamar's mission to create holidays that are good for employees while maintaining its position as the leading employer in Croatian tourism.

Valamar has established comprehensive processes for engaging with its own workforce and workers' representatives about impacts.

Employee Engagement Framework

Communication Channels

• Two-Way Communication: Valamar fosters long-term relationships and two-way communication with employees as key stakeholders
• Regular Feedback Systems: Annual employee satisfaction surveys conducted to monitor corporate climate and culture
• Management Accessibility: Open communication channels between senior management and employees across all levels

Worker Participation Processes

Employee Satisfaction Monitoring

• Annual Satisfaction Surveys: Comprehensive employee satisfaction surveys to assess workplace climate and identify areas for improvement
• Corporate Culture Assessment: Regular evaluation of corporate culture effectiveness and employee engagement levels
• Feedback Integration: Integration of employee feedback into policy development and workplace improvements

Employee Voice Mechanisms

• Input Channels: Established mechanisms for employee input on workplace policies and conditions
• Representative Communication: Engagement with employee representatives on workforce-related matters
• Impact Assessment: Regular assessment of how business decisions affect employee well-being and working conditions

Stakeholder Engagement Integration

Workforce as Key Stakeholder

• Stakeholder Recognition: Employees recognized as foundation of the business and key stakeholder group
• Value Creation Focus: Engagement processes designed to create value for employees while supporting business objectives
• Long-Term Relationship Building: Focus on building sustained relationships with workforce

Communication Strategy

• Transparent Communication: Open and transparent communication about company strategy, performance, and impact on employees
• Regular Updates: Ongoing communication about business developments that affect workforce
• Feedback Loop: Systematic process for receiving, processing, and responding to employee concerns and suggestions

Impact-Focused Engagement

Working Conditions Impact

• Workplace Improvement Programs: Specific focus on improving working conditions based on employee feedback
• Benefit Enhancement: Regular review and enhancement of employee benefits and compensation
• Career Development: Engagement on career development opportunities and training programs

Employment Security

• Job Security Discussion: Open communication about employment stability and company growth plans
• Seasonal Employment: Specific engagement with seasonal workers about return opportunities and working conditions
• Local Employment: Engagement with local communities about employment opportunities and impact

These engagement processes support Valamar's recognition as the most desirable employer in tourism and contribute to maintaining high employee satisfaction levels across the organization.

Valamar has established processes to remediate negative impacts and channels for the workforce to raise concerns.

Grievance and Remediation Mechanisms

Employee Feedback Channels

• Annual Satisfaction Surveys: Comprehensive employee satisfaction surveys serve as a primary channel for identifying workplace issues and concerns
• Two-Way Communication: Established communication channels that allow employees to raise concerns directly with management
• Regular Feedback Systems: Ongoing feedback mechanisms that enable continuous identification and addressing of workplace issues

Management Response Systems

Responsive Management Approach

• Senior Management Accessibility: Senior management responsible for overseeing key functional business areas and addressing employee concerns
• Cross-Functional Management: Cross-functional management structure that enables comprehensive response to workforce issues
• Executive Support: Management Board provides executive support for addressing workforce-related matters

Continuous Improvement Process

• Feedback Integration: Systematic integration of employee feedback into policy development and workplace improvements
• Working Conditions Enhancement: Particular focus placed on improving working conditions based on employee input
• Training Program Development: Development of training programmes based on identified needs and concerns

Remediation Actions

Workplace Improvement Initiatives

• Working Condition Enhancements: Specific improvements to working conditions in response to employee feedback
• Employee Reward Initiatives: Implementation of employee reward initiatives to address compensation and recognition concerns
• Training and Development: Enhanced training programmes to address skill development and career progression concerns

Accommodation and Support

• Seasonal Employee Accommodation: Significant attention given to improving accommodation for seasonal employees, including EUR 924,000 investment in Dubrovnik for additional 36 rooms (72 beds)
• Employee Support Services: Support for employees in organizing their lives within the destinations
• Benefits Enhancement: Regular review and improvement of employee benefits and compensation packages

Impact Prevention

Proactive Measures

• Employee Satisfaction Monitoring: Proactive monitoring through annual satisfaction surveys to identify potential issues before they become significant problems
• Best Practice Implementation: Implementation of best employer practices to prevent negative workforce impacts
• Continuous Learning Environment: Creation of continuous learning environment to prevent skill gaps and career stagnation

These remediation processes contribute to Valamar's recognition as the most desirable employer in tourism and support the high return rate of seasonal workers (53%) and local employee retention (78% local workforce).

Valamar has implemented comprehensive actions to manage material impacts on its own workforce and approaches to managing material risks and pursuing opportunities.

Actions on Material Workforce Impacts

Employment Security and Stability

• Job Preservation: All jobs were saved during the COVID and geopolitical crisis, demonstrating commitment to employment security
• Year-Round Employment: Strategic focus on providing over 50% of jobs with year-round income
• Employment Growth: At height of season, employed 8,300 staff members in 2024

Compensation and Benefits Management

• Salary Increases: Salaries and benefits increased by EUR 20 million, marking a 16% rise compared to previous year
• Competitive Compensation: Provision of competitive, year-round remuneration
• Employee Reward Initiatives: Implementation of specific employee reward initiatives

Working Conditions Improvement

• Workplace Enhancement: Particular focus placed on improving working conditions based on employee feedback
• Accommodation Investment: EUR 924,000 invested in improved accommodation for seasonal employees in Dubrovnik (36 rooms, 72 beds)
• Training Programs: Enhanced training programmes and employee development initiatives

Risk Management Approaches

Labor Market Challenges

• Competitive Positioning: As labor market becomes more challenging, reputation as best employer has become key competitive advantage
• Retention Strategy: High return rate of seasonal workers (53%) and local employee focus (78% local workforce)
• Talent Attraction: Recognition as most desirable employer in tourism for eighth consecutive year

Workforce Composition Risks

• Local Employment Focus: Strategic priority to ensure at least 70% of workforce consists of local employees (currently 78%)
• Seasonal Worker Retention: Systematic approach to retaining seasonal returnees (60% target)
• Skills Development: Continuous education and training to address potential skill gaps

Opportunity Pursuit

Career Development Opportunities

• Training Investment: Continuous investment in employee training and education programs
• Career Progression: Clear career development opportunities in tourism sector
• Year-Round Career Paths: Over 160 employees now have year-round jobs, working on Adriatic during summer and in Obertauern during winter

Employee Engagement Opportunities

• Corporate Culture Development: Valamar fosters corporate culture centered on people, innovation, and sustainable development
• Employee Empowerment: Employees recognized as foundation of business with focus on purpose and growth
• Recognition Programs: Regular employee recognition and satisfaction programs

Effectiveness Assessment

Performance Indicators

• Employee Satisfaction: Annual employee satisfaction surveys showing high satisfaction levels
• Industry Recognition: Eighth consecutive year as most desirable employer in tourism
• Retention Rates: 53% return rate for seasonal workers and 78% local workforce composition

Continuous Improvement

• Feedback Integration: Systematic integration of employee feedback into policies and practices
• Regular Monitoring: Annual monitoring of corporate climate and culture through satisfaction surveys
• Adaptive Management: Responsive management approach to emerging workforce challenges and opportunities

These actions and approaches support Valamar's strategic objective to remain the best employer in tourism while managing workforce-related risks and pursuing opportunities for employee development and satisfaction.

Valamar has established specific targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities for its own workforce.

Employment and Working Condition Targets

Year-Round Employment Goals

• 50%+ Year-Round Jobs: Target to maintain over 50% of jobs with year-round income
• Employment Stability: Continued commitment to employment security and job preservation
• Growth Employment: Expansion of employment opportunities through EUR 450 million investment plan creating over 700 new jobs (Pical Hotel project alone)

Workforce Composition Targets

• 70%+ Local Employment: Target to ensure at least 70% of workforce consists of local employees (currently achieving 78%)
• 60% Seasonal Returnees: Target 60% return rate of seasonal workers (currently achieving 53%)
• Community Integration: Continued focus on hiring from local communities in destinations

Compensation and Benefits Targets

Competitive Remuneration Goals

• Market-Leading Compensation: Continued provision of competitive compensation packages
• Benefits Enhancement: Regular review and improvement of employee benefits
• Performance-Based Rewards: Development of performance-based reward and recognition systems

Career Development Targets

• Training Investment: Continued investment in employee training and education programs
• Career Progression: Enhanced career development paths in tourism sector
• Skills Development: Systematic skills enhancement programs for workforce development

Best Employer Targets

Industry Leadership Goals

• Best Employer Maintenance: Continue recognition as most desirable employer in tourism sector
• Top 20 Employer Status: Maintain position as only tourism company in Croatia's top 20 employers
• Employee Satisfaction: Maintain high employee satisfaction levels through annual satisfaction surveys

Workplace Excellence Targets

• Working Conditions: Continuous improvement of working conditions across all properties
• Employee Accommodation: Enhanced accommodation standards for seasonal employees
• Work-Life Balance: Improved support for employees in organizing their lives within destinations

Strategic Workforce Objectives

Business Integration Goals

• Strategic Alignment: Integration of workforce objectives with 2026 business strategy
• Investment Integration: EUR 450 million investment plan includes significant workforce development components
• Operational Excellence: Workforce development supporting service quality and guest satisfaction goals

Innovation and Development Targets

• International Opportunities: Expansion of year-round employment through international operations (160+ employees working Adriatic/Obertauern)
• Digital Skills: Development of digital skills and capabilities among workforce
• Sustainability Training: Enhanced training on sustainability and ESG principles

Monitoring and Measurement

Performance Tracking

• Annual Satisfaction Surveys: Continued annual employee satisfaction monitoring
• Retention Rate Monitoring: Regular tracking of seasonal worker return rates and local employment percentages
• Industry Benchmarking: Comparison with industry standards and best practices

Continuous Improvement

• Feedback Integration: Systematic integration of employee feedback into target setting and policy development
• Regular Review: Annual review and adjustment of workforce targets based on performance and market conditions
• Strategic Alignment: Alignment of workforce targets with overall sustainability and business objectives

These targets support Valamar's mission to create value for employees while maintaining its position as the leading employer in Croatian tourism and achieving its strategic objectives for sustainable growth and development.

Valamar employs a significant workforce across its tourism operations with specific characteristics and composition.

Employee Numbers and Composition

Total Employment

• Peak Season Employment: At the height of the season, Valamar employed 8,300 staff members in 2024
• Year-Round Employment Focus: Strategic commitment to providing over 50% of jobs with year-round income
• Employment Growth: More than 160 employees now have year-round jobs, working on the Adriatic during summer and in Obertauern during winter

Geographic Distribution

• Multi-Destination Operations: Employees across destinations in Istria, Croatian islands (Krk, Rab, Hvar), Makarska, Dubrovnik, and Obertauern, Austria
• Destination-Specific Employment: Employment distributed across 36 hotels and resorts and 15 camping resorts

Workforce Composition by Employment Type

Local vs. Non-Local Employment

• Local Employee Majority: 78% of workforce consists of local employees in 2024
• Strategic Local Focus: Particular emphasis placed on retaining local employees
• Community Integration: Focus on hiring from local communities in destinations where Valamar operates

Seasonal Employment Characteristics

• Seasonal Worker Return Rate: 53% of seasonal workers choose to return to work at Valamar
• Seasonal Employment Support: Enhanced programs and accommodation for seasonal employees
• Seasonal Worker Accommodation: Investment of EUR 924,000 in Dubrovnik for improved seasonal employee accommodation (36 rooms, 72 beds)

Employment Strategy and Development

Best Employer Position

• Industry Leadership: Recognized as most desirable employer in tourism and hospitality in 2024
• Eight-Year Recognition: Maintaining position for eighth consecutive year as only tourism company in Croatia's top 20 employers
• Employer Reputation: Reputation as best employer has become key competitive advantage

Employee Development Focus

• Training and Education: Continuous investment in employee training and education programs
• Career Development: Career development opportunities in tourism sector
• Skills Enhancement: Focus on continuous learning and professional development

These employee characteristics reflect Valamar's strategy to maintain a stable, skilled, and locally-integrated workforce while providing attractive employment opportunities in the tourism sector.

Characteristics of non-employees in the undertaking's own workforce

Number of non-employees in the workforce by category

Methodology: Numbers provided are reported as headcount, from the end of the reporting period.

Most common types of non-employees

The largest share of non-employees in Valamar Group's workforce consists of students, both at the end of the reporting period and during the peak season. Students are engaged in various roles, primarily in support operations and administrative tasks. In addition to students, a smaller but still notable share consists of workers from employment agencies, who are engaged based on business needs, mainly in operational functions.

According to the workforce structure, the majority of work is carried out by Valamar Group employees. However, during the peak season, when booking volumes reach their highest levels and additional support is required, the company engages non-employees. On July 31, non-employees accounted for approximately 11% of the total workforce, while outside the peak season, this figure drops to below 0.5%. By highlighting the share of non-employees in the total workforce during the season, Valamar Group aims to emphasize their importance, which may not be evident from the figures at the end of the reporting period.

Working conditions and terms of employment for non-employees

Students are not covered by the collective agreement. Instead, their employment terms are regulated in accordance with the Law on Student Employment, which sets specific conditions for student work, including wages, working hours, and rights.

Agency workers, on the other hand, are covered by collective agreement of Valamar Riviera and Imperial Riviera, ensuring that they receive the same working conditions and employment terms as directly employed workforce.

Employees and non-employees subject to material impacts (Appropriate wages)

Collective bargaining coverage and social dialogue

Collective bargaining coverage

Percentage of total employees covered by collective bargaining agreements: 93%

Calculated based on headcount at the end of the reporting period. The figure includes all types of employment contracts as well as employees with non-guaranteed working hours.

Coverage rate of collective bargaining agreements by country with significant employment

Working conditions for employees not covered by collective agreements

The working conditions and terms of employment for employees not covered by collective bargaining are based on their employment contract and the Labor Law.

Working conditions for non-employees

Students: Not covered by the collective agreement. Their employment terms are regulated in accordance with the Law on Student Employment, which sets specific conditions for student work, including wages, working hours, and rights.

Agency workers: Covered by collective agreement of Valamar Riviera and Imperial Riviera, ensuring that they receive the same working conditions and employment terms as directly employed workforce.

Social dialogue arrangements

Workplace representation coverage rate in EEA countries with significant employment:

European Works Council (EWC) or similar arrangements:

Valamar Group has no agreements with employees for representation by a European Works Council (EWC), Societas Europaea (SE) Works Council, or Societas Cooperativa Europaea (SCE) Works Council.

Worker participation mechanisms:

At Valamar Riviera, employees participate in the Workers' Council, which ensures the representation of employees and the presentation of all key problems in an appropriate and transparent manner.

Engagement with worker representatives:

The employer holds meetings with employee representatives at least once every three months to discuss key issues and address employee needs. Regular feedback on the compensation system and working conditions is gathered through ongoing communication with worker representatives and trade unions.

Adequate wages

Benchmark Used

Valamar Group states that "all employees are paid adequate wages in line with applicable benchmarks." However, the specific benchmark used is not explicitly disclosed in the S1-10 section.

Methodology and Context

The company references that "appropriate wages are measured using a KPI that compares salaries to the national industry average, ensuring they are above the benchmark." This indicates a comparison to national industry averages rather than a living wage benchmark.

Salary Information Provided

Valamar Group provides detailed salary information:

• In 2024, base salary was increased for more than 5,000 employees
• Peak-season net salaries for skilled positions (chefs, waiters, receptionists) range from €1,400 to €2,000
• Housekeepers, assistant chefs, assistant waiters, kitchen staff, and servers receive net salaries ranging from €1,000 to €1,300
• Additional benefits include a 13th salary, Christmas gift of €1,000, gifts for children, and local employees receive an additional payment of €400
• Under the "Živi destinaciju" program, employees living in destinations receive an additional €400 net
• Under the "Krov and glavom" project, the company subsidizes rent with €500

Remuneration Ratio

The remuneration ratio (highest-paid employee to median hourly rate) in Valamar Group is 34.7.

Coverage and Scope

The disclosure covers Valamar Group's own workforce, including:

• Permanent employees
• Seasonal employees
• Employees with one-year contracts
• Students (non-employees)
• Agency employees (non-employees)

The geographic scope is primarily Croatia (3,624 employees) and Austria (175 employees).

Compliance and Governance

Salary policies are developed in agreement with social partners and trade unions. The company states alignment with collective agreements and emphasizes regular market analyses and collective bargaining wage policies.

Targets

No specific forward-looking targets related to adequate wages or living wage achievement are disclosed in the S1-10 section.

Assessment

While Valamar Group provides extensive detail on salary levels, benefits, and the remuneration ratio, the disclosure does not reference a living wage benchmark (such as Fair Wage Network, WageIndicator, Anker Methodology, or others). Instead, the company benchmarks against "national industry average" and ensures compliance with collective agreements and local regulations.

Persons with disabilities

Valamar Group has made adjustment of the physical environment to ensure the health and safety of persons with disabilities.

The Diversity and Non-Discrimination policy, Working conditions policy and Code of business conduct addresses the elimination of discrimination and harassment, promoting equal opportunities, and supporting diversity and inclusion. Those Policies explicitly address disability as a ground for discrimination.

Valamar Group ensures equal pay for female and male employees for equal work or work of equal value, strictly prohibiting any form of discrimination based on gender, sexual orientation, racial or ethnic origin, religion or belief, disability, age, or any other personal characteristic.

Quantitative data on percentage of employees with disabilities: Not disclosed.

Valamar has implemented comprehensive training and skills development programs for its workforce.

Training and Education Programs

Continuous Learning Framework

• Ongoing Training Investment: Continuous investment in employee training and education programs
• Professional Development: Focus on ensuring continuous learning and career development opportunities
• Skills Enhancement: Systematic approach to skills development across all employee levels

Career Development Initiatives

• Career Progression Paths: Clear career development opportunities in tourism sector
• Employee Growth: Ensuring purpose and growth opportunities for every team member
• Industry Expertise: Development of specialized tourism and hospitality skills

Training Program Enhancements

Training Programme Improvements

• Enhanced Programs: Particular focus placed on improving training programmes based on employee feedback
• Employee Development Focus: Regular enhancement of training initiatives to address skill development needs
• Competency Building: Systematic competency development aligned with business needs

Digital Skills Development

• Digitalisation Training: Integration of digital skills training as part of EUR 6.2 million digitalisation and innovation investment
• Technology Integration: Training on new digital systems and platforms
• Innovation Skills: Development of innovation and technology-related capabilities

Skills Development Investment

Financial Commitment

• Training Investment: Significant portion of annual investment allocated to employee training and development
• Long-Term Development: Multi-year commitment to employee skills enhancement
• Professional Growth: Investment in professional development aligned with career progression opportunities

Specialized Training Areas

• Service Excellence: Training focused on service quality and guest satisfaction
• Sustainability Education: Training on sustainability and ESG principles as part of corporate responsibility
• Leadership Development: Management and leadership skills development programs

Training Effectiveness

Employee Satisfaction Impact

• Satisfaction Correlation: Training programs contribute to high employee satisfaction levels measured through annual surveys
• Career Advancement: Training programs support career advancement and employee retention
• Professional Recognition: Contribution to Valamar's recognition as most desirable employer in tourism

Business Impact

• Service Quality: Training programs directly support exceptional guest satisfaction and service quality
• Operational Excellence: Skills development contributes to operational efficiency and excellence
• Competitive Advantage: Enhanced workforce capabilities support competitive positioning

These training and skills development initiatives support Valamar's strategic objective to remain the best employer in tourism while ensuring workforce capabilities align with business growth and sustainability objectives.

Health and safety metrics

Coverage of health and safety management system

Valamar Group maintains ISO 45001 (Occupational Health and Safety Management System) certification across all properties. The disclosure does not specify a precise percentage coverage figure for the own workforce.

Work-related injuries, fatalities and ill health

The materiality assessment table (page 70) indicates that the following ESRS S1-14 metrics are not disclosed:

• ESRS S1-14 88(b),(c): Number of fatalities and number and rate of work-related accidents – marked as "Not relevant"
• ESRS S1-14 88(e): Number of days lost to injuries, accidents, fatalities or illness – marked as "Not relevant"

No quantitative data on fatalities, recordable work-related accidents, injury rates (LTIFR/TRIR), or days lost to work-related injuries is provided in the sustainability report for the 2024 reporting period.

Compensation metrics (S1-16)

Pay gap

Not disclosed.

Remuneration ratio

Valamar Group discloses an annual total remuneration ratio comparing the highest-paid individual to the median employee.

Remuneration ratio: 34.7

Methodology

The remuneration ratio was calculated using the following methodology:

Components included in total remuneration:

• Base salary (sum of guaranteed, short-term, and non-variable cash compensation)
• Benefits in cash (base salary plus cash allowances, bonuses, and other variable cash payments)
• Benefits in kind (cars, private health insurance, life insurance)
• Direct remuneration (sum of benefits in cash, benefits in kind, and total fair value of all annual long-term incentives including stock option awards)

Calculation approach:

To address the seasonality of the business and the fact that many employees did not work for the entire 12-month period, Valamar Group utilized an hourly rate methodology:

• Denominator (median): The hourly rate per employee was calculated by dividing each employee's annual salary (including all components stated above) by the total annual hours worked by that employee, excluding the highest-paid employee. The median hourly rate for the Group was then calculated from this data.

• Numerator (highest-paid individual): The hourly remuneration of the highest-paid employee was determined by dividing their annual salary by their total annual hours worked.

Scope: All employees based on working hours are included in the calculation.

Incidents, complaints and severe human rights impacts

Discrimination and harassment incidents

During the reporting period, two complaints related to discrimination were reported. Both cases were handled through internal procedures in accordance with Valamar Group's policies. Following a thorough review, appropriate actions were taken where necessary. Valamar Group strictly prohibits any form of discrimination or harassment and maintains clear policies to ensure a safe, inclusive, and respectful work environment.

Complaints filed and status

Status of incidents and/or complaints: Both complaints received during the reporting period were handled through internal procedures in accordance with Valamar Group's policies. Appropriate actions were taken where necessary following thorough review.

Severe human rights impacts

There have been no severe human rights incidents including forced labour, human trafficking, or child labour, involving Valamar Group workforce during the reporting period.

Fines, penalties and compensation

No fines and penalties related to discrimination were registered in 2024. Valamar Group remains dedicated to complying with all relevant regulations and upholding the integrity of its business practices.

Grievance mechanisms

Complaints related to harassment were submitted through the internal incident reporting system to the individual authorized to receive and address complaints in writing. After receiving the complaints, the individual responsible for handling them, together with supervisory personnel and a human resources representative, interviewed the alleged offenders to establish the facts.

The authorized person is required to investigate the complaint and take all necessary measures appropriate to the specific case to prevent further harassment, if such harassment is established, within 8 days of receiving the complaint.

Possible measures include:

• Reassignment or alternative scheduling of specific employees
• Verbal and written warnings with a notice of termination of the employment contract
• Termination of the employment contract

Valamar Group emphasizes confidentiality and impartiality in addressing these concerns, fostering trust and encouraging employees to voice their issues.

Valamar has implemented comprehensive policies related to value chain workers, particularly focusing on supplier engagement and sustainable business practices.

Supplier Sustainability Policies

Sustainable Business Practices

• Supplier Commitment Program: 80% of suppliers have committed to implementing sustainable business practices, following Valamar's sustainability leadership
• Sustainability Standards: Integration of sustainability criteria in supplier selection and engagement processes
• Responsible Sourcing: Focus on suppliers that align with Valamar's environmental and social responsibility standards

Local and Regional Supplier Policies

Local Economic Support

• Local Producer Support: Supporting local producers by sourcing domestic products, resulting in 78% locally sourced food and beverages
• Regional Supply Chain: Prioritization of regional suppliers to support local economies and reduce environmental impact
• Community Economic Development: Supplier policies designed to contribute to local economic development in destination areas

Supply Chain Sustainability

• Environmental Criteria: Integration of environmental considerations in supplier evaluation and selection
• Social Responsibility: Focus on suppliers that demonstrate social responsibility in their operations
• Sustainable Procurement: Implementation of sustainable procurement practices throughout supply chain

Value Chain Worker Standards

Working Conditions in Supply Chain

• Supplier Standards: Expectation that suppliers maintain appropriate working conditions for their employees
• Sustainability Commitment: Supplier commitment to sustainable practices includes consideration of worker welfare
• Responsible Business Practices: Focus on suppliers that demonstrate responsible employment and working condition practices

Partnership Approach

• Long-Term Relationships: Development of long-term partnerships with suppliers that share Valamar's values
• Collaborative Development: Working with suppliers to improve sustainability and social responsibility practices
• Mutual Growth: Supporting supplier development while ensuring alignment with Valamar's standards

Supply Chain Integration

Strategic Procurement

• Procurement Optimization: Implementation of circular economy principles in procurement processes
• Supplier Development: Investment in supplier capability development and sustainability improvements
• Value Chain Management: Active management of entire value chain to ensure responsible practices

Monitoring and Evaluation

• Supplier Performance: Regular evaluation of supplier performance against sustainability and social responsibility criteria
• Continuous Improvement: Ongoing work with suppliers to enhance their sustainable business practices
• Impact Assessment: Assessment of supply chain impact on local communities and workers

These policies reflect Valamar's commitment to responsible value chain management and support for sustainable business practices throughout its supplier network, contributing to positive impacts on value chain workers and local communities.

Valamar has implemented comprehensive actions to manage impacts on value chain workers and approaches to managing related risks and opportunities.

Supplier Engagement Actions

Sustainability Commitment Program

• 80% Supplier Participation: Successfully engaged 80% of suppliers to commit to implementing sustainable business practices
• Sustainability Leadership: Suppliers have followed Valamar's sustainability leadership in adopting responsible business practices
• Continuous Engagement: Ongoing work with suppliers to enhance their sustainable business practices

Local Supplier Development

• Local Sourcing Achievement: Maintained 78% locally sourced food and beverages, supporting local producers and their workers
• Regional Economic Support: Prioritized regional suppliers, contributing to local economic development and employment
• Community Integration: Supplier selection that supports local communities and value chain workers

Value Chain Worker Impact Management

Responsible Procurement Practices

• Sustainable Procurement Implementation: Integration of circular economy principles in procurement processes that consider worker welfare
• Supplier Standards: Implementation of supplier standards that include consideration of working conditions
• Partnership Development: Development of long-term partnerships with suppliers that demonstrate responsible employment practices

Supply Chain Monitoring

• Performance Evaluation: Regular evaluation of supplier performance against sustainability and social responsibility criteria
• Impact Assessment: Assessment of supply chain impact on local communities and value chain workers
• Continuous Improvement: Ongoing supplier development to improve working conditions and practices

Risk Management Approaches

Supply Chain Risk Mitigation

• Supplier Diversification: Focus on local and regional suppliers to reduce supply chain risks
• Sustainability Standards: Implementation of sustainability criteria to mitigate reputational and operational risks
• Long-Term Partnerships: Development of stable, long-term supplier relationships

Value Chain Worker Welfare

• Indirect Impact Management: Management of impacts on value chain workers through supplier standards and expectations
• Community Support: Supplier policies that support local employment and community development
• Responsible Sourcing: Focus on suppliers that maintain appropriate working conditions and employment practices

Opportunity Pursuit

Economic Development Opportunities

• Local Economic Growth: Supplier policies that create opportunities for local economic development
• Supplier Capability Building: Investment in supplier development and capability enhancement
• Innovation Partnership: Collaboration with suppliers on sustainability and innovation initiatives

Sustainability Leadership

• Industry Influence: Use of supplier network to promote sustainable practices in tourism industry
• Best Practice Sharing: Sharing of sustainability knowledge and practices with supplier partners
• Collective Impact: Leveraging supplier network for broader positive impact on value chain workers

Effectiveness Assessment

Performance Indicators

• 80% Supplier Commitment: Achievement of significant supplier participation in sustainability programs
• 78% Local Sourcing: High percentage of local sourcing supporting local value chain workers
• ESG Recognition: High silver ESG rating from EcoVadis recognizing supply chain management effectiveness

Continuous Development

• Supplier Engagement Growth: Continued increase in supplier participation in sustainability initiatives
• Local Economic Impact: Positive impact on local economies through responsible procurement practices
• Value Chain Integration: Enhanced integration of social responsibility throughout value chain

These actions demonstrate Valamar's commitment to responsible value chain management and positive impact on value chain workers through supplier engagement, local economic support, and sustainable procurement practices.

Valamar has established specific targets related to managing impacts on value chain workers and pursuing opportunities for positive development.

Supplier Sustainability Targets

Sustainable Business Practice Goals

• 100% Supplier Commitment: Target to achieve 100% supplier commitment to implementing sustainable business practices (currently at 80%)
• Supplier Development: Continued enhancement of supplier sustainability capabilities and practices
• Best Practice Integration: Systematic integration of sustainability standards throughout supplier network

Supply Chain Responsibility Targets

• Value Chain Worker Welfare: Enhanced focus on supplier working conditions and employee welfare standards
• Responsible Sourcing Expansion: Broader implementation of responsible sourcing criteria that consider worker impacts
• Supply Chain Transparency: Increased transparency and monitoring of value chain worker conditions

Local Economic Development Targets

Local Sourcing Goals

• Local Sourcing Maintenance: Maintain and potentially increase the 78% share of locally sourced food and beverages
• Regional Economic Support: Continued prioritization of regional suppliers to support local employment
• Community Economic Integration: Enhanced integration with local economies to benefit value chain workers

Supplier Partnership Development

• Long-Term Partnerships: Development of stable, long-term partnerships with suppliers committed to worker welfare
• Collaborative Growth: Joint development initiatives with suppliers to improve working conditions and practices
• Local Supplier Capacity Building: Investment in local supplier capability development

Strategic Value Chain Objectives

ESG Integration Goals

• Supply Chain ESG: Integration of value chain worker considerations in achieving gold-tier ESG rating by 2026
• Industry Leadership: Recognition as leader in responsible supply chain management in tourism sector
• Sustainability Innovation: Development of innovative approaches to value chain worker welfare

Risk Management Targets

• Supply Chain Resilience: Enhanced supply chain resilience through responsible supplier relationships
• Impact Mitigation: Systematic mitigation of negative impacts on value chain workers
• Positive Impact Amplification: Amplification of positive impacts through supplier network

Monitoring and Accountability Targets

Performance Measurement

• Supplier Assessment: Regular assessment of supplier performance on worker welfare criteria
• Impact Monitoring: Systematic monitoring of impacts on value chain workers through supplier network
• Continuous Improvement: Ongoing improvement in supplier standards and practices

Stakeholder Engagement Goals

• Supplier Communication: Enhanced communication and engagement with suppliers on worker welfare issues
• Industry Collaboration: Leadership in industry initiatives for value chain worker protection
• Best Practice Sharing: Sharing of successful approaches with other tourism companies

Integration with Business Strategy

Investment Alignment

• Procurement Investment: Integration of value chain worker considerations in EUR 450 million investment plan
• Supplier Development Investment: Dedicated resources for supplier capability and standards development
• Technology Integration: Use of digitalisation and innovation to improve supply chain transparency and worker conditions

Operational Excellence

• Service Quality Connection: Connection between value chain worker welfare and service quality outcomes
• Sustainability Leadership: Value chain worker welfare as component of sustainability leadership strategy
• Stakeholder Value: Creation of value for value chain workers as part of stakeholder value creation approach

These targets reflect Valamar's commitment to responsible value chain management and demonstrate the company's recognition that positive impacts on value chain workers contribute to overall sustainability objectives and business success.

Valamar has implemented comprehensive policies related to affected communities, focusing on destination development and local community support.

Community Development Policies

Destination Enhancement and Infrastructure

• Public Infrastructure Investment: Maintaining and enhancing public tourism infrastructure such as beaches, promenades, playgrounds, and cycling trails
• Community Facility Development: Investment in facilities that benefit both tourists and local residents
• Quality of Life Improvement: Investments designed to improve quality of life for residents in destinations where Valamar operates

Community Support and Engagement

Local Community Investment

• 3-5% Revenue Allocation: Valamar allocates between 3% and 5% of its annual revenue to corporate social responsibility programmes supporting local communities
• Comprehensive Support Programs: Wide range of initiatives supporting various aspects of community life
• Long-Term Community Commitment: Sustained investment in community development and support

Education and Youth Support

• School Nutrition Programs: Promoting healthy nutrition in schools through the "Valamar brine za marende fine" ("Valamar Cares for Healthy School Lunches") initiative
• Summer Camps: Organizing summer camps for children in local communities
• Educational Infrastructure: Improving working conditions in kindergartens and educational facilities

Economic and Social Impact Policies

Local Economic Development

• Local Employment: Strategic focus on ensuring at least 70% of workforce consists of local employees (achieving 78%)
• Local Supplier Support: Supporting local producers with 78% locally sourced food and beverages
• Economic Multiplier Effect: Creating economic opportunities that benefit broader community

Community Infrastructure and Services

• Sports and Recreation: Providing support and donations to local sports clubs and associations
• Cultural Events: Supporting various cultural and sporting events in destinations
• Public Facility Enhancement: Investment in public facilities that serve both tourism and community needs

Destination Stewardship Policies

Sustainable Tourism Development

• Community-Centered Development: Tourism development that considers and benefits local community needs
• Environmental Protection: Protecting natural resources and environment for community benefit
• Destination Competitiveness: Enhancing destination attractiveness while preserving community character

Stakeholder Collaboration

• Community Partnership: Collaboration with destinations contributes to development of local economy
• Two-Way Communication: Engagement with local communities as key stakeholders
• Shared Value Creation: Creating value that benefits both business and community development

These policies reflect Valamar's commitment to being "Good for destinations" through sustainable development, community support, and responsible resource management that benefits affected communities while supporting tourism development.

Valamar has established comprehensive processes for engaging with affected communities about impacts through various stakeholder engagement mechanisms.

Community Stakeholder Engagement Framework

Stakeholder Recognition and Communication

• Community as Key Stakeholder: Local communities recognized as key stakeholders in Valamar's stakeholder engagement framework
• Two-Way Communication: Valamar fosters long-term relationships and two-way communication with communities in destinations where it operates
• Destination Collaboration: Active collaboration with destinations that contributes to development of local economy

Community Partnership Approach

• Long-Term Relationships: Building sustained relationships with local communities rather than transactional interactions
• Collaborative Development: Working with communities on development initiatives that benefit both tourism and local residents
• Shared Value Creation: Engagement focused on creating value for both Valamar and affected communities

Community Impact Discussion

Infrastructure and Development Engagement

• Public Infrastructure Planning: Community engagement on public tourism infrastructure development such as beaches, promenades, playgrounds, and cycling trails
• Quality of Life Impact: Discussion with communities about how investments contribute to improved quality of life for residents
• Development Impact Assessment: Engagement on how tourism development affects local communities

Economic Impact Engagement

• Local Employment Discussion: Communication about local employment opportunities and impact (70%+ local workforce target)
• Local Sourcing Impact: Engagement about supporting local producers and economic impact of 78% local sourcing
• Economic Development: Discussion of broader economic development impacts and opportunities

Community Support Program Engagement

Social Responsibility Program Consultation

• Program Development: Community input on corporate social responsibility programmes funded by 3-5% of annual revenue
• Needs Assessment: Engagement to identify community needs and priorities for support programs
• Program Effectiveness: Feedback mechanisms on effectiveness of community support initiatives

Specific Community Initiative Engagement

• Education Programs: Community engagement on school nutrition programs and educational support initiatives
• Sports and Culture: Collaboration with local sports clubs, associations, and cultural events
• Infrastructure Improvement: Community consultation on kindergarten improvements and public facility enhancements

Environmental and Sustainability Engagement

Environmental Impact Discussion

• Natural Resource Management: Community engagement on efficient management and preservation of natural resources
• Environmental Protection: Discussion of environmental protection measures and their community benefits
• Sustainability Initiatives: Community involvement in sustainability and environmental protection projects

Destination Sustainability

• Marine Conservation: Community engagement on marine protection initiatives like WWF Adria partnership
• Sustainable Tourism: Discussion of sustainable tourism development that benefits long-term community interests
• Environmental Stewardship: Engagement on shared environmental stewardship responsibilities

These engagement processes support Valamar's mission to be "Good for destinations" and ensure that community voices and concerns are integrated into business planning and development decisions.

Valamar has implemented comprehensive actions to manage impacts on affected communities and approaches to managing related risks and opportunities.

Community Investment Actions

Infrastructure Development for Community Benefit

• Public Infrastructure Investment: Maintaining and enhancing public tourism infrastructure including beaches, promenades, playgrounds, and cycling trails that serve both tourists and residents
• Pical Project Community Impact: Hotel Pical 5* project will create over 700 new jobs and contribute to improved quality of life for residents of Poreč
• Bike Centre Development: New Bike Centre built in Poreč as part of Valamar Parentino Hotel, funded through National Recovery and Resilience Plan

Economic Development Actions

• Local Employment Priority: Achieved 78% local workforce composition, exceeding 70% target, providing direct economic benefit to communities
• Local Sourcing Program: Maintained 78% locally sourced food and beverages, supporting local producers and economic development
• Job Creation: Strategic investments creating substantial employment opportunities in destination communities

Community Support Program Implementation

Social Responsibility Investment

• 3-5% Revenue Allocation: Systematic allocation of 3-5% of annual revenue to corporate social responsibility programmes benefiting local communities
• Education Support: Implementation of "Valamar brine za marende fine" healthy school lunch program and summer camps for children
• Infrastructure Enhancement: Improving working conditions in kindergartens and supporting educational facilities

Community Organization Support

• Sports and Culture: Providing support and donations to local sports clubs, associations, and cultural events
• Community Events: Supporting various socially responsible initiatives and community events in destinations
• Local Partnership: Building partnerships with local organizations and institutions

Environmental and Conservation Actions

Marine Conservation Community Benefit

• WWF Adria Partnership: Collaboration with WWF Adria to motivate sustainable fishing in the Adriatic, benefiting local fishing communities
• Vis Island Partnership: Strategic partnership with fisherman cooperative on Vis island supporting sustainable marine practices
• Environmental Protection: Natural resource conservation efforts that benefit community environmental health

Sustainable Development Actions

• Green Building Practices: Implementation of sustainable construction that minimizes negative community impacts
• Renewable Energy: 100% renewable electricity sourcing reducing environmental impact on communities
• Waste Management: Bio-waste composting and recycling programs that benefit community environmental quality

Risk Management for Community Impact

Development Impact Management

• Sustainable Tourism Planning: Tourism development planning that considers long-term community interests
• Environmental Impact Mitigation: Measures to minimize negative environmental impacts on communities
• Infrastructure Strain Management: Investment in public infrastructure to prevent overtourism impacts

Economic Risk Mitigation

• Local Economic Integration: High local employment and sourcing reducing risk of economic displacement
• Seasonal Employment Management: Strategies to provide year-round economic benefits to communities
• Economic Diversification: Supporting diverse local economic activities beyond tourism

Community Opportunity Development

Economic Opportunities

• Employment Creation: Major investments like Pical Hotel creating significant new employment opportunities
• Local Business Support: High local sourcing creating opportunities for local suppliers and producers
• Skills Development: Training programs that build local workforce capabilities

Infrastructure Opportunities

• Public Facility Enhancement: Tourism infrastructure investments that provide lasting community benefits
• Recreation Facility Access: Development of sports and recreation facilities accessible to local residents
• Transportation Infrastructure: Cycling trails and other infrastructure benefiting community mobility

Effectiveness Assessment

Community Impact Measurement

• Employment Impact: 78% local employment demonstrating significant positive community economic impact
• Local Sourcing Impact: 78% local sourcing providing substantial support to local producers
• Infrastructure Investment: Continuous investment in public infrastructure benefiting communities

Community Feedback Integration

• Stakeholder Engagement: Two-way communication ensuring community concerns are addressed
• Long-Term Relationship Building: Sustained community partnerships demonstrating commitment
• Collaborative Development: Joint development initiatives with communities

These actions demonstrate Valamar's commitment to creating positive impacts on affected communities through economic development, infrastructure investment, social support programs, and environmental protection measures.

Valamar has established specific targets related to managing impacts on affected communities and pursuing opportunities for positive community development.

Community Economic Development Targets

Employment and Economic Goals

• 70%+ Local Employment: Target to ensure at least 70% of workforce consists of local employees (currently achieving 78%)
• Local Economic Integration: Continued high level of local employment to maximize community economic benefits
• Job Creation Through Investment: EUR 450 million investment plan targeting creation of over 700 new jobs (Pical project alone)

Local Sourcing and Supplier Targets

• Local Sourcing Maintenance: Maintain and potentially increase 78% locally sourced food and beverages
• Local Producer Support: Continued support for local producers and suppliers in destination communities
• Economic Multiplier Enhancement: Strengthen economic multiplier effects through increased local procurement

Community Infrastructure and Quality of Life Targets

Public Infrastructure Goals

• Infrastructure Investment Continuation: Continued maintenance and enhancement of public tourism infrastructure (beaches, promenades, playgrounds, cycling trails)
• Community Facility Development: Enhanced investment in facilities that serve both tourists and local residents
• Quality of Life Improvement: Systematic improvement in quality of life for residents through strategic investments

Public Facility Enhancement

• Recreation Infrastructure: Development of sports and recreation facilities accessible to local communities
• Transportation Infrastructure: Expansion of cycling trails and sustainable transportation options
• Public Space Enhancement: Enhancement of public spaces for community benefit

Social Support Program Targets

Community Investment Goals

• 3-5% Revenue Allocation: Maintain allocation of 3-5% of annual revenue to corporate social responsibility programmes
• Program Expansion: Enhancement and expansion of community support programs
• Educational Support Growth: Continued and expanded support for educational initiatives and child welfare

Community Partnership Development

• Sports and Culture Support: Increased support for local sports clubs, associations, and cultural events
• Community Organization Partnership: Strengthened partnerships with local community organizations
• Social Initiative Expansion: Broader range of socially responsible initiatives supporting community needs

Environmental and Sustainability Targets

Environmental Community Benefit

• Marine Conservation Expansion: Expanded marine conservation efforts benefiting coastal communities through WWF partnerships
• Environmental Health: Continued environmental protection measures that benefit community health and quality of life
• Sustainable Development: Integration of community environmental benefits in all development projects

Conservation Partnership Goals

• Fishing Community Support: Expanded support for sustainable fishing practices benefiting local fishing communities
• Environmental Education: Community environmental education and awareness programs
• Natural Resource Stewardship: Enhanced community participation in natural resource conservation

Strategic Community Objectives

ESG Integration Goals

• Community Impact in ESG: Integration of community impact considerations in achieving gold-tier ESG rating by 2026
• Sustainability Leadership: Recognition as leader in community-beneficial tourism development
• Stakeholder Value Creation: Enhanced value creation for community stakeholders

Long-Term Relationship Targets

• Partnership Strengthening: Strengthened long-term partnerships with destination communities
• Collaborative Development: Increased collaborative development initiatives with communities
• Mutual Benefit Enhancement: Enhanced mutual benefit from tourism-community relationships

Monitoring and Accountability

Community Impact Measurement

• Employment Impact Tracking: Regular monitoring of local employment percentages and economic impact
• Community Benefit Assessment: Systematic assessment of community benefits from infrastructure and social investments
• Stakeholder Satisfaction: Regular evaluation of community satisfaction with Valamar's presence and activities

Continuous Improvement Targets

• Feedback Integration: Enhanced integration of community feedback into planning and development processes
• Impact Optimization: Continuous optimization of positive community impacts
• Best Practice Development: Development of best practices for community-beneficial tourism

These targets reflect Valamar's commitment to being "Good for destinations" and demonstrate systematic approach to creating positive impacts on affected communities while managing potential negative impacts through responsible tourism development.

Valamar has implemented comprehensive policies related to consumers and end-users, focusing on guest satisfaction, personalized experiences, and value creation.

Guest Experience and Satisfaction Policies

Personalized Service Approach

• Individual Guest Focus: Core value that "Each guest is unique, so holidays should be too"
• Tailored Experiences: Crafting holiday experiences tailored for the individual to ensure every guest feels welcome, valued and amazed
• Attention to Detail: Devotion to every detail to ensure guests leave with lasting memories, deep connections, and enriching experiences

Guest Satisfaction and Quality Standards

• Quality Score Target: Goal to achieve exceptionally high guest satisfaction with a quality score of 89%
• Net Promoter Score (NPS): Target NPS of 65 for measuring guest loyalty and satisfaction
• Service Excellence: Continuous focus on service quality and guest satisfaction through employee training and operational excellence

Guest Loyalty and Relationship Policies

Loyalty Program Development

• Valamar Rewards Programme: Comprehensive loyalty programme with exclusive benefits for returning guests
• Database Growth: Target to expand active marketing database to 1.6 million guests
• Returning Guest Focus: Goal for one in three guests to be returning customers

Long-Term Guest Relationships

• Guest Retention Strategy: Focus on creating lasting relationships with guests through exceptional experiences
• Personalized Services: Services based on guest preferences and feedback
• Continuous Engagement: Ongoing communication and engagement with guests beyond their stay

Product and Service Quality Policies

Diverse Portfolio Offering

• Range of Experiences: Diverse offering ranging from Valamar Collection hotels to family resorts and premium camping resorts
• Brand Differentiation: Different brands targeting different guest segments and preferences
• Quality Standards: Consistent high-quality standards across all brands and properties

Innovation and Digital Experience

• Digital Transformation: Investment in digital platforms and technologies to enhance guest experience
• Smart Hotel Systems: Implementation of smart hotel systems providing personalized guest experiences
• Digital Concierge Services: Valamar Experience Concierge for faster and more efficient communication

Safety and Well-being Policies

Guest Safety and Security

• Investment in Safety: Significant investments in property security and guest safety measures
• Health and Safety Standards: Comprehensive health and safety protocols for guest protection
• Emergency Preparedness: Robust emergency preparedness and response procedures

Guest Support Services

• Guest Communication: Multiple channels for guest communication and support
• Problem Resolution: Efficient systems for addressing guest concerns and resolving issues
• Accessibility: Focus on ensuring accessibility for all guests including persons with disabilities

These consumer and end-user policies support Valamar's mission to create really good holidays and ensure that every guest has an exceptional experience that encourages loyalty and positive word-of-mouth recommendations.

Valamar has established comprehensive processes for engaging with consumers and end-users about impacts through various touchpoints and feedback mechanisms.

Guest Feedback and Communication Systems

Direct Guest Engagement

• Personalized Communication: Focus on individual guest needs and preferences through tailored communication
• Digital Concierge Services: Valamar Experience Concierge providing faster and more efficient communication with guests
• Multi-Channel Communication: Various communication channels enabling guests to provide feedback and raise concerns

Guest Satisfaction Monitoring

• Guest Satisfaction Surveys: Systematic collection of guest feedback to monitor satisfaction levels and identify areas for improvement
• Quality Score Tracking: Regular monitoring of quality scores to ensure maintenance of high standards (target 89%)
• Net Promoter Score (NPS): Measurement of guest loyalty and willingness to recommend (target NPS of 65)

Digital Platform Engagement

Online Engagement

• Valamar.com Platform: New website launched in October 2024 providing enhanced user experience and communication capabilities
• Digital Transformation: Investment in digital platforms facilitating better guest communication and feedback
• Online Booking Integration: Seamless communication through online booking and reservation systems

Loyalty Program Communication

• Valamar Rewards Programme: Platform for ongoing engagement with 656,000 loyalty members
• Marketing Database: Active communication with 1.3 million guests in marketing database
• Exclusive Benefits Communication: Regular communication about loyalty benefits and exclusive offers

Guest Experience Feedback Integration

Service Personalization

• Preference-Based Services: Services based on guest preferences and feedback collected through various touchpoints
• Experience Customization: Adaptation of services based on guest feedback and individual needs
• Continuous Improvement: Integration of guest feedback into service development and enhancement

Operational Response

• Service Quality Enhancement: Use of guest feedback to continuously improve service quality and operational excellence
• Problem Resolution: Efficient systems for addressing guest concerns and implementing solutions
• Innovation Development: Guest feedback driving innovation in services and digital solutions

Stakeholder Engagement Integration

Guest as Key Stakeholder

• Stakeholder Recognition: Guests recognized as primary stakeholders in Valamar's stakeholder engagement framework
• Value Creation Focus: Engagement processes designed to create value for guests while supporting business objectives
• Long-Term Relationship Building: Focus on building sustained relationships with guests beyond single transactions

Impact Communication

• Sustainability Communication: Communication with guests about environmental and social impacts of their stays
• Community Impact Sharing: Information about how tourism contributes to local community development
• Sustainable Tourism Education: Engagement with guests about sustainable tourism practices and their role

Feedback Integration Processes

Continuous Improvement Cycles

• Regular Feedback Analysis: Systematic analysis of guest feedback to identify trends and improvement opportunities
• Service Enhancement: Implementation of service improvements based on guest input and suggestions
• Innovation Development: Use of guest feedback to drive innovation in products, services, and experiences

Response Mechanisms

• Timely Response: Systems ensuring timely response to guest feedback and concerns
• Follow-Up Communication: Follow-up with guests to ensure satisfaction with problem resolution
• Proactive Communication: Proactive communication about service changes and improvements based on feedback

These engagement processes support Valamar's goal of achieving exceptional guest satisfaction and creating lasting relationships with consumers and end-users while ensuring their voices are heard and integrated into business operations and development.

Valamar has implemented comprehensive actions to manage impacts on consumers and end-users and approaches to managing related risks and opportunities.

Guest Experience Enhancement Actions

Service Quality Improvements

• Best Satisfaction Results Ever: Achieved the best guest satisfaction results in company history in 2024
• Quality Score Progress: Working toward target quality score of 89% and NPS of 65 through continuous service improvements
• Service Excellence Investment: Continuous investment in service quality and guest satisfaction through employee training and operational excellence

Digital Experience Enhancement

• Website Transformation: Launched new valamar.com in October 2024 with enhanced user experience and contemporary design
• Smart Hotel Systems: Implementation of smart hotel systems providing personalized guest experiences
• Digital Concierge: Implementation of Valamar Experience Concierge for faster and more efficient guest communication

Guest Loyalty and Retention Actions

Loyalty Program Development

• Loyalty Membership Growth: 98,000 new members joined Valamar Rewards programme in 2024
• Active Database Expansion: Marketing database exceeded 1.3 million guests with 656,000 loyalty members
• Returning Guest Achievement: 29% of total visitors in 2024 were returning guests

Personalized Service Implementation

• Individual Guest Focus: Implementation of services based on guest preferences and feedback
• Tailored Experiences: Development of holiday experiences crafted for individual guest needs
• Exclusive Benefits: Provision of exclusive benefits and personalized offers for loyalty program members

Product and Portfolio Development

Diverse Offering Enhancement

• Brand Portfolio Expansion: Development of five product brands under Valamar umbrella (Collection, Hotels & Resorts, Camping, Places, Sunny)
• Sunny Brand Completion: Completed renovation of three hotels under Sunny by Valamar brand with EUR 20 million investment
• New Branding Strategy: Implementation of new brand strategy with "Holiday As You Are" slogan emphasizing personalization

Quality and Innovation Investment

• Capital Investment: EUR 117 million in capital investments in 2024 enhancing guest facilities and experiences
• Innovation Projects: Over EUR 6.2 million invested in digitalisation and innovation projects improving guest experience
• Infrastructure Enhancement: Continuous investment in facilities, amenities, and infrastructure benefiting guest experience

Safety and Security Actions

Guest Safety Enhancement

• Security Investment: Significant investments in property security and guest safety measures
• Health Protocols: Implementation of comprehensive health and safety protocols for guest protection
• Emergency Preparedness: Robust emergency preparedness and response procedures

Operational Excellence

• Staff Training: Comprehensive employee training programs focused on guest service and safety
• Quality Standards: Implementation of consistent high-quality standards across all properties
• Continuous Monitoring: Regular monitoring and improvement of safety and security measures

Risk Management for Guest Impact

Service Quality Risk Management

• Performance Monitoring: Continuous monitoring of guest satisfaction and service quality metrics
• Rapid Response Systems: Systems for quickly addressing guest concerns and service issues
• Quality Assurance: Comprehensive quality assurance programs across all properties

Digital Security and Privacy

• Data Protection: Implementation of robust data protection measures for guest information
• Digital Security: Enhanced digital security measures for online platforms and guest data
• Privacy Compliance: Compliance with privacy regulations and guest data protection requirements

Opportunity Development

Market Expansion Opportunities

• Direct Sales Growth: Direct sales reached EUR 211 million, accounting for 64% of total sales revenue
• Database Growth: Target to expand marketing database to 1.6 million guests by 2026
• Returning Guest Target: Goal for one in three guests to be returning customers

Innovation Opportunities

• Technology Integration: AI-driven analytics for deeper understanding of guest needs
• Service Innovation: Continuous innovation in guest services and experience offerings
• Digital Platform Development: Enhanced digital platforms for improved guest engagement

Effectiveness Assessment

Guest Satisfaction Metrics

• Best Ever Results: Achievement of best guest satisfaction results in company history
• Loyalty Growth: Significant growth in loyalty program membership and returning guests
• Quality Recognition: Recognition for exceptional service quality and guest experience

Business Impact

• Revenue Growth: 12% growth in total revenues to EUR 420.3 million
• Direct Sales Success: 64% of sales from direct channels demonstrating guest loyalty
• Market Position: Strengthened position as leading tourism provider on Adriatic and Alps

These actions demonstrate Valamar's comprehensive approach to managing impacts on consumers and end-users through service excellence, digital innovation, safety enhancement, and continuous improvement based on guest feedback and market demands.

Valamar has established specific targets related to managing impacts on consumers and end-users and pursuing opportunities for enhanced guest satisfaction and loyalty.

Guest Satisfaction and Experience Targets

Quality Performance Goals

• Quality Score Target: Achieve exceptionally high guest satisfaction with a quality score of 89%
• Net Promoter Score (NPS): Target NPS of 65 for measuring guest loyalty and willingness to recommend
• Service Excellence: Continue achieving best-ever guest satisfaction results through operational excellence

Guest Experience Enhancement Targets

• Personalized Service: Enhanced personalization of services based on individual guest preferences and feedback
• Digital Experience: Continuous improvement of digital platforms and smart hotel systems for seamless guest experience
• Attention to Detail: Systematic enhancement of attention to detail across all guest touchpoints

Guest Loyalty and Retention Targets

Loyalty Program Goals

• Database Expansion: Target to expand active marketing database to 1.6 million guests by 2026
• Returning Guest Target: Goal for one in three guests to be returning customers
• Loyalty Membership Growth: Continued expansion of Valamar Rewards programme membership

Customer Relationship Development

• Guest Retention Enhancement: Increase in percentage of returning guests through exceptional service and loyalty benefits
• Lifetime Value Growth: Enhancement of guest lifetime value through long-term relationship building
• Engagement Improvement: Deeper guest engagement through personalized communication and services

Product and Service Development Targets

Portfolio Enhancement Goals

• Brand Development: Continued development of five product brands to serve diverse guest segments
• Service Innovation: Innovation in guest services and experience offerings across all brands
• Quality Consistency: Maintenance of consistent high-quality standards across entire portfolio

Digital Transformation Targets

• Technology Integration: Enhanced integration of technology for personalized guest experiences
• Digital Platform Evolution: Continuous improvement of digital booking and communication platforms
• Smart Service Implementation: Expanded implementation of smart hotel systems and digital concierge services

Safety and Security Targets

Guest Safety Enhancement

• Security Standards: Continued enhancement of security standards and guest safety measures
• Health Protocol Excellence: Maintenance of comprehensive health and safety protocols
• Emergency Preparedness: Enhanced emergency preparedness and response capabilities

Operational Excellence Goals

• Service Consistency: Consistent delivery of exceptional service across all properties
• Staff Training Excellence: Continued investment in employee training for guest service excellence
• Quality Assurance: Enhanced quality assurance programs and monitoring systems

Business Performance Targets Related to Guests

Revenue and Sales Goals

• Direct Sales Growth: Target of two-thirds of revenue from direct sales by 2026
• Revenue per Guest: Enhancement of revenue per guest through value-added services and experiences
• Market Position: Strengthened position as leading holiday provider on Adriatic and in Alps

Seasonal Performance Targets

• Year-Round Business: Target of 50% revenue generation outside peak tourist season
• Seasonal Optimization: Enhanced guest experience during both peak and off-peak periods
• Capacity Optimization: Improved guest experience through optimal capacity management

Strategic Integration Targets

ESG and Sustainability Goals

• Sustainable Tourism: Integration of guest education and engagement in sustainable tourism practices
• Environmental Awareness: Enhanced guest awareness and participation in environmental protection initiatives
• Community Connection: Strengthened connection between guests and local communities

Innovation and Development

• Technology Leadership: Maintain leadership in tourism technology and digital innovation
• Service Innovation: Continuous innovation in guest services and experience delivery
• Best Practice Development: Development of industry best practices in guest experience management

Monitoring and Measurement Targets

Performance Tracking

• Real-Time Monitoring: Enhanced real-time monitoring of guest satisfaction and service quality
• Feedback Integration: Systematic integration of guest feedback into service improvement processes
• Continuous Improvement: Ongoing enhancement of all aspects of guest experience

Competitive Positioning

• Industry Leadership: Maintain position as industry leader in guest satisfaction and service quality
• Benchmark Performance: Performance exceeding industry benchmarks for guest satisfaction
• Recognition Achievement: Continued recognition for excellence in hospitality and guest service

These targets reflect Valamar's commitment to creating "really good holidays" and ensuring exceptional experiences for all consumers and end-users while building long-term loyalty and driving sustainable business growth.

Valamar has established comprehensive business conduct policies and fostered a strong corporate culture based on transparency, ethics, and stakeholder value creation.

Corporate Culture and Values

Core Value System

Valamar's corporate culture is centered on four core values that guide business conduct:

• Good for our guests: Welcoming approach where each guest is unique, with attention to detail ensuring lasting memories and enriching experiences
• Good for our employees: Proud employer approach ensuring competitive benefits, inspiring work environment, and continuous learning opportunities
• Good for destinations: Committed and responsible approach to sustainability, resource management, and community support
• Good for our investors: Prosperous approach creating superior returns and value through sustainable business practices

Mission and Vision Integration

• Mission Statement: Create holidays that are good for guests, destinations, employees and the environment while creating value for shareholders and partners
• Vision: To create really good holidays
• Strategic Alignment: Business conduct policies aligned with mission to be leading holiday provider on Adriatic and in Alps

Corporate Governance Framework

Governance Structure

• Comprehensive Model: Corporate governance model comprises regulations, rules, policies, protocols, processes, and procedures based on transparency principles
• Best Practices Implementation: Foundation built on best corporate governance practices
• Management Responsibility: Senior management responsible for overseeing key functional business areas and ensuring ethical conduct

Transparency and Accountability

• Business Transparency: Legal experts and strategic teams ensure business transparency and compliance with regulations
• Stakeholder Communication: Two-way communication with all stakeholder groups
• Regular Reporting: Comprehensive reporting on business performance, sustainability, and governance

Ethical Business Practices

Stakeholder Value Creation

• Integrated Approach: Business conduct focused on creating value for all stakeholders (guests, employees, destinations, investors)
• Long-Term Relationships: Focus on building long-term relationships rather than short-term gains
• Sustainable Business Model: Integration of sustainability principles into all business decisions

Corporate Social Responsibility

• Community Investment: 3-5% of annual revenue allocated to corporate social responsibility programmes
• Local Community Support: Comprehensive support for local communities through various initiatives
• Environmental Responsibility: Commitment to environmental protection and sustainable tourism development

Risk Management and Compliance

Legal and Regulatory Compliance

• Expert Oversight: Legal experts and strategic teams ensure compliance with relevant regulations
• Proactive Approach: Proactive approach to legal compliance and risk management
• Stability Safeguarding: Through expertise and proactive approach, safeguarding company stability and long-term sustainability

Internal Controls

• Cross-Functional Management: Cross-functional management and leadership ensuring comprehensive oversight
• Executive Support: Management Board provides executive support for governance and compliance
• Continuous Monitoring: Regular monitoring of business practices and compliance

Industry Leadership and Recognition

ESG Excellence

• ESG Rating: High silver ESG rating from EcoVadis recognizing excellence in governance and business conduct
• Industry Leadership: Recognition as leader in sustainable tourism development and business practices
• Target Achievement: Goal to achieve gold-tier ESG rating by 2026

Business Conduct Recognition

• Best Employer: Recognition as most desirable employer demonstrating excellent employment practices
• Sustainability Leadership: Multiple awards and recognitions for sustainable business practices
• Corporate Responsibility: Recognition for corporate social responsibility and community engagement

This comprehensive approach to business conduct and corporate culture supports Valamar's strategic objectives while ensuring ethical operations and stakeholder value creation.

Valamar has implemented comprehensive policies and practices for managing relationships with suppliers, focusing on sustainability, local economic support, and responsible business practices.

Supplier Sustainability Management

Sustainable Business Practice Requirements

• 80% Supplier Commitment: Successfully achieved 80% of suppliers committing to implementing sustainable business practices
• Sustainability Leadership Influence: Suppliers have followed Valamar's sustainability leadership in adopting responsible business practices
• Continuous Supplier Development: Ongoing work with suppliers to enhance their sustainable business practices

Supplier Standard Implementation

• Sustainability Criteria Integration: Integration of sustainability criteria in supplier selection and engagement processes
• Environmental and Social Standards: Focus on suppliers that align with Valamar's environmental and social responsibility standards
• Responsible Sourcing: Implementation of responsible sourcing practices throughout supply chain

Local and Regional Supplier Strategy

Local Economic Support

• 78% Local Sourcing: Supporting local producers by sourcing 78% of food and beverages locally
• Local Producer Development: Direct support for local producers and their business development
• Regional Supply Chain: Prioritization of regional suppliers to support local economies and reduce environmental impact

Community Economic Integration

• Local Economic Development: Supplier policies designed to contribute to local economic development in destination areas
• Community Partnership: Building partnerships with local suppliers and producers
• Economic Multiplier Effect: Creating positive economic multiplier effects through local sourcing

Supplier Relationship Management

Partnership Approach

• Long-Term Relationships: Development of long-term partnerships with suppliers that share Valamar's values
• Collaborative Development: Working collaboratively with suppliers to improve sustainability and social responsibility practices
• Mutual Growth: Supporting supplier development while ensuring alignment with Valamar's standards

Supplier Performance Management

• Regular Evaluation: Regular evaluation of supplier performance against sustainability and social responsibility criteria
• Performance Monitoring: Systematic monitoring of supplier compliance with sustainability standards
• Continuous Improvement: Ongoing improvement in supplier standards and practices

Procurement Policy Integration

Sustainable Procurement Framework

• Circular Economy Principles: Implementation of circular economy principles in procurement processes
• Environmental Criteria: Integration of environmental considerations in supplier evaluation and selection
• Social Responsibility Focus: Focus on suppliers that demonstrate social responsibility in their operations

Supply Chain Optimization

• Procurement Optimization: Systematic optimization of procurement practices for sustainability and efficiency
• Supplier Capability Building: Investment in supplier capability development and sustainability improvements
• Value Chain Management: Active management of entire value chain to ensure responsible practices

Supplier Development and Support

Capability Enhancement

• Supplier Training: Support for supplier development in sustainability and responsible business practices
• Best Practice Sharing: Sharing of sustainability knowledge and practices with supplier partners
• Technology Integration: Support for supplier adoption of sustainable technologies and practices

Innovation Partnership

• Collaborative Innovation: Collaboration with suppliers on sustainability and innovation initiatives
• Joint Development: Joint development of sustainable products and services
• Industry Leadership: Use of supplier network to promote sustainable practices in tourism industry

Monitoring and Accountability

Performance Measurement

• Sustainability Metrics: Regular measurement of supplier sustainability performance
• Local Sourcing Tracking: Monitoring of local sourcing percentages and economic impact
• Impact Assessment: Assessment of supply chain impact on local communities and environment

Continuous Development

• Supplier Engagement Growth: Continued increase in supplier participation in sustainability initiatives
• Target Achievement: Working toward 100% supplier commitment to sustainable practices
• Industry Influence: Leveraging supplier relationships to promote broader industry sustainability

This comprehensive approach to supplier relationship management supports Valamar's sustainability objectives while creating positive economic and social impacts in destination communities and contributing to responsible business practices throughout the supply chain.

Incidents of corruption or bribery

Confirmed incidents

Valamार Group does not disclose the number of confirmed incidents of corruption or bribery for the 2024 reporting period in the sustainability statement. The company states that it is a member of the UN Global Compact and respects the Ten Principles that encompass fundamental business responsibilities in human rights, labour, environment, and anti-corruption. However, no specific incident count is provided.

Convictions and fines

No information is disclosed regarding convictions or legal decisions (criminal or administrative) related to corruption or bribery, nor any fines paid for violations of anti-corruption / anti-bribery laws.

Disciplinary actions

No information is disclosed regarding the number of employees dismissed or disciplined due to corruption or bribery.

Contracts terminated

No information is disclosed regarding the number of contracts with business partners terminated or not renewed due to corruption or bribery.

Investigation procedures and speak-up mechanisms

Valamार Group has established comprehensive procedures for investigating business conduct incidents:

Whistleblower protection: The Management Board has adopted the Regulation on in-house whistleblowing in accordance with the Law on the Protection of Whistleblowers (implementing EU Directive 2019/1937). The procedure establishes:

• Appointment of a confidential person to receive reports
• Right to protection of identity and confidentiality for whistleblowers
• Court protection and compensation for damage
• Free primary legal aid
• Emotional support

Reporting channels: Multiple channels are available:

• Internal whistleblowing channels through a confidential person
• Email address: prituzbe.prijedlozi@valamar.com for proposals, complaints and applications from employees, business partners, shareholders and other interested persons
• Reports may be submitted by internal and external stakeholders

Number of whistleblower reports in 2024: 0 (zero)

Investigation procedures: The company commits to investigating business conduct incidents promptly, independently and objectively, including corruption or bribery. Measures to prevent bribery and corruption are prescribed by the Code of Business Conduct. Confidential persons are obliged to examine reports within prescribed deadlines and may request professional assistance depending on the reported irregularity.

Code of Business Conduct: In 2024, the Management and Supervisory Boards established new text of the Codes of Business Conduct that include anti-corruption rules. The Code sets out basic guidelines for ethical conduct to achieve common good and public interest. All employees are introduced to the Code through online and onsite education.

Conflict of Interest Management: The Management and Supervisory Boards have established a Conflict of Interest Management Policy as part of the Codes of Business Conduct. In 2024, there were no reported conflicts of interest in Valamar Group.

Materiality assessment

According to the ESRS disclosure requirements table (page 71), the following G1-4 data points are marked as "Not material":

• ESRS G1-4 24(a): Fines for violation of anti-corruption and anti-bribery laws
• ESRS G1-4 24(b): Standards of anti-corruption and anti-bribery

Political influence and lobbying activities

Lobbying activities

Valamár Riviera has engaged in lobbying activities related to tourism regulation in Croatia. In the Letter from the Chairman and CEO, the company states:

"After twenty years of lobbying, we now have in place a reasonable execution decree for making tourist..."

This indicates the company has conducted lobbying efforts over an extended period (twenty years) focused on tourism regulatory matters in Croatia. However, no additional details are provided regarding:

• The nature or scope of these lobbying activities
• Financial expenditure on lobbying
• Political contributions made
• Trade association memberships or dues
• Ethical standards or guidelines governing political engagement
• Registration in the EU Transparency Register or equivalent
• Specific focus areas beyond tourism regulation

The company also mentions that members of the Management Board "held vital positions in trade associations and actively participated in dozens of business projects," but no specific trade associations are named, nor are any membership fees or contributions disclosed.

No quantitative data on political contributions, lobbying expenditure, or trade association fees is provided in the sustainability report.