In the capital connection of CBA members, there will be disappointments but also pleasant surprises

One of the models of merging is to sell our assets to CBA, for CBA to take over existing obligations, and to pay the difference in asset value to the members. The second model is that members have shares in a joint company proportional to their value.

Interviewed by: Antonija Knežević
[email protected]
Photo: Željko Jelenski

Calm, relaxed, and unburdened are the words that best describe Josip Stojanović, the owner of the Jolly retail chain, a hotel company in Vodice, and the women’s basketball club Šibenik Jolly JBS, who, unlike most Croatian entrepreneurs, is not burning with ambition to push his own boundaries and add new zeros to his bank account. Instead, Stojanović, with the help of his closest associates, whom he trusts immensely, rules his empire like an American third-generation heir who enjoys money more than respects it. We were convinced of this during our first contact with Stojanović when we called him to arrange an interview. At 11 a.m., he asked us to call a little later because he had just woken up. No, he was not on vacation that day – waking up late, going to work at noon, and staying there for no more than two hours is part of his daily routine. However, despite such a laid-back Dalmatian style, Stojanović’s business empire expands every year. Last year, his companies generated revenue of nearly 500 million kuna. The most significant business event for Jolly JBS this year is the investment in the Department Store in Šibenik, where he intends to open a new shopping center soon.

• How much is the investment in the Department Store in Šibenik worth?
– We do not yet know how much it will turn out to be because we initially thought we would only do a little renovation of the building, but we saw that it needs a thorough renovation. Ultimately, this investment will cost us around 20 million euros. In the first phase, we will arrange about 10,000 square meters net, in the second phase another two thousand, while the third involves the addition of two more floors with an area of approximately two thousand square meters. We are still waiting for the project that Cinestar is working on for the last phase.

• How did you arrange cooperation with Cinestar?
– We will build those two floors with four cinema halls of 700 seats and lease them to Cinestar. Everything else is up to Cinestar. We do not interfere in that industry.

• There was previously Konzum in that department store. How did you manage to agree on Konzum’s exit before the lease agreement, which was still valid for another two years, expired?
– Without any problems. We have good, friendly relations with Konzum, and they terminated the lease early without any issues. Even without any compensation. We have been friends for a long time, and sometimes they mess with me, sometimes I mess with them… They took one store from me in the center, and then I told them that for revenge, they had to vacate early.

• What are your further expansion plans in retail?
– As for retail, we have covered the county with about 80 to 85 percent, so we have very little room for expansion left. We calculated that we could still grow in the county by about 100 million kuna at most, but we would need to invest at least 70 million for that. This year, we covered small tourist places like Tribunj, Primošten, Skradin, and we also plan to build stores in Rogoznica and Pirovac.

• Do you intend to expand into other counties?
– We have a gentleman’s agreement in CBA that everyone covers their county, and we cannot expand without the consent of colleagues from other counties. However, we do not intend to go outside the county. Except, within CBA, where we are already working on developing a joint retail network. The CBA management recently moved to offices in Soblince, where we are also building the first joint supermarket, and in the meantime, we bought a supermarket in Krapina, from Strahinjčica, so it will be the first or second joint store, depending on which one is built first. In parallel, we are also working on capital connections, and Privredna banka Zagreb and Raiffeisen banka are already assessing the value of the members.

• When will they be completed?
– They should be finished by October 30, and after we see how much each member is worth, we will decide on one of the models of capital connection.

• What are the possible models?
– One of the models is that we sell our assets to CBA, for CBA to take over existing obligations, and to pay the difference in asset value to the members, with us still remaining owners in equal proportions in that option. The second model is that members have shares in a joint company proportional to their value. These are the two basic models. There are two more, but we will choose between those two that I mentioned.

• Do you believe in the success of the connection? Such agreements usually come after the final assessments of the companies are completed. Many are disappointed…
– That is true, and we are aware of that. Bank consultants have warned us that some will be pleasantly surprised, and some unpleasantly surprised. However, we consciously entered this process because we believe that without capital connection, we have no future.

• How is the management of the joint company envisioned?
– The joint company will be managed by professional management, which currently constitutes the CBA Management Board, and we will merge as companies into CBA. We will not disappear; we will still retain local names, but we will have a unified appearance, brands, and marketing. We have already done part of that, but for example, now we have two types of marketing, local and national, which will not be the case in the future. In any case, this will bring us significant savings in operations.

• In that case, the owners of the members will no longer be able to interfere in decision-making?
– Well, that is my wish. To slowly withdraw into the Supervisory Board.

• However, people who have built a company for years do not easily relinquish management to others?
– Such people usually end up failing. We do not think that way. At least we have stated so. Of course, we will see how things develop after the assessments of the members are made. For now, we are united in going in that direction.

• Who makes key decisions at your company now?
– Senka Ramljak has moved to the hotel company, so I am now the director of Jolly. But I interfere very little in the business. Key decisions are made by managers, and I only get acquainted with them at the end.

• So, you are not afraid to hand over the reins of the company to managers?
– No, I have no such fears. If I did, I would not be getting up at nine or ten in the morning and coming to the company at noon.

• In which direction do you intend to expand further? As far as I heard, you started buying some construction land in Rogoznica. What do you plan to build there?
– We bought several thousand square meters in Rogoznica, but we have not yet decided what we will do there. We will see. We are expanding slowly but surely. We are no longer in a position where we have to take risks, and our goal is only to maintain and enhance what we have done so far. We have dispersed a little recently, from retail to hospitality, and in the future, we will have the most income from renting our own spaces, such as the Department Store in Šibenik, the shopping center in Vodice… I have already said that our goal is to withdraw from the operational part of the business and expand through CBA.

• Surely you have some new investment planned?
– We have family designers, the Zaninović family, who design exclusively for us and supervise all the work. They already have work lined up for six or seven years in advance. We are currently resolving the Department Store, before that we completed the wellness center, and this fall we will start renovating the Hotel Olimpija, then we will build a business center in the former cinema Tesla…. We are embarking on one investment at a time; we are no longer in a hurry.

• Are you satisfied with the foray into hospitality?
– We are satisfied to the extent that the hotels are located in our area. But the hotel business is not as rosy as it seems. It requires significant investments, and the return on investment takes a very long time. According to our plans, we will only make a profit in six years, which is laughable compared to retail.

• Do you still plan to expand in that direction?
– Difficult. We only plan to reconstruct the existing hotel in the fall. We will renovate the rooms and the indoor pool. We plan to turn the pool into a multipurpose facility, a sports hall, and a conference center, which are prerequisites for the hotel to operate all year round. In addition, we will build a wellness center, a small indoor pool, as well as a nightclub and all other facilities needed for a four-star hotel. We will also build another outdoor restaurant. Next year, we intend to completely renovate and demolish all old beach facilities and build new ones, and we will announce a tender for that part in the coming days.

• Did you have any problems regarding obtaining a concession for the beach?
– That was not a problem. In fact, it was and it wasn’t. We did everything according to the rules – we determined the boundary of the maritime domain, and for that, we had to give up 2,800 square meters of our own land in favor of the state. We hope to receive a 20-year concession in the fall, which is a prerequisite for us to invest more seriously in hotels. But you know how slow our administration is. However, we extend the concession every year, so we are not in a hurry.

• Have you had problems with administration and paperwork before?
– There were none, except in Drniš. And even then, it was not a problem with building permits, but with the structure in the City of Drniš, which did not do their job on time. We did everything on time, but we could not resolve the fundamental issue, which is the spatial plan. But in the end, after two years, that was finally resolved.

• Why did you start the business of buying packaging?
– Together with the Environmental Protection Fund, we were the first to seriously start buying packaging because we realized that without it, there is no future. And all skeptics later agreed with that. At the beginning, understandably, there was a lot of resistance, first from us, the retailers, then from the producers, however, in the end, it paid off for everyone. Consequently, we sought and obtained a concession for collecting primary waste for the Šibenik-Knin and Split-Dalmatia counties. We are currently preparing the land in the business zone in Radonić, where we plan to create a collection center for plastic packaging, aluminum, paper, and glass packaging. Initially, the packaging was brought to us from Karlovac, Gospić, Imotski, Metković, from everywhere, because no one was buying except us; we were the first in this business for a long time.

• How did you fall to second place?
– We were first until our friends from Konzum organized themselves again and, of course, thanks to their size, surpassed us.

• To what extent is this a profitable business?
– It is profitable if you organize it well. However, like any business, this one also requires significant investments. We had to buy new forklifts, presses, trucks… I can say that it is a good business, and I believe that the Environmental Protection Fund did a fair job. Of course, the Fund could be more generous; it can always give a little more. We certainly would not complain.

• It was said that you plan to build a recycling plant as well?
– That is not true; that conclusion was taken out of context. We only plan to collect, sort, and send waste further. In Croatia, we have two recycling plants, with the capacity to process waste from the entire region and not just Croatia, so it would be foolish to build another such plant.

• When did you buy shares in Jadranska banka and why?
– I don’t know exactly, almost 10 years ago. I think it was in 1996 when we started working intensively with Jadranska banka. Alongside the development of retail, we bought shares because we believed that their value would grow over time. And, here it is, that has come true. I think they will be worth more than their current price. I regret that I didn’t buy more shares earlier. At one point, when their price was 1,000 kuna, 50 percent of the nominal value, I planned to buy more shares, but unfortunately, I changed my mind. Now I could have had 30 percent of the bank instead of five percent.

• Recently, there has been a real euphoria for investing in stocks in Croatia. Have you also bought some recently?
– I have not invested in the stock market in recent years. I bought shares at a time when no one believed in it. It was the euphoria of the 90s – at that time, I bought shares of everything that had the prefix Croatia. I bought shares of Croatia banka and shares of Croatia osiguranje. I only did not profit from the shares of Croatia branka because they simply disappeared. But I still do not give up on them and hope that the dispute with the state being conducted in the Administrative Court will end positively.

° You have often been angered by articles in the newspapers. After one article, you even stated that you would sell everything you have?
– There have been various stupid articles. This last one, according to which Lepa Brena is buying my hotel, is by far the stupidest. I cannot meet with anyone without an article coming out in some newspaper that I decided to sell something.

• However, that article did not anger you enough to announce again that you would sell everything?
– No, I do not intend to sell the company. Our business philosophy is not selling, but buying.