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In its session of 22 July 2005, the Croatian Governmentadopted a decision on forming a Commission to continuethe privatisation process of INA - Industrija nafte d.d.(a new Commission member was appointed by asubsequent decision dated 26 August 2005 amendingthe initial decision).In 2006 INA went into the next privatization stage. TheGovernment of the Republic of Croatia made availablefor sale 1,700,000 ordinary shares, of INA - Industrijanafte d.d., in a public offering to (1) Croatian citizens withpriority rights and on preferential terms and (2) to theextent any shares are not taken up in the PreferentialOffering, natural persons, domestic legal persons andforeign investors in Croatia, without priority rights andpreferential terms.The shares became publicly traded on 1 December 2006.In 2007, based on the Government Decision on theManner of Sale, Price, Special Privileges, Timing and Termsof the Sale to the existing and former employees of INA -Industrija nafte d.d., dated 19 July 2007 (Official Gazette77/07), pursuant to the Law on the Privatization of INA -Industrija nafte d.d. (Official Gazette No. 32/2002) andthe Amendments to the Decision of 7 September 2007(Official Gazette No. 94/07), the Croatian Governmentdecided to sell up to 7 % of the shares of INA - Industrijanafte d.d. (700,000 shares).Based on the Government Decisions, the existing andformer employees have purchased 628,695 shares.On 3 December 2007, 66,754 supplementary shares weretransferred from the account of the Croatian Governmentto the account of the eligible investors under the Decisionof the Croatian Government of 14 September 2006 andthe Amendments to the Decision of 13 October 2006 and10 November 2006.The ownership structure of the INA Group as of 31 December 2007:2007 2006Number ofsharesOwnership in %Number ofsharesOwnership in %Government of the Republic of Croatia 4,484,918 44.85 5,180,367 51.80MOL 2,500,001 25.00 2,500,001 25.00Croatian Homeland War Veterans Fund 700,000 7.00 700,000 7.00ZagrebaËka banka d.d. (treasurer) /Citibank N.A. (GDR depositor) 204,307 2.04 368,725 3.69Small shareholders (less than 2 % individually) 2,110,774 21.11 1,250,907 12.5110,000,000 100 10,000,000 100Distribution of dividends and bonuses to theSupervisory Board and the Management Board inaccordance with the decision made in the GeneralMeeting of ShareholdersIn the General Meeting of Shareholders of INA-Industrijanafte d.d. held on 11 May 2007, a decision was made onthe allocation of the net profit for the year 2006, by which131 million HRK or HRK 13.08 per share, were designatedfor the distribution of dividends.The General Meeting of Shareholders has not passed adecision on the distribution of bonuses to the SupervisoryBoard and the Management Board during 2007.Principal activitiesPrincipal activities of INA and its subsidiaries (Group) are:• exploration and exploitation of oil and gas deposits,primarily onshore and offshore within Croatia; otherlicence interests are held in Angola, Egypt and Syria;Annual report 200791