Proposals and motions of the Annual General Meeting of

Danubius Hotels Nyrt. to be held on 18 April 2011

Budapest, 25 March 2011

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CONTENT

INVITATION TO THE ANNUAL GENERAL MEETING...... 3

ITEM 1 OF THE AGENDA: To submit and approve the 2010 Annual reports (stand alone prepared in accordance with Hungarian Accounting Act and consolidated prepared in accordance with International Financial Reporting Standards - IFRS) of the Company ...... 5 Report of the Board of Directors on the year 2010 performance of Danubius Group ...... 5 Report of the Auditor...... 19 Report of the Supervisory Board on the 2010 operating activities and B/S of Danubius Hotels Nyrt...... 23 PROPOSAL FOR THE RESOLUTION FOR ITEM 1 OF THE AGENDA: ...... 24

ITEM 2 OF THE AGENDA: To pass decision on the report on corporate governance ...... 25 PROPOSAL FOR THE RESOLUTION FOR ITEM 2 OF THE AGENDA: ...... 37

ITEM 3 OF THE AGENDA: To pass decision on the 2010 profit allocation...... 37 PROPOSAL FOR THE RESOLUTION FOR ITEM 3 OF THE AGENDA: ...... 37

ITEM 4 OF THE AGENDA: To inform the meeting about the 2011 business targets...... 38 PROPOSAL FOR THE RESOLUTION FOR ITEM 4 OF THE AGENDA: ...... 39

ITEM 5 OF THE AGENDA: To elect members of the board of directors ...... 40 PROPOSAL FOR THE RESOLUTION FOR ITEM 5 OF THE AGENDA: ...... 41

ITEM 6 OF THE AGENDA: To modify the articles of association...... 42 PROPOSAL FOR THE RESOLUTION FOR ITEM 6 OF THE AGENDA: ...... 51

ITEM 7 OF THE AGENDA: To appoint the auditor and approve ITS 2011 remuneraion...... 52 PROPOSAL FOR THE RESOLUTION FOR ITEM 7 OF THE AGENDA: ...... 52

ITEM 8 OF THE AGENDA: To establish the remuneration of the members of the board of directors and the supervisory board ...... 52 PROPOSAL FOR THE RESOLUTION FOR ITEM 8 OF THE AGENDA: ...... 52

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INVITATION TO THE ANNUAL GENERAL MEETING (published on the website of the company (www.danubiushotels.com), the Budapest Stock Exchange www.bet.hu) and the announcement web site of the Hungarian Financial Supervisory Authority (www.kozzetetelek.hu) on 18 March 2011).

The Board of Directors announces its shareholders that DANUBIUS HOTEL AND SPA PUBLIC LIMITED COMPANY /1051 Budapest, Szent István sq. 11. court of registration: Metropolitan court, company registration number: 01-10-041669 / shall hold its

Annual General Meeting

on Monday, 18th April 2011 at 10.00 a.m. in the Berlin room of Hotel Budapest /1026 Budapest, Szilágyi Erzsébet fasor 47./ in a traditional way

The shareholders shall participate at the general meeting personally

Items of the agenda:

1. To submit and approve the 2010 Annual reports (stand alone prepared in accordance with Hungarian Accounting Act and consolidated prepared in accordance with International Financial Reporting Standards - IFRS) of the Company, - To receive the Board’s report about the 2010 business activities - To receive the reports of the Auditor - To receive the report of the Supervisory Board 2. To pass decision on the Report on Corporate Governance 3. To pass decision on the 2010 profit allocation 4. To inform the Meeting about the 2011 business targets 5. To elect members of the Board of Directors 6. To modify the Articles of Association (amendment of certain sections of the Articles of Association is necessary due to changes in the provisions of the Gt. (Joint Regulations on Business Associations) and the Tpt. (Law on Capital Market) 7. To appoint the Auditor and approve his 2011 remuneration 8. To establish the remuneration of the members of the Board of Directors and the Supervisory Board

We inform our Shareholders that the information including the proposals and draft resolutions of the General Meeting will be published on 25th March 2011 on the Company site (www.danubiushotels.hu), on the site of BÉT Zrt. /Budapest Stock Exchange/ (www.bse.hu), furthermore, on the site for capital market publications operated by the PSZÁF /Hungarian Financial Supervisory Authority/ (www.kozzetetelek.hu). Upon request, we will place the document at your disposal electronically, by post or personally.

The General Meeting has a quorum if attended by shareholders, or their proxy holders, who represent more than half of the votes embodied by the shares entitling to vote. In the absence of a quorum, the Board convenes the repeated General Meeting at the very same venue for 10 a.m. on 29th April 2011 (Friday) with unaltered agenda. The repeated General Meeting has a quorum regardless of the number of shares represented.

Every share with a nominal value of one thousand Forints entitles to one vote.

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Conditions to attend the General Meeting and exercise the voting right:

Our owners may exercise their voting right at the General Meeting personally, by way of a legally or regularly authorised proxy, or by way of a shareholder’s nominee as per the Tpt. Authorisation of representation should be submitted in the form of a public document or private document with full probative force till 12 a.m. on 15th April 2011 at the Head Office of Danubius Hotels Nyrt. (1051 Budapest, Szent István tér 11., 3rd floor), or upon registration, prior to commencement of the General Meeting, on the spot.

We call the attention of our Shareholders to the fact whereby only he who is the owner of shares at the end of the shareholder’s identification record date (i.e. end of Monday 11th April 2011) and who has been entered in the Book of Shares updated and closed for the General Meeting on Wednesday, 13th April 2011 till 3 p.m. and simultaneously registers himself on the attendance sheet personally or by way of his proxy is entitled to exercise the shareholders rights at the General Meeting! The condition of registering a shareholder as a natural person is the personal identification of the shareholder and in case of a proxy assigment in addition to the personal identification of the proxy, presenting the proxy assigment as set forth in the prior paragraph. In case of shareholders who are not natural persons, the condition of registering is the presentation of a certificate of incorporation issued not later than 30 days or a document certifying registration and the personal identification of the proxy, while in case of a proxy assigment the signature specimen of the representative of the shareholder giving the assigment and the presentation of the proxy assigment.

Closing down the Book of Shares does not restrict the rights of the person registered in the Book of Shares to transfer his shares after the closing down of the Book of Shares. Transfer of the shares prior to the starting day of the General Meeting does not exclude the right of the person registered in the Book of Shares to participate at the General Meeting and to exercise the rights entitled to him as a shareholder.

KELER Zrt. performs entry in the Book of Shares according to the shareholders’ verification requested by the Company for the fifth working day preceding the General Meeting, for 11th April 2011, as record date. Pursuant to the Articles of Association of the Company entry in the Book of Shares is to be performed till the third working day prior to the General Meeting, thus requests for entries in the Book of Shares have to be received by Keler Zrt. by 3 p.m. 13th April 2011. Pursuant to the shareholder’s expressed instruction, the keepers of security account are obliged to arrange the entry of shares in the Book of Shares, therefore, we request those of our shareholders wishing to exercise their shareholders rights at the General Meeting, to contact their keeper of security account in the interest of their entry in the Book of Shares. The Company assumes no responsibility for fulfilment of the mandate given to the keepers of security account, likewise, for the consequences of negligence or erroneous data supply performed by the keepers of security account.

The shareholder’s right to information

If the above requirements are met, every shareholder has a right to attend the general meeting, to request information, to make comments and proposals and to vote if he is in possession of the shares ensuring the voting rights. The Board shall provide the necessary information to all shareholders in connection with the items placed on the agenda of the general meeting upon written request at least eight days before the scheduled date of the general meeting. The Board may refuse to provide such information if it is of the opinion that it would infringe upon the company's business secrets.

Complementing the agenda of the general meeting

Shareholders controlling at least 1% of votes may request in writing from the Board, within 8 days of receiving the invitation to the General meeting or the publication of the notice for calling the general meeting to add an issue to the agenda of the general meeting indicating the reasons in writing and to table draft resolutions in connection with items on the agenda.

Registration and receipt of the voting-papers are possible on the spot from 9 a.m. to 10 a.m.

Further information regarding the advertisement is available from the Investors’ Relations of the Company at the telephone number (06 1) 889 4007 or by e-mail ([email protected]).

Budapest, 18th March 2011

Board of Directors of Danubius Hotels Nyrt.

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ITEM 1 OF THE AGENDA: TO SUBMIT AND APPROVE THE 2010 ANNUAL REPORTS (STAND ALONE PREPARED IN ACCORDANCE WITH HUNGARIAN ACCOUNTING ACT AND CONSOLIDATED PREPARED IN ACCORDANCE WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS - IFRS) OF THE COMPANY

REPORT OF THE BOARD OF DIRECTORS ON THE YEAR 2010 PERFORMANCE OF DANUBIUS GROUP

This report contains consolidated financial statements for the period ended 31 December 2010 as prepared by the management in accordance with International Financial Reporting Standards (IFRS).

Continuing difficult trading conditions in Hungary offset by resilient profit contribution by subsidiaries.

HIGHLIGHTS HUF million EUR million 1 Danubius Hotels FY FY Ch FY FY Ch

Group (IFRS) 2010 2009 % 2010 2009 % Net sales revenues 42,921 43,485 (1) 155.8 155.0 1 EBITDA 4,853 5,741 (15) 17.6 20.5 (14) Operating profit/(loss) 356 1,122 (68) 1.3 4.0 (68) Financial results (1,309) (1,529) (14) (4.8) (5.4) (12) Loss before tax (953) (407) 134 (3.5) (1.5) 139 Operating cash flow 4,269 3,816 12 15.5 13.7 14 CAPEX 2,514 2,148 17 9.1 7.7 20 HUF/EUR 275.4 280.6 (2) n.a. 1 The presentation currency of the Group is HUF. The EUR amounts are provided as a convenience translation using average f/x rates of the respective periods.

ƒ In the financial year of 2010 total net sales revenues were HUF 42.9 billion, down by 1% compared to last year. The movements in HUF/EUR FX rate and the net lost revenue caused by the volcanic ash together had a considerable negative effect on Hungarian segment revenue in 2010 compared to 2009, while in EUR terms we were able to increase revenue compared to last year. Group occupancy in 2010 was 60.0% compared to 58.9% in 2009 due to the significant occupancy increase in the third quarter, that is regularly the strongest quarter of the group. ƒ EBITDA in FY 2010 is down by 15% to HUF 4.9 billion from HUF 5.7 billion due to the following: ƒ Hungarian segment’s revenue for FY 2010 decreased by 2% to HUF 25.2 billion mainly due to lower revenue recognised from room and F&B services (significantly less banqueting) and from Gundel banqueting services, however the occupancy of hotels increased by 1.7% from 55.5% to 57.2%, while the operating result amounted to a loss of HUF 0.6 billion compared to HUF 0.1 billion loss as savings on payroll and other operating expenses partly compensated the negative effect of lower revenues. ƒ Czech hotels contributed an operating profit of HUF 574 million in FY 2010 compared to a profit of HUF 623 million in FY 2009, in spite of the revenue increase of 3% to HUF 7.3 billion due to higher cost of more guest nights. ƒ Slovakian segment’s operating profit was HUF 134 million in FY 2010 compared to a profit of HUF 356 million in FY 2009. Revenue in HUF terms decreased by 2% to HUF 9.0 billion, partly thanks to the strengthening of HUF against EUR. Costs were kept tightly under control. ƒ In FY 2010 the total revenue of Romanian segment decreased by 2% to HUF 1.5 billion, therefore operating result decreased by HUF 25 million to a profit of HUF 203 million. ƒ The Financial result in 2010 was a loss of HUF 1.3 billion, compared to a loss of HUF 1.5 billion in 2009. In 2010 interest expenses decreased by HUF 589 million compared to 2009 as the EURIBOR prime rate was extremely low (around 0.8% in average) and last year the fair value of our Collar&Cap options adversely changed by HUF 97 million increasing the interest expenses by this amount. In 2010 weaker HUF caused HUF 0.5 billion unrealised FX loss while it was HUF 0.3 billion in 2009. ƒ Loss before tax in 2010 was HUF 1.0 billion, compared to a loss of HUF 0.4 billion in 2009. ƒ Net cash provided by operating activities in 2010 was HUF 4.3 billion, a 12% improvement compared to HUF 3.8 billion net cash provided in 2009. ƒ Capital expenditure and investments during 2010 amounted to HUF 2.5 billion compared to HUF 2.1 billion spending in 2009. ƒ Group level average headcount decreased by 5% in 2010, it was 4,646 compared to 4,876.

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FINANCIAL OVERVIEW Hungarian Segment

HUF million EUR million FY FY Ch FY FY Ch HUNGARY 2010 2009 % 2010 2009 % Net sales revenues 25,189 25,742 (2) 91.46 91.75 (0) Operating loss (553) (86) 541 (2.01) (0.31) 552 Financial results (1,232) (1,339) (8) (4.47) (4.77) (6) Loss before tax (1,785) (1,426) 25 (6.48) (5.08) 28 CAPEX 778 1,273 (39) 2.85 4.54 (37)

Total sales revenue and other operating income of 2010 decreased by 2% to HUF 25.2 billion, mainly due to lower revenue recognised from room and F&B services and from Gundel banqueting services. The combination of the strengthening of HUF against EUR and the net lost revenue caused by the volcanic ash together still had a negative effect on total 2010 revenue compared to 2009, that is estimated to be app. HUF 0.4 billion. Hotel occupancy in FY 2010 was 57.2% compared to 55.5% in FY 2009, thanks to the impressive increase in Q3’s occupancy by 4%, and in Q4 by almost 1%.The occupancy of Budapest hotels increased by 0.9 percentage point at year-to-date level. In spite of the occupancy increase room revenue of Hungarian hotels in 2010 decreased by 3% to HUF 12.9 billion compared to 2009 due to the significant decrease of average room rate achieved (ARR) to HUF 12,628, lower by HUF 910 than the comparative figure. The average length of stay was 2.8 days in 2010 remained at the same level of last year. The number of guest-nights during financial year of 2010 increased to 1,699,016 from 1,657,734 out of which domestic guest-nights represent 19.8%, compared to FY 2009 level of 21.5%. In financial year guests from Spain, Great Britain and China decreased the most, but more guests arrived from Ukraine, Russia, USA and Germany. Due to the revenue drop room departmental profit margin decreased from 77.6% to 75.5%.

Food and beverage revenue of hotels and restaurants for financial year of 2010 was HUF 7.5 billion, lower by 2% than the comparative figure, as a direct result of lower banqueting. Full year 2010 F&B departmental profit of our hotels fell by HUF 176 million mainly as the result of lower revenue which could not be compensated by the decrease of payroll and cost of sale. Gundel’s F&B revenue in FY 2010 decreased by 6% to HUF 984 million. Operational expenses include a net loss of HUF 145 million in respect of selling and impairing wine inventories.

In FY 2010 Spa revenue was HUF 1,222 million, remained at the same level of last year, being the combined effect of an increase in the number of treatments sold and a decrease in average price. Spa departmental profit decreased by 5% due to the higher personnel costs associated with more treatments sold. Revenue from security services decreased by 7% in 2010 to HUF 774 million. Due to the combined effect of inflation on materials and the effect of cost saving measures full year raw material expenses decreased by 6% to HUF 5.4 billion, however – due to more guest nights - the value of services used in FY 2010 increased by 5% to HUF 6.4 billion, within this energy cost felt by 12% to HUF 2,289 million while the amount spent on maintenance work at the hotels and restaurants increased by 5% to HUF 623 million. Personnel expenses of operation in FY 2010 were HUF 10.7 billion, no material change compared to 2009 in spite of the increased occupancy of our hotels, in addition the comparison with the prior years was negatively impacted by the movements in accruals. Due to the combined effect of the decrease of 3 months EURIBOR, the decrease of average borrowings over the period and the change in the fair value of interest swap derivatives interest expenses decreased to HUF 688 million from HUF 1,191 million in financial year of 2010. Primarily as the result of depreciation of HUF in FY 2010 against EUR, in which the majority of our long-term borrowings are denominated, a HUF 0.6 billion foreign

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exchange loss (mostly unrealised) was recognised in profit and loss, compared to a loss of HUF 0.3 billion in FY 2009. Capital expenditure during FY 2010 was HUF 778 million compared to HUF 1,273 million spent in FY 2009, including expenditure on the new operational software. Overall the loss before tax of Hungarian segment was HUF 1.8 billion in FY 2010, compared to a loss of HUF 1.4 billion in FY 2009.

Czech Segment

HUF million

FY FY CZECH Ch% 2010 2009 Total revenue and income 7,273 7,067 3

Operating profit 574 623 (8) Financial results 4 (29) n.a.

Profit before tax 578 595 (3)

CAPEX 853 532 60

HUF/CZK average 10.90 10.61 3

CZK/EUR average 25.27 26.45 (4)

Total sales revenue and other operating income in HUF terms grew by 3% to HUF 7.3 billion in financial year of 2010, mainly due to the strengthening of Czech crown against forint. Room revenue of FY 2010 was HUF 4.0 billion, up by 4% as in FY 2010 Marienbad hotels’ occupancy was 77.0% compared to 75.8%, in addition the average room rate achieved (ARR) in CZK term improved to 1,766 from 1,706. The average length of stay was 9.6 days in FY 2010 while it was 9.0 days in FY 2009. As the result of temporary closures the number of guestnights in FY 2010 was 338,797 compared to 346,842 and the drop in German and domestic guests was partly compensated by increasing number of guests arriving from Israel and certain former Soviet Union countries.

The amount of material expenses and services used in FY 2010 increased by 5% to HUF 3.2 billion, within this energy costs increased by 8% to HUF 647 million, while maintenance expenses decreased by 5% to HUF 442 million. Total personnel expenses in financial year were HUF 2.1 billion, up by 2% compared to last year.

Due to the decrease of 3 months EURIBOR and the lower amount of borrowings interest expense for FY 2010 was HUF 46 million compared to HUF 73 million. As the result of the strengthening of CZK in FY 2010 against EUR in which all of LLML’s long-term borrowings are denominated, a HUF 49 million foreign exchange gain was recognised in profit and loss, compared to a gain of HUF 43 million in FY 2009. Capital expenditure in FY 2010 amounted to HUF 853 million, up by 60% compared to previous year, including spending on Maria Spa and Vltava Spa House. Overall, the profit before tax of Czech operations for FY 2010 was HUF 578 million compared to HUF 595 million achieved in 2009.

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Slovakian Segment

HUF million

FY FY Ch% SLOVAKIA 2010 2009 Total revenue and income 9,003 9,187 (2)

Operating profit 134 356 (62) Financial results (96) (146) (34)

Profit before tax 37 210 (82)

CAPEX 458 293 56

HUF/EUR 275.41 280.58 (2)

The functional currency of the Slovakian subsidiary is Euro as of 1 January 2009. Total sales revenue and other operating income in FY 2010 decreased by 2% to HUF 9.0 billion, mainly due to the stronger forint against euro. Room revenue in EUR increased by 2% in 2009 as the average room rate (ARR) increased to EUR 41.8 from EUR 40.3 while the occupancy decreased from 62.7% to 62.2%. The number of rooms sold decreased from 299,336 to 296,203 in FY 2010. The number of guestnights in FY 2010 was 480,045 compared to 477,515 in FY 2009, the average length of stay in financial year of 2010 was 10,0 days, the same level of last year. The number of German guests decreased by 15% compared to FY 2009, together with the decrease of guests from neighbouring countries like Austria and Czech Republic, however the number of guests arriving from Israel and Kuwait increased considerably by 23% and 26%, respectively. Comparative FY 2009 revenue included HUF 94 million (EUR 0.3 million) one-off gain on the sale of a land, while there was no sale of fixes assets in financial year of 2010. The amount of material expenses and services used in FY 2010 was HUF 3.3 billion, down by 1%, within this, energy cost decreased by 12% to HUF 709 million, mainly due to the implementation of energy savings systems and maintenance expenses were HUF 217 million compared to HUF 212 million in FY 2009. Personnel expenses for FY 2010 were HUF 3.4 billion, a decrease of 3% in HUF terms, reflecting partly the stronger HUF and headcount reduction measures. Due to the decrease of 3 months EURIBOR and the lower average level of borrowings the interest expenses for FY 2010 amounted to HUF 100 million, compared to HUF 152 million in FY 2009.

Capital expenditure during financial year of 2010 was HUF 458 million compared to the HUF 293 million in FY 2009. Overall, the profit before tax of Slovakian operations for FY 2010 was HUF 37 million compared to a profit of HUF 210 million in FY 2009.

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Romanian Segment

HUF million

FY FY ROMANIA Ch% 2010 2009 Total revenue and income 1,456 1,489 (2)

Operating profit 203 228 (11) Financial results 15 (16) n.a. Profit before tax 217 212 2 CAPEX 425 50 749

HUF/RON average rate 65.41 66.19 (1)

RON/EUR average rate 4.21 4.24 (1)

Total sales revenue and other operating income for FY 2010 decreased by 2% in HUF terms compared to financial year of 2009, in spite of the FY 2010 slight occupancy increase to 56.7% as average room rate (ARR) decreased from RON 107.3 to RON 105.3. Room departmental profitability in RON terms decreased by 2% in FY 2010. The number of guests during financial year of 2010 increased to 36,754 from 35,592. In spite of the combined effect of inflation and extensive refurbishment works total material expenses and services used in FY 2010 was HUF 606 million compared to HUF 605 million last year. Within this, energy cost was HUF 147 million, up by 5% compared to FY 2009, while maintenance expenses were HUF 50 million in 2010, up by 71% compared to 2009.

Due to the decrease in 3 months EURIBOR and the lower average level of borrowings the interest expenses for FY 2010 amounted to HUF 17 million compared to HUF 23 million in FY 2009. Capital expenditure during financial year of 2010 was HUF 425 million compared to HUF 50 million in FY 2009, the majority of which relates to the reconstruction of new spa pools and the refurbishment of hotel rooms. Being the result of the above the profit before tax of Romanian operations for FY 2010 was HUF 217 million compared to a profit of HUF 212 million in FY 2009.

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Consolidated Balance Sheet Total consolidated asset value amounted to HUF 87.3 billion as of 31 December 2010, no material change compared to the period end of year 2009. Current assets include assets held for sale which comprises the net carrying value, less cost of sale, of a hotel and hospitality property in Hungary. The Group expects to sell these assets within the next twelve months. The amount of trade receivables grew by 6% from HUF 1.37 billion to HUF 1.44 billion. The amount of property, plant and equipment was HUF 76.4 billion at the end of year 2010, that is a HUF 0.3 billion decrease over the last 12 months as the amount of capital expenditures are lower than the amount of amortisation accounted for. From August 2009 the 50% investment in Egészségsziget Kft., our associate established to utilise the land acquired near Hotel Gellért became a fully consolidated subsidiary (before this date it was treated as an associate). CP Holdings purchased the remaining 50% shareholding in August 2009 and Danubius simultaneously entered into a put and call option agreement with a view to purchase this shareholding. The underlying purchase price paid by CP Holdings and the amount to be paid by Danubius under the option agreement is the same (EUR 1.7m). The option agreements provide for an option fee of EUR 100,000 and interest from August 2010. Total liabilities at the end of the fourth quarter 2010 was HUF 34.2 billion, a 1% decrease compared to 31 December 2009. The Group had EUR 91.0 million long-term loans, including short-term portion as of 31 December 2010. The value of shareholders’ equity increased by 1% compared to 31 December 2009 being the combined effect of the after tax loss of HUF 1.0 billion of previous 12 months, the significant, HUF 1.4 billion increase of translation reserve and HUF 0.1 billion increase in non-controlling interest.

Cash flow Net cash provided by operating activities in financial year of 2010 was HUF 4.3 billion, a considerable improvement compared to HUF 3.8 billion net cash provided in FY 2009, due to the positive result of working capital changes and lower amount of interest paid. Capital expenditure in FY 2010 was HUF 2.5 billion, a 18% increase compared to FY 2009, still reflecting our tight cash management program.

During financial year of 2010 EUR 12.0 million loan has been drawn down and EUR 11.5 million repayment of borrowings has taken place.

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APPENDIX I - AUDITED CONSOLIDATED BALANCE SHEET PREPARED IN ACCORDANCE WITH IFRS (HUF million)

At 31 December

2010 2009

Assets Cash and cash equivalents 4,186 3,537 Trade and other receivables 2,415 2,222 Inventory 620 824 Long-term assets classified as held for sale 73 78 Current income tax receivables 4 134 Total current assets 7,298 6,795

Property, plant and equipment 76,448 76,795 Intangible assets 3,238 3,208 Other investments 24 72 Deferred tax assets 317 201 Total non-current assets 80,027 80,276 Total assets 87,325 87,071

Liabilities and Shareholders' Equity Trade accounts payable 2,205 1,995 Advance payments from guests 616 672 Current income tax payables 234 6 Other payables and accruals, including 3,151 2,901 derivatives Interest-bearing loans and borrowings 6,130 5,290 Provisions 317 344

Total current liabilities 12,653 11,208 Interest-bearing loans and borrowings 19,602 21,005 Deferred tax liabilities 1,077 1,332 Provisions 897 1,033 Total non-current liabilities 21,576 23,370 Total liabilities 34,229 34,578 Shareholders' Equity Share capital 8,285 8,285 Capital reserve 7,435 7,435 Treasury shares (1,162) (1,162) Translation reserve 7,817 6,354 Retained earnings 28,203 29,152 Attributable to equity holders of the parent 50,578 50,064 Non-controlling interest 2,518 2,429 Total shareholders’ equity 53,096 52,493 Total liabilities and shareholders' equity 87,325 87,071

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APPENDIX II - AUDITED CONSOLIDATED STATEMENT OF INCOME PREPARED IN ACCORDANCE WITH IFRS (HUF million) Year ended 31 December

2010 2009

Room revenue 20,914 21,215 Food and beverage revenue 12,719 13,020 Spa revenue 5,801 5,841 Other departmental revenue 2,056 1,777 Revenue from wineries 132 155 Revenue from security services 774 835 Other income 525 642

Total operating revenue and other income 42,921 43,485

Cost of goods purchased for resale 447 432 Material costs 8,965 9,291 Services used 9,612 9,246 Material expenses and services used 19,024 18,969 Wages and salaries 11,704 11,407 Other personnel expenses 1,197 1,393 Taxes and contributions 3,595 3,771 Personnel expenses 16,496 16,571 Depreciation and amortisation 4,497 4,619 Other expenses 2,522 2,293 Changes in inventories of finished goods and w.i.p. 74 (4) Work performed and capitalised (48) (85)

Total operating expenses 42,565 42,363

Profit from operations 356 1,122

Interest income 77 200 Interest expense (850) (1,439) Foreign currency loss (536) (290) Financial loss (1,309) (1,529)

Loss before tax (953) (407) Current tax expense 338 54 Deferred tax expense / (benefit) (409) 295

Loss for the year (882) (756) Attributable to: Owners of the Company (933) (801) Non-controlling interest 51 45

Basic and diluted earnings per share (HUF per share): (118) (101)

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APPENDIX III – AUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (HUF million)

Year ended 31 December

2010 2009

Loss for the year (882) (756)

Other comprehensive income Foreign currency translation differencies for foreign operations 1,501 394 Income tax on other comprehensive income - -

Total other comprehensive income 1,501 394

Total comprehensive income for the period 619 (362)

Attributable to: Owners of the Company 530 (479) Non-controlling interest 89 117

Total comprehensive income for the period 619 (362)

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APPENDIX IV - AUDITED CONSOLIDATED STATEMENT OF CASH FLOWS PREPARED IN ACCORDANCE WITH IFRS (HUF million)

Year ended 31 December

Notes 2010 2009

Profit from operations 356 1,122

Depreciation and amortisation 7,8 4,497 4,619 Gain/on sale of property, plant and equipment and intangibles - (90) Change of provisions 12 (163) (303) Impairment of receivables and write-off of inventories 130 6 Changes in working capital (Increase)/ decrease of accounts receivable and other current (377) 1,064 assets (Increase)/ decrease of inventory 89 43 Increase / (decrease) of accounts payable and other current 882 (1,148) liabilities Interest paid (1,076) (1,301) Income tax paid (69) (196)

Net cash provided by operating activities 4,269 3,816

Purchase of property, plant and equipment and intangibles (2,514) (2,148) Interest received 82 192 Proceeds on sale of property, plant and equipment and - 125 intangibles Net cash paid on acquisition 9 - (1,268) Net cash used in investing activities (2,432) (3,099)

Receipt of long-term bank loans 3,282 1,369 Repayment of long-term bank loans (3,200) (3,285) Net cash provided by financing activities 82 (1,916)

Net increase (decrease) in cash held 1,919 (1,199) Cash and cash equivalents at the beginning of the period, net 1,981 3,171

Effect of exchange rate fluctuations on cash held 65 9

Cash and cash equivalents at the end of the period, net 3 3,965 1,981

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APPENDIX V SUBSEQUENT EVENTS There has not been any matter or circumstance occurring subsequent to the end of the reporting period that has significantly affected, or may significantly affect, the operations of the Group, the result of those operations or the state of affairs of the Group in future periods.

APPENDIX VI SHAREHOLDER STRUCTURES AND CHANGES IN ORGANISATION In FY 2010 there were no significant organisational changes within the Group.

PERIOD END OF Q4 Q1 Q2 Q3 Q4 Shareholder1 2009 2010 2010 2010 2010 CP Holdings and its investments2 76.41% 77.61% 77.61% 77.61% 77.72% Of which: CP Holdings Ltd. 37.94% 37.94% 37.94% 37.94% 37.94% Interag Zrt.3 31.45% 31.45% 31.45% 31.45% 31.45% Israel Tractors 6.12% 6.12% 6.12% 6.12% 6.12% Foreign financial investors 11.74% 9.43% 9.02% 8.95% 9.33% Domestic financial investors 4.45% 5.34% 5.78% 5.75% 5.45% Domestic individuals 2.70% 2.92% 2.90% 2.99% 2.80% Employees 0.18% 0.18% 0.18% 0.18% 0.18% Treasury shares 4.52% 4.52% 4.52% 4.52% 4.52% Total 100.00% 100.00% 100.00% 100.00% 100.00% 1 The table shows shareholders separately if their shareholding reaches or exceeds 5%, according to the Book of Shares.

2 The 77.72% ownership of CP Holdings and its investments results an 81.40% combined direct interest in Danubius Hotels Nyrt. and includes the shares held by Sir Bernard Schreier, the Chairman of CP Holdings. 3 The Danubius shares previously held by Agrimill-Agrimpex Zrt. are currently owned by Interag Zrt. as the result of their merge in 2009

APPENDIX VII DECLARATION

Danubius Hotels Nyrt. hereby declares that the audited consolidated IFRS Financial Statements – as adopted by the EU – presented in this report follow the same accounting standards, procedures and estimations of and therefore can be compared with previous year-end and interim IFRS financial statements. The financial statements give a true and fair view on the assets, liabilities, financial position, net income and loss for the period of the Issuer Company and the consolidated subsidiaries. In addition, this report also gives true and fair view on the position, development, performance and risks of the Issuer Company and the consolidated subsidiaries. The financial statements do not conceal any fact or information that would be substantial in the judgement of the issuer's position. As issuer, Danubius Hotels Nyrt. assumes liability for the contents of the reports. Danubius Hotels Nyrt. declares that it is liable as issuer for the reimbursement of losses caused by the omission and/or the misleading contents of regular and extraordinary announcements.

Dr. Imre Deák János Tóbiás

Member of the Board of Directors Member of the Board of Directors

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APPENDIX VIII BALANCE SHEET OF DANUBIUS HOTELS NYRT. PREPARED IN ACCORDANCE WITH HUNGARIAN ACCOUNTING ACT - Audited in HUF thousand 2009. 2010.

ID december 31 december 31 a c e 01. NON-CURRENT ASSETS 53 753 364 53 885 874 02. INTANGIBLE ASSETS 72 472 28 219 03. Capitalised cost of foundation and restructuring 04. Capitalised research and development costs 05. Rights and titles 06. Intellectual property 72 472 28 219 07. Goodwill 08. Advance payment on intangible assets 09. Revaluation of intangible assets PROPERTY, PLANT AND EQUIPMENT (TANGIBLE 10. 6 370 081 6 051 306 ASSETS) 11. Real estates and relating rights 6 219 467 5 912 725 12. Equipments, machines, vehicles 11 689 1 700 13. Other equipments, fixtures, vehicles 8 977 6 229 14. Livestock 15. Capital investments and refurbishments 129 948 130 652 16. Advance payments on capital investments 17. Revaluation of tangible assets 18. NON-CURRENT FINANCIAL INVESTMENTS 47 310 811 47 806 349 19. Long-term investments 43 728 969 44 509 016 20. Long-term loan to related parties 3 565 112 3 295 518 21. Other long-term investments 15 217 1 230 22. Long-term loan to other investments 23. Other long term loans 1 513 585 24. Long term securities 25. Revaluation of non-current financial assets 26. CURRENT ASSETS 2 444 089 2 678 072 27. INVENTORIES 0 2 041 28. Raw materials 29. Work in progress and semifinished goods 30. Grown, fattened and other livestock 31. Finished products 32. Goods, Commodities 2 041 33. Advance payments on stocks 34. RECEIVABLES 1 199 232 610 015 35. Receivables from supply of goods and services (customers) 1 715 250 36. Receivables from related parties 1 171 800 596 179 37. Receivables from other investment 38. Bills of exchange 7 Other receivables 25 717 13 586 40. SECURITIES 1 161 021 1 161 021 41. Investment in related parties 42. Other investments 43. Treasury shares 1 161 021 1 161 021 44. Short term securities 45. TOTAL CASH AND CASH EQUIVALENTS 83 836 904 995 46. Cash at hand, cheques 268 318 47. Bank deposits 83 568 904 677 48. ACCRUALS AND PREPAYMENTS 21 165 27 196 49. Accrued income 14 511 24 205 50. Prepaid costs and expenses 6 654 2 991 51. Deferred expenses

52. TOTAL ASSETS 56 218 618 56 591 142

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in HUF thousand 2009. 2010. ID december 31 december 31 a ce 53. SHAREHOLDERS' EQUITY 41 339 062 42 127 882 54. SHARE CAPITAL 8 285 437 8 285 437 55. REGISTERED BUT UNPAID CAPITAL 374 523 374 523 56. Treasury shares at face value 57. SHARE PREMIUM (CAPITAL RESERVE) 7 138 139 7 138 139 58. RETAINED EARNINGS 24 463 833 24 538 671 59. COMMITED RESERVES 1 376 815 1 376 815 60. REVALUATION RESERVE 61. NET PROFIT FOR THE PERIOD 74 838 788 820 62. PROVISIONS 75 419 110 180 63. Provisions for expected liabilities 75 419 110 180 64. Provisions for future expenses 65. Other provisions 66. LIABILITIES 14 723 604 14 207 110 67. BACKLISTED LIABILITIES 0 0 68. Backlisted liabilities to related parties 69. Backlisted liabilities to other investment 70. Backlisted liabilities to third parties 71. LONG TERM LIABILITIES 11 741 641 10 068 005 72. Long term loans 73. Convertible bonds 74. Liability from bond issue 75. Capital investment and development loans 76. Other long term loans 11 741 641 10 068 005 77. Long term liabilities to related parties 78. Long term liabilities to other investments 79. Other long term liability 80. SHORT TERM LIABILITIES 2 981 963 4 139 105 81. Short term credits 82. from which: convertible bonds 83. Short term loans 2 739 164 3 905 500 84. Advance payments from customers 3 643 85. Creditors, Suppliers 10 257 22 434 86. Bills of exchange 87. Short term liabilities to related parties 101 909 124 283 88. Short term liabilities to other investments 89. Other short term liabilities 126 990 86 888 90. DEFERRALS 80 533 145 970 91. Deferred revenues 92. Deferred costs and expenses 79 781 145 970 93. Deferred income 752

95. TOTAL LIABILITIES AND SHAREHOLDERS EQUITY 56 218 618 56 591 142

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INCOME STATEMENT OF DANUBIUS HOTELS NYRT. PREPARED IN ACCORDANCE WITH HUNGARIAN ACCOUNTING ACT - Audited in HUF thousand 2009 2010 ID a c e 01. Net domestic sales revenue 2 727 456 2 765 069 02. Export sales revenue I. Total net sales revenue 2 727 456 2 765 069 03. Change in the stock of own prod. 04. Cap. value of assets of own prod. II. Cap. value of own production 0 III. Other income 36 844 38 241

05. Raw material costs 8 407 7 911 06. Value of services used 741 652 702 796 07. Other services 30 260 31 224 08. Purchase price of goods sold 09. Value of sold services 55 913 49 773 IV. Material expenditures 836 232 791 704 10. Salaries and wages 413 471 486 919 11. Other personnel payments 71 179 63 304 12. Taxes and contributions 144 162 146 432 V. Total payroll & related costs 628 812 696 655 VI. Depreciation 425 085 393 034 VII. Other expenditures 220 084 239 563

A. Operating profit 654 087 682 354 13. Dividend received 100 509 84 630 out of which received from related party 100 509 84 541 14. Capital gain on the sale of shares 127 923 out of which received from related party 127 923 15. Exchange gain of inv. fin. assets out of which received from related party 16. Other interests received 325 828 150 214 out of which received from related party 208 881 138 600 17. Other financial income 95 312 549 075 VIII. Rev. from financial transact. 521 649 911 842 18. Exchange loss of inv. fin. assets 4 468 out of which given to related party 4 468 19. Interests payable 944 792 726 928 out of which given to related party 5 583 20. Loss of value -securities, deposits 21. Other financial expenses 143 275 73 480 IX. Expenditures of fin. transact. 1 088 067 804 876 B. Financial profit or loss -566 418 106 966 C. Profit from ordinary activities 87 669 789 320 X. Extraordinary income 6 588 XI. Extraordinary loss 12 831 7 088 D. Extraordinary profit or loss -12 831 -500 E. Profit before tax 74 838 788 820 XII: Corporate tax payable F. Profit after tax 74 838 788 820 22. Dividend paid from profit reserve 23. Dividend payable/ Minority G. NET PROFIT FOR THE PERIOD 74 838 788 820

REPORT OF THE AUDITOR

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REPORT OF THE SUPERVISORY BOARD ON THE 2010 OPERATING ACTIVITIES AND B/S OF DANUBIUS HOTELS NYRT.

Report of the Supervisory Board of Danubius Hotels Nyrt. about the 2010 B/S of the Company and the report of the Board of Directors

The Supervisory Board submits its report before the AGM based on the report of the Board of Directors, the report of the independent Auditor, and the Audit Committee and the regular interim control of the operation of the company as well as its own work.

The Supervisory Board of Danubius pursued its activities set own in the annual work plan according to the prevailing provisions. The Supervisory Board held five meetings in the course of the year together with the Audit committee and the Supervisory Board of Danubius Zrt. The quarter year flash reports of the Board about the operation of the company, the financial position and the forecast figures were listed regularly among the items of the agenda. The participation of the chairman of the Supervisory Board at the meetings held by the Board of Directors as well as the attendance of the President, the Senior Vice President, the auditor and the company’s internal auditors at the meetings of the Supervisory Board ensured profound access to information of the members. Special focus was put on the follow up of measures made based on the experience gathered via the audits.

In addition to this, the Supervisory Board paid special attention to outstandings, the activities of the IT division reorganised with the aim of more efficiency, the marketing and PR activities enhancing sales and the results of the recently introduced central room reservation system.

The Supervisory Board established that the 2010 report of the Board of Directors is reliable and shows a realistic picture about the operations and financial position of the Company, therefore it agrees and proposes it for approval by the AGM and supports the 2011 plans and concepts.

The Supervisory Board discussed the 2010 annual report prepared by Danubius Hotels Nyrt. in line with the Hungarian Accounting Act with 56,591,142 thousand HUF total assets and 788,820 thousand HUF net profit for the period, as well as the 2010 consolidated report prepared by the Danubius group in line with the International Financial Reporting Standard with 87,325 million HUF total assets and 882 million HUF loss after tax and proposes it to the AGM for approval.

The Supervisory Board agrees with the proposal of the Board of Directors regarding the allocation of the achieved profit. The Supervisory Board reviewed and submitted for approval to the AGM the report on Corporate Governance.

Budapest, 23 March 2011

Tibor Antalpéter Chairman of the Supervisory Board

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Issued shares of the Company and number of voting rights attached to the shares on 18th March 2011: Number of Number of Total number Voting right Number of own Securities series securities securities with of voting per share shares issued voting right right

„A” series (equity) 8 285 437 8 285 437 1 8 285 437 374 523

Total 8 285 437 8 285 437 1 8 285 437 374 523 Shares of Danubius Hotels Nyrt. belong to the same securities series.

PROPOSAL FOR THE RESOLUTION FOR ITEM 1 OF THE AGENDA:

The Board of Danubius Hotels Nyrt. proposes to the AGM to approve the stand alone and consolidated 2010 statement of Danubius Hotels Nyrt. with the following major data: - Danubius Hotels Nyrt. B/S total asset value: 56,591,142 thousand HUF - Danubius Hotels Nyrt. profit after tax: 788,820 thousand HUF - Danubius Hotels Nyrt. consolidated B/S total asset value: 87,325 million HUF - Danubius Hotels Nyrt. consolidated loss after tax: 882 million HUF

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ITEM 2 OF THE AGENDA: TO PASS DECISION ON THE REPORT ON CORPORATE GOVERNANCE

The declaration of Danubius Hotels Nyrt. about compliance with the contents of the Corporate Governance issued by the Budapest Stock Exchange

DANUBIUS HOTELS Nyrt. has always recognised the importance of maintaining the highest standards of corporate governance. The DANUBIUS HOTELS Nyrt.’s corporate governance meets the requirements of the regulations of the Budapest Stock Exchange, the directives of the Hungarian Financial Supervisory Authority and the relevant regulations of the Capital Market Act. Danubius also subjects its policies to regular review to ensure that they take account of continually evolving international best practice in this area

Board of Directors

The DANUBIUS HOTELS Nyrt.’s Board of Directors acts as the highest governance body of the Company and as such has collective responsibility for all corporate operations. The Board’s key activities are focused on achieving increasing shareholder value, improving efficiency and profitability and ensuring transparency in corporate activities. It also aims to ensure appropriate risk management, environmental protection and conditions for safety at work.

Operation of the Board of Directors

The Board acts and makes resolutions as a collective body.

The Board adopted a set of rules (Charter) to govern its own activities, these rules are regularly updated to ensure continued adherence to best practice standards. The Board Charter covers: - scope of the authority and responsibilities of the Board, - provision of information to the Board - order and preparation of Board meetings and the permanent items of the agenda, and - decision-making mechanism and the manner in which the implementation of resolutions is monitored.

In accordance with this Charter, members of the Board have signed a declaration on conflict of interest and that they have reported their position as director in the Board to their employer or principal as regards other key management positions.

Report of the Board of Directors on its 2010 activities

In 2010, the Board of Directors held two meetings with an average attendance rate of 90%. The Board of Directors evaluates and makes decision in respect of various strategic business issue, individually evaluates the performance of each of the company’s business units and approves the planes for future year.

Remuneration of the Board of Directors

In 2010 the Chairman of the Board of Danubius Hotels Nyrt. received HUF 355 thousand per month, its members received HUF 240 thousand per month.

Supervisory Board

The Supervisory Board is responsible for monitoring and supervising the Board of Directors on behalf of the shareholders. In accordance with DANUBIUS HOTELS Nyrt’s Articles of Association, the minimum number of members is 3 while the maximum number of members is 15, currently there are 4 members.

The members of the Supervisory Board and their independence status:

Tibor Antalpéter, chairman, independent Dr. Gábor Boér Dr. András Gálszécsy, independent László Polgár, independent 25

The supervisory board (SB) may request information from the executive and senior officers of the company which is to be answered by the addressees in writing in case of written request within 15 days of receipt. The SB reviews all vital business reports included on the agenda of the general meeting and all proposals concerning matters belonging to the extraordinary sphere of authority of the general meeting. The general meeting may only pass decision related to the reports according to the Accounting Act and allocation of the profit after tax having received the written report of the supervisory board. The report on Corporate Governance cannot be submitted to the general meeting without the approval of the Supervisory Board. The SB might review the books and documents of the company, even by an expert if necessary. If, according to the judgment of the supervisory board the activity of the management is contrary to the law, the article or the resolutions of the general meeting or otherwise infringes upon the interests of the company or its shareholders, calls the extraordinary meeting of the company and proposes its agenda. Members of the supervisory board may attend sessions of the general meetings in an advisory capacity.

Remuneration of the members of the Supervisory Board

The remuneration of the members of the Supervisory Board was approved by the last AGM, according to which members of the Supervisory board were entitle to HUF 193 thousand per month in 2010.

Audit Committee

The general meeting of the company elects an audit committee from three independent persons of the supervisory board for a period equal to the period of the supervisory board membership.

At least one member of the audit committee has to have accounting and/or auditing qualifications. The task of the audit committee is especially:

ƒ to form an opinion on the annual report prepared according to the Accounting Act, ƒ to recommend the person and remuneration of the auditor, ƒ to prepare the contract to be concluded with the auditor, ƒ to monitor compliance with the qualification requirements and with the regulations on conflict of interest in connection with the auditor, ƒ to discharge the duties relating to cooperation with the auditor and where necessary tabling recommendations to the supervisory board for taking measures, ƒ to monitor the independence of the auditor, including in addition to the audit of the annual report and the consolidated annual report other services rendered to the Company, ƒ to follow the audit of the annual report and the consolidated annual report ƒ to monitor the process of financial reporting, to evaluate the operation of the financial reporting system and to make proposals for taking necessary measures, ƒ to monitor the efficiency of the internal audit and risk management system, ƒ to assist the work of the supervisory board so as to exercise proper control of the financial reporting system.

The members of the audit committee:

Dr. András Gálszécsy, chairman Tibor Antalpéter László Polgár

The audit committee elects a chairman from among its members. The audit committee establishes its rules of procedure on its own, which is approved by the supervisory board.

External Auditor

A DANUBIUS Hotels Group was audited by KPMG in 2010. Within the framework of the audit contract, KPMG performs an audit of statutory financial statements, including interim financial statements of Danubius Hotels Nyrt.. prepared in accordance with Law C of 2000 on Accounting and the consolidated annual financial statements prepared in accordance with International Financial Reporting Standards (IFRS). Audits of the above mentioned financial statements are carried out in accordance with the Hungarian National Standards on Auditing, the International Standards on Auditing (ISA), the provisions of Accounting Law and other relevant 26 regulations. The auditors ensure the continuity of the audit by scheduling regular on-site reviews during the year, participating in the meetings of Supervisory Board and through other forms of consultation. The auditors also review the stock exchange reports issued quarterly; however they do not perform an audit of or issue any opinion on such reports.

The level of compliance with the Corporate Governance

R 1.1.1 The Managing Body ensured that shareholders received access to information in time to enable them to exercise their rights. Yes

R 1.1.2 The company applies the "one share - one vote" principle. Yes

R 1.2.8 The company ensures that shareholders must meet the same requirements in order to attend at the general meeting. Yes

R 1.2.9 Items on the general meeting agenda only include subjects which are correctly detailed and summarized clearly and unambiguously. Yes

The proposals included the suggestions of the Supervisory Board and a detailed explanation of the effects of the decision. Yes

R 1.2.10 Shareholders' comments on and supplements to the items on the agenda were published at least two days prior to the general meeting. There was no such a comment.

R 1.3.8 Comments on the items of the agenda were made available to shareholders simultaneously with registration at the latest. There was no such a comment.

Written comments made on the items on the agenda were published two working days prior to the general meeting. There was no such a comment.

R 1.3.10 The election and dismissal of executives took place individually and by separate resolutions. Yes

R 2.1.1 The responsibilities of the Managing Body include those laid out in 2.1.1. Yes

R 2.3.1 The Managing Body held meetings regularly, at times designated in advance. Yes

The Supervisory Board held meetings regularly, at times designated in advance. Yes

The rules of procedure of the Managing Body provide for unscheduled meetings and decision-making through electronic communications channels. Yes

The rules of procedure of the Supervisory Board provide for unscheduled meetings and decision-making through electronic communications channels. Yes

R 2.5.1 The Management Board of the company has a sufficient number of independent members to ensure the 27

impartiality of the board. Yes

R 2.5.4 At regular intervals (in connection with the CG Report) the Managing Body requested a confirmation of their independent status from those members considered independent. Members of the Board of Directors inform the Board about any changes in their position that could have an impact on the assessment of their independent status, if such a thing takes place.

R 2.5.5 At regular intervals (in connection with the CG Report) the Supervisory Board requested a confirmation of their independent status from those members considered independent. Members of the Supervisory Board inform the Board about any changes in their position that could have an impact on the assessment of their independent status, if such a thing takes place.

R 2.5.7 The company disclosed on its website the guidelines on the independence of the Managing Body and the Supervisory Board, as well as the criteria applied for assessing independence.

The criteria applied for assessing independence of the Board of Directors and the Supervisory Board are judged by the Recommendation for Corporate Governance. The circle of the members of the Board of Directors ensures that in line with the strategic interests of the company the interests of all the shareholders be taken into consideration.

R 2.6.1 Members of the Managing Body informed the Managing Body (Supervisory Board/Audit Committee) if they (or any other person in a close relationship to them) had a significant personal stake in a transaction of the company (or the company's subsidiary).

No deal justifying an announcement took place in the recent year.

R 2.6.2 Transactions between board and executive management members (and persons in close relationship to them) and the company (or its subsidiary) were conducted according to general rules of practice of the company, but with stricter transparency rules in place. Yes

Transactions which according to 2.6.2. fell outside the normal course of the company’s business, and their terms and conditions were approved by the Supervisory Board (Audit Committee). Yes

R 2.6.3 Board members informed the Supervisory Board/Audit Committee if they received an offer of Board membership or an offer of an executive management position in a company, which is not part of the company group. No such event took place last year.

R 2.6.4 The Managing Body established its guidelines on information flow within the company and the handling of insider information, and monitored compliance with those guidelines. Yes

The Managing Body established its guidelines regarding insiders' trading in securities and monitored compliance with those guidelines. Yes

R 2.7.1 The Managing Body formulated remuneration guidelines regarding the evaluation and remuneration of the work of the Managing Body, the Supervisory Board and the executive management. Yes

The Supervisory Board formed an opinion on the remuneration guidelines. Yes

The guidelines regarding the remuneration for the Managing Body and the Supervisory Board and the changes in those guidelines were approved by the general meeting, as a separate item on the agenda. No such proposal was submitted in the past year.

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R 2.7.2 The Managing Body prepared an evaluation of the work it carried out in the given business year. The Supervisory Board prepared an evaluation of the work it carried out in the given business year. Yes

R 2.7.3 It is the responsibility of the Managing Body to monitor the performance of and determine the remuneration for the executive management. Yes

The frameworks of benefits due to members of the executive management that do not represent normal practice, and the changes in those benefits were approved by the general meeting as a separate agenda item. No such proposal was submitted in the past year.

R 2.7.4 The structure of share-incentive schemes were approved by the general meeting. Prior to the decision by the general meeting on share-incentive schemes, shareholders received detailed information (at least according to those contained in 2.7.4). There is no such remuneration system in the company.

R 2.7.7 The Remuneration Statement was prepared by the company and submitted to the general meeting. The Remuneration Statement includes information about the remuneration of individual members of the Managing Body, the Supervisory Board, and the executive management. The Remuneration of the members of the Board of Directors and the Supervisory board is submitted to the AGM, every year and is voted on as a separate item of the agenda. The Remuneration of the members of the management is not disclosed.

R 2.8.1 The Managing Body or the committee operated by it is responsible for monitoring and controlling the company's entire risk management. Yes

The Managing Body requests information on the efficiency of risk management procedures at regular intervals. Yes

The Managing Body took the necessary steps to identify the major risk areas. Yes

R 2.8.3 The Managing Body formulated the principles regarding the system of internal controls. Yes

The system of internal controls established by the executive management guarantees the management of risks affecting the activities of the company, and the achievement of the company's performance and profit targets. Yes

R 2.8.4 When developing the system of internal controls, the Managing Body took into consideration the viewpoints included in 2.8.4. Yes

R 2.8.5 It is the duty and responsibility of the executive management to develop and maintain the system of internal controls. Yes

R 2.8.6 The company created an independent Internal Audit function which reports to the Audit Committee. Controlling activities are carried out at several levels in the company. Controlling activities built into the work processes and general controlling activities are continuous, the internal controlling body acting in the company reports to the Supervisory Board and informs the Audit Committee about its findings, while the Presidential internal auditor receives her tasks from the Chairman of the Board of Directors. The Board of Directors, the Supervisory Board and the Audit Committee are all informed about any major statements of any controlling function.

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The Internal Audit reported at least once to the Audit Committee on the operation of risk management, internal control mechanisms and corporate governance functions. Yes

R 2.8.7 The internal audit activity is carried out by the Internal Audit function based on authorisation from the Audit Committee. As an organisation, the Internal Audit function is independent from the executive management.

See point “R 2.8.6.”

R 2.8.8 The Internal Audit schedule was approved by the Managing Body (Supervisory Board) based on the recommendation of the Audit Committee. The internal controlling body reports to the Supervisory Board, its work plan is approved by the Supervisory Board. The Presidential Internal Auditor receives her tasks from the Chairman of the Board of Directors.

R 2.8.9 The Managing Body prepared its report for shareholders on the operation of internal controls. Yes, the Board of Directors set forth the assessment of the operation of internal controls in the Report of the Board prepared for the AGM.

The Managing Body developed its procedures regarding the receipt, processing of reports on the operation of internal controls, and the preparation of its own report. The activities in connection with the reports prepared about the operation of internal controls are in line with the procedures set down in writing as well as the applied practise.

R 2.8.11 The Managing Body identified the most important deficiencies or flow in the system of internal controls, and reviewed and re-evaluated the relevant activities. Yes

R 2.9.2 The Managing Body, the Supervisory Board and the Audit Committee were notified in all cases when an assignment given to the auditor may have resulted in significant additional expense, caused a conflict of interest, or affected normal business practices significantly in any other way. No such assignment was given in the past year.

R 2.9.3 The Managing Body informed the Supervisory Board of any assignment given to the external auditor or an external advisor in connection with any event which held significant bearing on the operations of the company. No

The Managing Body pre-determined in a resolution what circumstances constitute "significant bearing". Yes

R 3.1.6 On its website, the company disclosed duties delegated to the Audit Committee, the Nomination Committee and the Remuneration Committee, as well as the committees' targets, rules of procedure, composition (indicating the name, brief biography and the date of appointment of members). Yes. Among the listed only the Audit Committee is operating in our company, the duties of which are laid down in the Articles.

R 3.2.1 The Audit Committee monitored the efficiency of risk management, the operation of internal controls, and the activity of the Internal Audit. Yes

R 3.2.3 The Audit Committee received accurate and detailed information on the work schedule of the Internal Auditor and the independent auditor, and received the auditor's report on problems discovered during the audit. Yes

R 3.2.4 The Audit Committee requested the new candidate for the position of auditor to submit the disclosure statement according to 3.2.4. The Auditor of the company has been KPMG Hungária Kft since 1999. It is assigned by the AGM every year and it signs a declaration as evidence of its approval. Facts in line with incompatibility regulations are laid down in this.

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R 3.3.1 There is a Nomination Committee operating at the company. No, the duties of the Nomination Committee are fulfilled by the Board of Directors.

R 3.3.2 The Nomination Committee provided for the preparation of personnel changes. The Nomination Committee reviewed the procedures regarding the election and appointment of members of the executive management. The Nomination Committee evaluated the activity of board and executive management members. The Nomination Committee examined all the proposals regarding the nomination of board members which were submitted by shareholders or the Managing Body. The duties of the Nomination Committee are fulfilled by the Board of Directors.

R 3.4.1 There is a Remuneration Committee operating at the company. No, the duties of the Remuneration Committee are fulfilled by the Board of Directors.

R 3.4.2 The Remuneration Committee made a proposal for the system of remuneration for the boards and the executive management (individual levels and the structure of remuneration), and carries out its monitoring. The duties of the Remuneration Committee are fulfilled by the Board of Directors.

R 3.4.3 The remuneration of the executive management was approved by the Managing Body based on the recommendation of the Remuneration Committee. The remuneration of the executive management is approved by the Board of Directors.

The remuneration of the Managing Body was approved by the general meeting based on the recommendation of the Remuneration Committee. The remuneration of the Board of Directors is approved by the AGM.

The Remuneration Committee also monitored the share option, cost reimbursement and other benefits in the remuneration system. There is no share option in the company. The cost reimbursement and other benefits are continuously monitored.

R 3.4.4 The Remuneration Committee made proposals regarding remuneration guidelines and the remuneration of individual persons. The Remuneration Committee reviewed the terms and conditions of contracts concluded with the members of the executive management. The Remuneration Committee ascertained whether the company fulfilled its disclosure obligations regarding remuneration issues.

The duties of the Remuneration Committee are fulfilled by the Board of Directors.

R 3.4.7 The majority of the members of the Remuneration Committee are independent.

The duties of the Remuneration Committee are fulfilled by the Board of Directors.

R 3.5.1 The Managing Body disclosed its reasons for combining the Remuneration and Nomination Committees.

The duties of the Remuneration Committee and Nomination Committee are fulfilled by the Board of Directors.

R 3.5.2 The Managing Body carried out the duties of the Remuneration and Nomination Committees and disclosed its reasons for doing so. Yes. The size of the company and the relative constant owner and senior management circle makes it possible for duties of the Remuneration Committee and Nomination Committee to be entirely fulfilled by the Board of Directors.

R 4.1.1 In its disclosure guidelines, the Managing Body established those principles and procedures which ensure that all relevant information about the operations of the company and circumstances influencing its share price are disclosed and made available accurately, in a timely fashion and in full. Yes

R 4.1.2 The company ensured in its disclosure activities that all shareholders and market participants were treated equally. Yes

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R 4.1.3 The company's disclosure guidelines include the procedures governing electronic, on-line disclosure. According to the guideline the company acts in line with the prevailing legal regulations and other rules and regulations.

The company develops its website taking into consideration disclosure guidelines and the provision of information to investors. Yes

R 4.1.4 The Managing Body assessed the efficiency of disclosure processes. Yes

R 4.1.5 The company published its corporate events calendar on its website. No, the company publishes precise information about the events following setting the final date.

R 4.1.6 In the annual report and on the website of the company, the public was informed about the company's corporate strategy, its main business activities, business ethics and its policies regarding other stakeholders. Yes

R 4.1.8 In the annual report the Managing Body disclosed the character and size of any other assignments given by the company or its subsidiaries to the auditing firm responsible for auditing the financial statements. No such assignment was given.

R 4.1.9 In the annual report and on the website the company discloses information on the professional career of the members of the Managing Body, the Supervisory Board and the executive management. Yes, this information is available on the website of the company.

R 4.1.10 The company provided information on the internal organisation and operation of the Managing Body and the Supervisory Board and on the criteria considered when evaluating the work of the Managing Body, the executive management and the individual members thereof. The Rules of procedure of the Board of Directors and the Supervisory Board are available on the website of the company. The remuneration of the management is established based on the continuous interim evaluation, the criteria when evaluating the work of the management is equal to that applied for the other senior managers.

R 4.1.11 In the annual report and in the Remuneration Statement on the company's website, the company informed the public about the applied remuneration guidelines, including the remuneration and fees provided for members of the Managing Body, the Supervisory Board and the executive management.

The remuneration of the Board of Directors and the Supervisory Board is established based on the resolution passed by the AGM, the shareholders are informed accordingly in the AGM documents and the Minutes taken at the AGM. The remuneration of the management is established based on the continuous interim evaluation. The fixed and the variable wage – calculated based on the profit and other key performance indicators - reflect the market conditions. In case of the benefits, the Board of Directors endeavors to calculate by focusing on the strategic long- term goals of the owners and the company.

R 4.1.12 The Managing Body disclosed its risk management guidelines, including the system of internal controls, the applied risk management principles and basic rules, as well as information about major risks. The Board of Directors is continuously dealing with risk management but does not disclose any detailed information as these are considered business secret. The Board of Directors informs its shareholders about major risk elements affecting its operation and business once a year in its annual report (and if necessary in the quarterly flash report) when evaluating the past year and forecasting the coming year.

R 4.1.13 In order to provide market participants with information, the company publishes its report on corporate governance at the same time that it publishes its annual report. Yes

R 4.1.14 The company discloses its guidelines governing insiders' trading in the company's securities on its website. The company considers the legal regulations and other regulations in connection with insiders’ trading as prevailing.

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The company published in the annual report and on its website ownership in the company's securities held by the members of the Managing Body, the Supervisory Board and the executive management, as well as any interests held in share-incentive schemes.

Employees were last provided the possibility to become holders of the company’ securities in the course of the employee share program - allowance program - carried out in 1999-2000. No share incentive scheme is operating in the company.

R 4.1.15 In the annual report and on its website, the company disclosed any relationship between members of the Managing Body and the executive management with a third party, which might have an influence on the operations of the company. The members of the Board of Directors and the management have no such relationships.

The level of compliance with the Corporate Governance

S 1.1.3 The company has an investor relations department. Yes

S 1.2.1 The company published on its website the summary document regarding the conducting of the general meeting and the exercise of shareholders' rights to vote (including voting via proxy) Yes

S 1.2.2 The company's articles of association are available on the company's website. Yes

S 1.2.3 The company disclosed on its website information according to 1.2.3 (on the record date of corporate events). Yes

S 1.2.4 Information and documents according to 1.2.4 regarding general meetings (invitations, proposals, draft resolutions, resolutions, minutes) were published on the company's website. Yes

S 1.2.5 The general meeting of the company was held in a way that ensured the greatest possible shareholder participation. Yes

S 1.2.6 Additions to the agenda were published within 5 days of receipt, in the same manner as the publication of the original invitation for the general meeting. No request was made for such an addition.

S 1.2.7 The voting procedure applied by the company ensured unambiguous, clear and fast decision-making by shareholders. Yes

S 1.2.11 At the shareholders' request, the company also provided information on the general meeting electronically. Yes

S 1.3.1 The identity of the chairman of the general meeting was approved by the company's general meeting prior to the discussion of the items on the agenda. Yes

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S 1.3.2 The Managing Body and the Supervisory Board were represented at the general meeting. Yes

S 1.3.3 The company's articles of association render possible that at the initiation of the chairman of the Managing Body or the shareholders of the company, a third party be invited to the company's general meeting and be granted the right of participation in the discussion of the relevant items on the agenda. The articles of association does not regulate this issue.

S 1.3.4 The company did not prevent shareholders attending the general meeting from exercising their rights to request information, make comments and proposals, and did not set any pre-requisites to do so. Yes

S 1.3.5 The company published on its website within three days its answers to those questions which it was unable to answer satisfactorily at the general meeting. Where the company declined to give an answer it published its reasons for doing so This issue has not occurred.

S 1.3.6 The chairman of the general meeting and the company ensured that in answering the questions raised at the general meeting, national laws and regulations of the Stock Exchange pertaining to disclosure were complied with. Yes

S 1.3.7 The company published a press release and held a press conference on the decisions passed at the general meeting. Yes

S 1.3.11 The company's general meeting decided on the different amendments of the articles of association in separate resolutions. The modifications of the articles proposed to the AGM closing the financial year of 2010 are of a technical kind, consequently one resolution will be made.

S 1.3.12 The minutes of the general meeting containing the resolutions, the presentation of draft resolutions, as well as the most important questions and answers regarding the draft resolutions were published by the company within 30 days of the general meeting. Yes

S 1.4.1 The dividend was paid within 10 days to those shareholders who had provided all the necessary information and documentation. No dividend has been paid in previous years. In the event if the AGM passes a resolution in favour of paying a dividend, the company, alongside observing the legal regulations, will endeavour to publish the starting payment day in advance to make it possible for the shareholders to collect the dividend due to them as soon as possible.

S 1.4.2 The company disclosed its policy regarding anti-takeover devices In terms of anti-takeover devices, the company acts in line with legal regulations and principles set down in other stipulations.

S 2.1.2 The rules of procedure define the composition of the Managing Body and all procedures and protocols for the preparation and holding of meetings, the drafting of resolutions and other related matters.

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Yes

S 2.2.1 The rules of procedure and the work schedule of the Supervisory Board gives a detailed description of its operation and duties, as well as procedures and processes which the Supervisory Board followed. Yes

S 2.3.2 Board members had access to the proposals of a given meeting at least five days prior to the board meeting. Yes

S 2.3.3 The rules of procedure regulate the regular or occasional participation at board meetings of persons who are not members of the boards. Yes

S 2.4.1 The election of the members of the Managing Body took place in a transparent way, information on candidates was made public at least five days prior to the general meeting. Yes

S 2.4.2 The composition of boards and the number of members complies with the principles specified in 2.4.2. Yes

S 2.4.3 Newly elected, non-executive board members were able to familiarize themselves with the structure and operations of the company, as well as their duties as board members through a tailored induction programme Yes.

S 2.5.2 The separation of the responsibilities of the Chairman of the Managing Body from those of the Chief Executive Officer has been outlined in the basic documents of the company. Yes

S 2.5.3 The company has published a statement about the means it uses to ensure that the Managing Body gives an objective assessment of the executive management's work where the functions of Chairman and CEO are combined. Presently the two functions are separated, no such disclosure is needed.

S 2.5.6 The company's Supervisory Board has no member who held a position in the Managing Body or the executive management of the company in the three years prior to his nomination. Yes

S 2.7.5 The development of the remuneration system of the Managing Body, the Supervisory Board and the executive management serves the strategic interests of the company and thereby those of the shareholders. Yes

S 2.7.6 In the case of members of the Supervisory Board, the company applies a fixed amount of remuneration and does not apply a remuneration component related to the share price. Yes

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S 2.8.2 The Managing Body developed its risk management policy and regulations with the cooperation of those executives who are responsible for the design, maintenance and control of risk management procedures and their integration into the company's daily operations. Yes

S 2.8.10 When evaluating the system of internal controls, the Managing Body took into consideration the aspects mentioned in 2.8.10. Yes

S 2.8.12 The company's auditor assessed and evaluated the company's risk management systems and the risk management activity of the executive management, and submitted its report on the matter to the Audit Committee. Yes

S 2.9.1 The rules of procedure of the Managing Body, the Supervisory Board and the committees cover the procedure to be followed when employing an external advisor. Yes

S 2.9.4 The Managing Body may invite the company's auditor to participate in those meetings where it debates general meeting agenda items. Agenda items of the AGM are discussed with the Auditor outside of the Board meeting.

S 2.9.5 The company's Internal Audit function co-operated with the auditor in order to help it successfully carry out the audit. Yes

S 3.1.2 The chairmen of the Audit Committee, Nomination Committee, Remuneration Committee (and any other committees operating at the company) regularly inform the Managing Body about the meetings of the committee, and the committees prepared at least one report for the Managing Body and the Supervisory Board in the given business year. Yes

S 3.1.4 The company's committees are made up of members who have the capabilities, professional expertise and experience required to perform their duties. Yes

S 3.1.5 The rules of procedure of committees operating at the company include those aspects detailed in 3.1.5 Yes

S 3.2.2 The members of the Audit Committee were fully informed about the accounting, financial and operational peculiarities of the company Yes.

S 3.3.3 The Nomination Committee prepared at least one evaluation for the chairman of the Managing Body on the operation of the Managing Body and the work and suitability of the members of the Managing Body. The Board of Directors fulfils the duties of the Nomination Committee.

S 3.3.4 The majority of the members of the Nomination Committee are independent The Board of Directors fulfils the duties of the Nomination Committee.

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S 3.3.5 The rules of procedure of the Nomination Committee includes those details contained in 3.3.5. The Board of Directors fulfils the duties of the Nomination Committee.

S 3.4.5 The Remuneration Committee prepared the Remuneration Statement. The Board of Directors fulfils the duties of the Remuneration Committee.

S 3.4.6 The Remuneration Committee exclusively consists of non-executive members of the Managing Body. The Board of Directors fulfils the duties of the Remuneration Committee.

S 4.1.4 The disclosure guidelines of the company at least extend to those details contained in 4.1.4. Yes

The Managing Body informed shareholders in the annual report on the findings of the investigation into the efficiency of disclosure procedures The Board of Directors continuously monitors the efficiency of disclosure procedures and informs its shareholders at the AGM.

S 4.1.7 The company's financial reports followed IFRS guidelines Reports, statements of Danubius Hotels Nyrt. as a stand alone company are prepared in accordance with Hungarian Accounting Act, while consolidated Group statements are prepared in accordance with International Financial Reporting Standards (IFRS)

S 4.1.16 The company also prepares and releases its disclosures in English Yes.

PROPOSAL FOR THE RESOLUTION FOR ITEM 2 OF THE AGENDA:

The Board of Danubius Hotels Nyrt. proposes to the AGM to approve the Declaration on Corporate Governance set forth.

ITEM 3 OF THE AGENDA: TO PASS DECISION ON THE 2010 PROFIT ALLOCATION

The Board of Danubius Hotels Nyrt. proposes to the AGM not to pay any dividend out of the net profit of 2010. In reflection of the 2010 year results and the 2011 budget – drafted in the business targets – in terms of achieving its long term plans the board finds it best to continue retaining its cash within the Company and using it for capital investments.

PROPOSAL FOR THE RESOLUTION FOR ITEM 3 OF THE AGENDA:

The Board of Danubius Hotels Nyrt. proposes to the AGM not to pay any dividend out of the net profit of 2010.

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ITEM 4 OF THE AGENDA: TO INFORM THE MEETING ABOUT THE 2011 BUSINESS TARGETS

The hotel industry remains in a challenging situation in year 2011. Hotel industry investments carried out in the past decade significantly increased hotel capacity in the Central-East European region and demand is only expected to adjust after several years. Hotels are experiencing fierce competition for retaining market share and beside a rates war, increasing efficiency, cutting and streamlining costs play a major role. Danubius’ plans for 2011 fully reflect its strong response to these tough market conditions. Retaining the effect of the cost cutting measures undertaken in 2009 as a reaction to the crisis and a further increase in cost efficiency whilst continuing to provide our guests with our usual high quality is a key goal for the Danubius group in the year 2011. The operating performance of the Group is at all times influenced by the strengthening and weakening of the forint and other national currencies compared to the euro. When preparing the 2011 budget, management calculated with a 275 HUF/EUR rate. The Company has forecast a wage increase that is lower than the rate of inflation. Generally, 4.0% inflation and at the time of preparing the budget a low 1% increase of Gross Domestic Product (GDP) were prognosticated, however current forecasts now suggest a GDP growth of 3% in 2011 which, if achieved, would be a positive sign of economic recovery. In our Hungarian hotels, demand from the major guest segments did not change significantly in 2010, however there was a considerable drop in the main segments in the year 2009. Budapest saw the largest drop in business and meeting tourism and groups of leisure tourists. We are not expecting a further decrease in these segments in 2011. On the contrary, we are starting to rebuild lost turnover this year, mainly from volume increase. The number of guests arriving from the German markets has been dropping for the past years. We trust that as a result of the renewal of the market representation in Germany we will be able to reach out to wellness and business guests too. The majority of British guests arrive to Budapest for leisure and business purposes, and their number is largely dependent on the air traffic between the two countries. Hungary has become a member of the Schengen group, which has a positive effect on West-European demand; in addition customers from former Soviet Union countries are expected to increase further in 2011. Alongside the expected slight increase in foreign demand, a further expansion of domestic guests can be expected, although the rate of increase will somewhat slow down as, due to changes in the tax law, less holiday vouchers are expected to be available for employees. All these factors are expected to lead to a moderate 1.2% increase of occupancy from 57.2% in 2010 to 58.4%. The implementation of new operating software will continue in 2011 and 2012 with the aim of providing greater efficiency in the fields of operations, sales, guest relations and the economic and financial area. In addition, the company is focusing on increasing the turnover through electronic sales channels, especially through our website, which showed an impressive improvement in 2010 with the highest average daily rate (ADR) achieved. A further goal is to achieve an adequate ratio of leisure and business guests in the city hotels while in the hotels of the Danubius Health Spa Resort brand we plan to achieve better results by introducing new products and new concepts like family friendly hotel programs. In spite of the current strong competition on the market, our objective is slightly to raise prices in euro. Besides monitoring the competition, our rates are flexibly adjusted to the requirements of market demand. Special attention is paid in our sales strategy to driving cross selling to keep as much business as possible within the Company and the Group. This is strengthened by the application of the Central Reservation System (CSR) in more and more hotels. In addition to maximising revenues, minimizing costs will continue to have a special role in 2011. Seasonality is of great importance in both our Budapest and country hotels, and so we have adjusted the constant hotel headcount to the staff requirement in the low occupancy months and at times when the number of guests goes up, we provide the expected high quality services by employing temporary manpower. Due to the significant headcount reduction and cut back of personnel expenses in previous years, Danubius management plans to increase wages by 2% on average and will compensate the majority of employees for the loss caused by new personnel tax legislation. Considering the 1.2% increase in occupancy and a moderate increase of average rates in HUF terms, we plan approx. 2.5% revenue increase on the Hungarian market in 2011, which alongside the increase of personnel expenses and strict control of other fixed costs will result in the slight increase of departmental profit as opposed to 2010. In Czech Republic we expect that the drop in German market will bottom out and a slow recovery will start in 2011, due to the significant, 4% growth of the German economy in previous year. However the number of insurance paid German guests will be lower by approximately 10-15%. The Czech subsidiary also expects an increasing number of guests via electronic channels, including the new Danubius web site. The potential future

38 markets for the Czech hotels are guests from the domestic market, the surrounding countries, Israel and the former Soviet states, although visa obligations could make sales difficult. Considering all factors in the market, the number of sold rooms is expected to decrease by almost 2%, while the average room rate is expected to be on 2010 level. The lower amount of revenues cannot be fully compensated by cost reductions, therefore operating performance is expected to decrease slightly, however our Czech subsidiary will still be the biggest contributor to Group’s operational profit in 2011. The impact of quality enhancing developments completed in the hotels in Slovakia and Piestany is reflected in the 2011 budget expectations of the hotels. The number of domestic guests financed by social insurance companies is expected to decline further, at the same time, shorter leisure stays by Slovakian guests will become more popular and the number of guests from the Arabic and Russian markets are expected to go up. However, the current Arabian political difficulties can easily erode our positive expectations. Alongside a 4% increase in average occupancy, we expect average rates to go up by 1.5% in 2011. As a result of more revenues, the budget indicates an improvement of both gross and net operating profit. In Romania the significant lagging behind in the number of business and conference guests in 2009 and 2010 is likely to recover partly in 2011. The spa and leisure guests still give a stable revenue and profit contribution to the company. In 2010 the weather conditions and the implementation of new entrance system contributed highly to the revenue increase of the spa lake operations and we expect these revenues to increase slightly in 2011. Despite the fact that the Romanian economy is still facing very serious difficulties and domestic tourism will not receive enough incentives from the government, we expect the competitiveness of the hotels in Sovata will allow our profit level to be maintained, even taking account of the minimum wage increase required by the government. In view of the above mentioned, we plan to increase slightly the 2010 Group level operating revenues and operating profits in 2011, which means maintaining the reduced rate cost base from 2009. The financing opportunities limited by the economic crises, the extended return period and the difficult business climate have forced the management of Danubius Nyrt. to distribute investment sources carefully. Among planned investments the implementation of the new operating software is a significant element. In Hungary, the Company does not plan any significant reconstructions in the hotels and restaurants other than the necessary maintenance and certain important quality improving works in 2011. However, in Czech Republic the Maria Spa Project will be completed to provide 20 new rooms, spa facilities and linking corridors. In Piestany, the entire reconstruction of the balneotherapy section will be completed. The management of the Group aims to support developments to minimise energy use and provide extra services required by the customers that generate revenues. The size of such investment programs will depend on business performance and financing sources. The Group’s liquidity position in the continuing testing market will be kept under strict control. Our 2011 budget is subject to the market and economic environment not deteriorating significantly during the entire year, despite the uncertain economic and international political outlook. Certain factors e.g. increasing energy prices are mounting up further difficulties to retaining profitability. Besides the planned change in operating profit, interest costs are expected to grow owing to the increasing EURIBOR rates, but the amount of outstanding loans is expected to remain around the level of the previous year. Through the loan translations, the recent extreme changes in the forint/euro rate may considerably affect the financial profit and thus the profit before tax. The overall cost base of Danubius has been considerably reduced thanks to the actions made as a reaction to the challenges of the economic crisis. This also gives a profit opportunity to the Company when revenues start to grow again. However, it should be emphasized that the outlook for 2011 remains extremely uncertain due, on the one hand, to the increasing trend of late booking and unpredictable developments in the international and domestic economies, together with the political situation of Arabic countries. On the other hand, the continued recovery of the German economy and the predicted pick up in Hungary, would be positive features for tourism and our business.

PROPOSAL FOR THE RESOLUTION FOR ITEM 4 OF THE AGENDA:

The Board of Danubius Hotels Nyrt. proposes the AGM to accept the 2011 business targets set forth.

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ITEM 5 OF THE AGENDA: TO ELECT MEMBERS OF THE BOARD OF DIRECTORS

The Board of Directors of Danubius Hotels Nyrt. at present consists of 11 members. The mandate of Sir Bernard Schreier, John E. Smith, Dr Imre Deák, János Tóbiás, Sándor Betegh and Dr István Fluck, Board members will expire (all on 27 April 2011).

The Board expresses its thanks for their work of the past five years and requests the general meeting to renew the mandate of the said members for the next five years.

Sir Bernard Schreier He has been the Chairman of the Board at Danubius since 1996. Chairman of the Board since its founding, and CEO of CP Holdings Limited, President of subsidiaries of CP Holdings Ltd., including Interag Zrt., Deputy chairman of Bank Leumi Plc. Born in Austria, he has been living in England since 1955. He is a qualified mechanical engineer. His work has been highly recognised by leaders of several countries. In 2000 he was knighted by H.M. Queen Elisabeth II. He is married with a daughter and has eight grandchildren.

John E. Smith A member of the Danubius Hotels Nyrt. Board since 1996. He is Director of CP Holdings Ltd. and several CP subsidiaries, Deputy Chairman of Danubius Hotels Group. He is a member of the Institute of Chartered Accountants. From 1968 till 1990 he was with Ernst & Young, ultimately as a Regional Managing Partner on the National Executive Committee. In 1986-87 he was President of the London Society of Chartered Accountants and he was a member of the Council of the Institute of Chartered Accountants from 1987 till 1993. He is married and has a son and a daughter.

Dr Imre Deák A member of the Danubius Hotels Nyrt. Board since 1992. He was Senior Vice President of the company from 1990 till 2006, when he was elected Chief Executive Officer. He was born in Pécs and graduated at the College of Commerce, Catering and Tourism and at the University of Law in Pécs. After his high school graduation he took up a job in Hotel Nádor and following his military years he was restaurant manager in Hotel Hilton Budapest. He was appointed general manager to Hotel Helikon in Keszthely in 1977, then in 1980 general manager to the Thermal Hotel in Hévíz. After 5 years he accepted an invitation to the USA where he worked in Los Angeles as general manager. He is married with two children. He speaks English and German.

János Tóbiás A member of the Danubius Hotels Nyrt. Board since 1994. He is Senior Vice President and CFO at Danubius Hotels Nyrt. Born in 1954, he graduated from the College of Commerce, Catering and Tourism and the University of Economics. He first worked for Danubius from September 1975 at the department of economics, where he has worked for 5 years. He was director of finance at the First Hungarian Gambling Kft. between 1980 and 1989 then in 1989 became chief accountant of Budapest Hilton. Simultaneously with the privatisation programme of the company he filled in the position of vice president for finance in the head office of Danubius in 1991. He is married with two children. He speaks English and German.

Sándor Betegh A member of the Danubius Hotels Nyrt. Board since 1992. He was CEO of Danubius from 1990 till 2006 (President and CEO between 1991-1996), when he retired. He was born in Balda on the territory of today’s Romania. He graduated from the College of Commerce, Catering and Tourism and acquired post-graduate qualifications in 1992 at the Cornell University. Having spent some practical time at Hotel Béke, he has filled in different professional positions in hotels of HungarHotels for 11 years. He started working in Danubius Hotels in 1975 as head of reception in Thermal Hotel Hévíz, following which he continued in the head office in Budapest first as head of sales department then as Deputy CEO for Marketing. In 1990 he was elected CEO of Danubius Hotels Rt. that has become a company by then. He is married with a son. He speaks English and German.

Dr István Fluck A member of the Danubius Hotels Nyrt. Board since 1992. First Vice-President of the World Federation for Balneology and Climatology (FEMTEC), medical director general of Danubius Hotels Nyrt. He graduated at the University of Medicine in Budapest with special qualifications in rheumatology and physiotherapy. He started working in the National Institute for Rheumatology and Physiotherapy then at the University of Groningen in the Netherlands. In 1976 he won the application for the position of medical director in the Budapest Spa Directorate, and in its legal successor, the Budapest Spas and Thermal Waters Zrt., until 31st December 2010, which is simultaneously the head of the hospital department of the Gellért Health Spa. Since 1992 he has been the medical director general of Danubius Hotels Nyrt. He was president of the Hungarian Balneological Association between 1982 and 1997 and from 1997 life long honorary president, vice-president of FEMTEC from 1986 and First Vice-President from 1993. He speaks English, German, Dutch and Russian.

PROPOSAL FOR THE RESOLUTION FOR ITEM 5 OF THE AGENDA:

The Board of Danubius Hotels Nyrt. proposes to the AGM to elect Sir Bernard Schreier to be member of the Board of Directors as of 28 April 2011 for a period of five years.

The Board of Danubius Hotels Nyrt. proposes to the AGM to elect John E. Smith to be member of the Board of Directors as of 28 April 2011 for a period of five years.

The Board of Danubius Hotels Nyrt. proposes to the AGM to elect Dr Imre Deák to be member of the Board of Directors as of 28 April 2011 for a period of five years.

The Board of Danubius Hotels Nyrt. proposes to the AGM to elect János Tóbiás to be member of the Board of Directors as of 28 April 2011 for a period of five years.

The Board of Danubius Hotels Nyrt. proposes to the AGM to elect Sándor Betegh to be member of the Board of Directors as of 28 April 2011 for a period of five years.

The Board of Danubius Hotels Nyrt. proposes to the AGM to elect Dr István Fluck to be member of the Board of Directors as of 28 April 2011 for a period of five years.

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ITEM 6 OF THE AGENDA: TO MODIFY THE ARTICLES OF ASSOCIATION

Prevailing Articles Modified Articles

IV. Register of Shareholders IV. Register of Shareholders

4.5. The name of the shareholder or its proxy wishing to attend the general meeting must be recorded in the register of shareholders till the second working day prior to the starting day of the general meeting. (Subsection (2) of Section.304. of the GT.))

V. Rights and obligations of the V. Rights and obligations of the shareholder, the transfer of the shareholder, the transfer of the shares, shares, notification about the notification about the degree of voting degree of voting right right

5.1. In line with the conditions set forth 5.1. In line with the conditions set forth in the in the Gt., the Tpt. and the present Gt., the Tpt. and the present Articles Articles shareholders shall have shareholders shall have

5.1.1. The right to 5.1.1. The right to Following registering into the book Following registering into the book of of shares in case of registered share shares in case of registered share a/. participate, to request information, a/. participate, to request information, to to make remarks and proposals at make remarks and proposals at the the general meeting and if general meeting and if holding shares with voting rights, to holding shares with voting rights, to vote vote The management board shall The management board shall provide the provide the necessary information necessary information to all shareholders to all shareholders in connection in connection with the items placed on with the items placed on the agenda the agenda of the general meeting upon of the general meeting upon written written request at least eight days before request at least eight days before the scheduled date of the general the scheduled date of the general meeting. meeting. The management board may refuse The management board may refuse to to provide such information if it is provide such information if it is of the of the opinion that it would infringe opinion that it would infringe upon the upon the company's business company's business secrets. secrets. b/. exercise any rights in possession of b/ an access to the register of shareholders the ownership certificate issued by and to request a copy of a part related to the security account keeper, them from the Board of directors or its 42

representative, which the keeper of the register of the shareholders is obliged to provide within five days c/. receive a share (dividend) from the c/. receive a share (dividend) from the company’s taxed profit of the year company’s taxed profit of the year under under review ordered to be review ordered to be distributed by the distributed by the General Meeting General Meeting established in established in accordance with the accordance with the Accounting Act – Accounting Act – with the with the exception of capital decrease - exception of capital decrease - and and from the taxed profit supplemented from the taxed profit supplemented by available profit reserves in the by available profit reserves in the percentage consistent to the face value of percentage consistent to the face their shares, value of their shares, d/. transfer their shares, d/. transfer their shares, e/. receive a share in proportion to the e/. receive a share in proportion to the face face value of their shares from the value of their shares from the assets assets remaining after settlement of remaining after settlement of all debts in all debts in the event of termination the event of termination of the company of the company without legal without legal successor, unless otherwise successor, unless otherwise provided by law, provided by law, f/. exercise minority rights for f/. exercise minority rights for shareholders shareholders representing at least representing at least five percent of the five percent of the votes, votes, g/. shareholders controlling at least 1% g/. shareholders controlling at least 1% of of votes may request in writing votes may request in writing from the from the Board, within 8 days of Board, within 8 days of receiving the receiving the invitation to the invitation to the General meeting or the General meeting or the publication publication of the notice for calling the of the notice for calling the general general meeting meeting

- indicating the reason and objective - indicating the reason and objective thereof, to add an issue on the thereof, to add an issue on the agenda of agenda of the general meeting, the general meeting, - to have the possibility to table draft - to have the possibility to table draft resolutions for items on the agenda. resolutions for items on the agenda.

h/. The shareholders controlling at h/. The shareholders controlling at least one least one per cent of the votes may per cent of the votes may request request simultaneously to simultaneously to advancing the costs the advancing the costs the appointment of an independent expert by appointment of an independent the court of registration to examine expert by the court of registration to whether the payment made to the examine whether the payment made shareholder substantiates the application 43

to the shareholder substantiates the written in Subsection (4) of Section 219 application written in Subsection of the Gt. (4) of Section 219 of the Gt. i/. an access to the register of i/. in the event if the general meeting of the shareholders and to request a copy company decides upon delisting the of a part related to them from the shares listed on the regulated market, any Board of directors or its shareholder whose shares are directly representative, which the keeper of affected by the delisting – excluding the register of the shareholders is those who supported the general obliged to provide within five days. meeting’s decision - may request within a sixty-day forfeit deadline following the date of publication of the decision on delisting as set forth in item 7.3.4. – the company to purchase his shares.

5.2. Own shares 5.2. Own shares

Voting rights shall not be attached Unless otherwise prescribed in this Act, to the own shares acquired by the the Company may acquire its own company, and such shares shall not shares only if able to finance it from its count for the purpose of a quorum assets other than of the share capital, or in connection with pre-emptive except where it exercises its right of sale subscription rights. in the process of delisting shares admitted to trading on a regulated market.

Own shares may not be acquired if the Company is not authorised to distribute any dividend for the financial year due to lacking the conditions specified in Subsection (1) of Section 219, except in the case of delisting shares admitted to trading on a regulated market. The annual report and the interim balance prepared pursuant to the Accounting Act may be taken into consideration for determining compliance with this requirement within the 6 (six) months period following the balance sheet date. The Company shall dispose of any shares it acquired from a shareholder in the process of delisting shares admitted to trading on the regulated market within two years, or shall withdraw such shares.

Voting rights shall not be attached to the own shares acquired by the company, and such shares shall not count for the purpose of a quorum or in connection with pre-emptive subscription rights. 44

VI. General Meeting VI. General Meeting

6.4. The quorum of the general meeting 6.4. The quorum of the general meeting

The general meeting has quorum if The general meeting has quorum if shareholders or their proxy shareholders or their proxy authorised in authorised in a public or private a public or private document with full document with full probative force probative force representing more than representing more than half of the half of the votes embodied by shares votes embodied by shares with with voting rights are present. voting rights are present.

If the general meeting fails to have If the general meeting fails to have quorum, the repeated general quorum, the repeated general meeting meeting convened for the date and convened for the date and place place designated in the designated in the announcement shall announcement shall have quorum in have quorum in the issues of the original the issues of the original agenda agenda irrespective of the number of irrespective of the number of those those present. present.

The general meeting has quorum if shareholders or their proxy authorised in a public or private document with full probative force representing more than half of the votes embodied by shares with voting rights are present.

In issues not included in the In issues not included in the published published agenda the general agenda the general meeting may only meeting may only pass decision if pass decision if all shareholders are all shareholders are present and present and consent unanimously to their consent unanimously to their being being put on the agenda. put on the agenda.

6.5. The procedure of holding the 6.5. The procedure of holding the general general meeting, the participation at meeting, the participation at the general the general meeting and the extent meeting and the extent of voting right. of voting right.

6.5.2. A prerequisite to participating at the 6.5.2. The names of the shareholders and general meeting for the shareholder proxies wishing to participate at the or its proxy in this quality is to be general meeting are to be entered into the entered into the share register of the register of shareholders by the 2nd company at least till the 3rd (third) (second) working day preceding the first working day prior to the day of the day of the general meeting. general meeting. There is no need for the shareholder There is no need for the shareholder to to present the owner’s certificate present the owner’s certificate issued – issued – for the practise of the for the practise of the participation rights participation rights at the general at the general meeting – by the securities 45

meeting – by the securities accounts-keeper, the shareholder accounts-keeper, the shareholder identification procedure is prescribed by identification procedure is the Tpt. prescribed by the Tpt.

The company requests Keler Zrt. to The company requests Keler Zrt. to carry carry out the shareholders’ out the shareholders’ identification identification procedure on the 5th procedure at a date in line with the (fifth) working day - as record date - procedure order of Keler Zrt.- as record prior to the general meeting with the date - with the aim of establishing the aim of establishing the shareholders’ or proxy’s entitlement. shareholders’ or proxy’s entitlement.

The keeper of the register of The keeper of the register of shareholders shareholders deletes all data deletes all data available in the register of available in the register of shareholders’ valid at the time of shareholders’ valid at the time of establishing the shareholders’ establishing the shareholders’ identification, simultaneously registers all identification, simultaneously data he gained access to as a result of registers all data he gained access to establishing the shareholders’ as a result of establishing the identification. The keeper of the register shareholders’ identification. The of shareholders is obliged to act as all keeper of the register of deleted data can be determined shareholders is obliged to act as all deleted data can be determined.

6.6. The sphere of authority of the 6.6. The sphere of authority of the general general meeting meeting 6.6.1. Issues falling within the exclusive 6.6.1. Issues falling within the exclusive competence of the general meeting: competence of the general meeting: a). decisions to approve and modify the a). decisions to approve and modify the articles of association unless articles of association unless stipulated stipulated otherwise by the Gt. otherwise by the Gt. b). decision on changing the form of b). decision on changing the form of operation of the Company, operation of the Company, c). decision on the transformation and c). decision on the transformation and termination of the Company termination of the Company without without legal successor, legal successor, d). election and removal of members of d). election and removal of members of the the board of directors, the board of directors, the supervisory board supervisory board and the auditor and the auditor and establishing their and establishing their remuneration, remuneration e). approval of the annual report on the e). approval of the annual report on the balance according to the balance according to the Accounting Act, Accounting Act, including the including the report on Corporate report on Corporate Governance Governance and the decision on the and the decision on the allocation of allocation of profit after tax, profit after tax, f). decision to pay interim dividends, if f). decision to pay interim dividends, if not not stipulated otherwise by the Gt. stipulated otherwise by the Gt. 46 g). alteration of the rights attached to g). alteration of the rights attached to various various series of shares and the series of shares and the conversion of conversion of categories or classes categories or classes of shares, of shares, h). decision to issue convertible bonds, h). decision to issue convertible bonds, or or bonds with subscription rights, bonds with subscription rights, unless unless otherwise stipulated by the otherwise stipulated by the Gt. Gt. i). decision to increase the share i). decision to increase the share capital capital unless otherwise stipulated unless otherwise stipulated by the Gt, by the Gt, j). decision to decrease the share j). decision to decrease the share capital capital unless otherwise stipulated unless otherwise stipulated by the Gt, by the Gt, k). based on a written motion presented k). based on a written motion presented by by the management board, decision the management board, decision about about restricting or excluding the restricting or excluding the exercise of exercise of preferential subscription preferential subscription rights rights l). decision on the authorisation of the l). decision on the authorisation of the board board of directors - including of directors - including conditions- conditions- related to the related to the acquisition of own shares acquisition of own shares excluding excluding the fact if the acquisition of the fact if the acquisition of the the shares is forced upon the company to shares is forced upon the company avoid facing direct severe damage unless to avoid facing direct severe otherwise stipulated by the Gt, damage unless otherwise stipulated by the Gt, m). decision on the introduction of the m). decision on the introduction (admitting) company on the stock exchange or of the shares of the company on the its withdrawal regulated market and delisting from the regulated market, n). election of the members of the audit n). election of the members of the audit board, board, o). decision on all issues that fall into o). decision on all issues that fall into the the exclusive competence of the exclusive competence of the general general meeting according to the meeting according to the company act company act (Gt.) or the articles of (Gt.) or the articles of association. association.

6.7. The voting ratio necessary for 6.7. The voting ratio necessary for passing a passing a resolution resolution

6.7.2. The general meeting passes a 6.7.2. The general meeting passes a resolution resolution in connection with the in connection with the following issues following issues by at least by at least three/quarter majority of the three/quarter majority of the votes votes a). establishing and modifying the a). establishing and modifying the articles, articles, b). modifying the form of operation of b). modifying the form of operation of the the company company c). decision on the transformation of c). decision on the transformation of the 47

the company and its termination company and its termination without without legal succession, legal succession, d). changing the rights attached to d). changing the rights attached to certain certain share series and share series and transformation of certain transformation of certain types of types of shares, classes of shares, shares, classes of shares, e). decision on the reduction of the e). decision on the reduction of the share share capital unless – otherwise capital unless – otherwise stipulated by stipulated by the Gt. the Gt. f). delisting the shares of the Company from the regulated market

7.3. Sphere of competence and tasks of 7.3. Sphere of competence and tasks of the the board of directors board of directors

7.3.1. In addition to the above mentioned 7.3.1. In addition to the above mentioned following tasks belong to the sphere following tasks belong to the sphere of of competence of the board of competence of the board of directors: directors: a). to determine the place and date of a). to determine the place and date of the the general meeting, and to elect general meeting, and to elect the person the person of the chairman of the of the chairman of the general meeting, general meeting, b). to submit the report prepared based b). to submit the report prepared based on on the Accounting Act and the the Accounting Act and the proposal for proposal for the allocation of the the allocation of the profit after tax, profit after tax, c). to issue instructions, c). to issue instructions, recommendations recommendations relating to relating to objectives of practical objectives of practical business business policy and economy, policy and economy, d). to conclude, to amend, and to d). to conclude, to amend, and to terminate terminate each contract exceeding each contract exceeding the value limit the value limit of HUF of HUF 100,000,000, (in letters: HUF 100,000,000, (in letters: HUF One One hundred million), hundred million),, e). to decide on the participation in an e). to decide on the participation in an economic company over the value economic company over the value limit limit of HUF 50,000,000, (in of HUF 50,000,000, (in letters: HUF letters: HUF Fifty million),, Fifty million), f). to exercise employer’s rights vis-a- f). to exercise employer’s rights vis-a-vis vis the president, and vice the president, and vice presidents, presidents, g). to purchase and sell real estates, g). to purchase and sell real estates, h). to approve the organisational h). to approve the organisational regulations regulations and the rules of and the rules of procedure, procedure, i). to authorise entitlement to i). to authorise entitlement to representation representation to employees of the to employees of the company, company, j). conclude a contract concerning the j). to conclude a contract concerning the 48

keeping of the share register, keeping of the share register, k). to take care of the proper keeping of k). to take care of the proper keeping of the the business books of the company, business books of the company, l). to prepare a report relating to the l). to prepare a report relating to the management, the financial situation management, the financial situation and and the business policy of the the business policy of the company at company at least once a year for least once a year for the general meeting the general meeting and once in and once in three months for the three months for the supervisory supervisory board, board, m). to meet announcement and m). to meet announcement and extraordinary extraordinary announcement announcement obligations vis-a-vis the obligations vis-a-vis the Budapest Budapest Stock Exchange and the Stock Exchange and the Hungarian (PSZÁF) Hungarian Banking and Banking and Capital Market Capital Market Supervision with the Supervision with the contents set contents set and till the date determined and till the date determined by the by the provisions of the law, provisions of the law, n). to announce any modification of n). to announce any modification of data data registered into the company registered into the company registry or registry or any other data any other data subscribed by law to the subscribed by law to the court of court of registration, in case of registration, in case of stipulations stipulations by the law to have the by the law to have the stipulated stipulated decisions and declarations decisions and declarations appear in appear in the Cégközlöny. the Cégközlöny. o). to purchase or alienate own shares o). to purchase or alienate own shares based based on the authorisation of the on the authorisation of the general general meeting, meeting, p). to acquire own shares to avoid any p). to acquire own shares to avoid any serious damage the company is serious damage the company is directly directly facing, facing, q). decision on taking suitable steps for q). decision on taking suitable steps for the the disturbance of the procedure of disturbance of the procedure of making a making a public purchase offer public purchase offer r). decision on the acceptance of a r). decision on the acceptance of a public public purchase offer made for the purchase offer made for the own share. own share. s). based on the authorisation by the s). based on the authorisation by the general general meeting, decision about the meeting, decision about the increase of increase of capital and capital and during the authorization for during the authorization for increasing increasing the capital, decision the capital, decision about the exclusion about the exclusion or restriction of or restriction of preferential subscription preferential subscription rights. rights.

t). decision about transferring the shares of the Company to regulated markets .

7.3.3. The Board is obliged to send respectively to the PSZÁF and the regulated market on the working day 49

following the decision about the delisting, “transfer” of the share listed a). on the regulated market: the resolution b). containing the decision, the particulars of the shares affected, and a statement about the proposed date c). for the delisting or transfer, in case of transfer the contact details of the regulated market on which the share in question is traded. 7.3.4. The Board shall notify the registered shareholders concerning the decision for the delisting of shares admitted to trading on a regulated market within five working days following the date when the resolution was adopted in accordance with the relevant provisions on the service of official documents, and shall – furthermore – publish the information contained in item a)–c) of 7.3.3. in its own gazette for official notices, if available, and in a daily newspaper of nationwide circulation

The time span between the date of submission of the notice of delisting to the exchange market and the date when the shares are in fact removed from the regulated market in question may not be less than sixty trading days.

The shareholder designated in item 5.1.1.i) whose shares are directly affected by the delisting may request, within a forfeit deadline of 60 (sixty) days calculated from the announcement of the decision about the delisting, the Company to purchase his shares. Such offer to sell may not be withdrawn.

To determining the value of the share constituting the object of the sale, the provisions of Tpt 63/A shall apply.

A share transfer agreement between the Company and the shareholder who has offered to sell shall become effective on the last day of the period within which the offer to sell has to be made. The Company shall effect payment within ten working days following the last day of the period within which the offer to 50

sell has to be made.

If the Board satisfies the conditions set out in Item 7.3.3., the regulated market shall provide for – according to its bylaws – having the shares admitted to trading on that market removed from the list of traded securities on the effective date of delisting or transfer.

Budapest, 18 April 2011

Dr. Deák Imre Chairman at the AGM

Countersigned by:

...... Dr. Mária Szabó Dr. Gerelyes company head solicitor Budapest, 18 April 2011

PROPOSAL FOR THE RESOLUTION FOR ITEM 6 OF THE AGENDA:

The Board of Danubius Hotels Nyrt. proposes the AGM to approve the modification of the Articles of Association set forth.

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ITEM 7 OF THE AGENDA: TO APPOINT THE AUDITOR AND APPROVE ITS 2011 REMUNERAION

In the course of 2010 KPMG Hungária Kft. fulfilled the duties of auditor for the Company. The Board of Danubius Hotels Nyrt proposes the Annual General Meeting to elect as Auditor of the Company KPMG Hungária Kft-t (1139 Budapest, Váci út 99.; company registration number: 01-09-063183; registration number: 000202), personally Péter Szabó as registered Auditor (chamber registration number: 005301) to perform audit services for the year 2011, from 29 April 2010 for a one year period and to approve HUF 13,820,000 + VAT to be the Auditor’s annual compensation, covering the audit of the annual stand alone financial statements of the Company prepared in accordance with the Hungarian Accounting Act and also the audit of the annual consolidated financial statements of Danubius Hotels Group prepared in accordance with International Financial Reporting Standards (IFRS).

PROPOSAL FOR THE RESOLUTION FOR ITEM 7 OF THE AGENDA:

The Board of Danubius Hotels Nyrt. proposes to the AGM to appoint KPMG Hungária Kft. – assigned representative Péter Szabó – for 2011 from 29 April 2011 for a one year period for a remuneration of 13 million 820 thousand HUF.

ITEM 8 OF THE AGENDA: TO ESTABLISH THE REMUNERATION OF THE MEMBERS OF THE BOARD OF DIRECTORS AND THE SUPERVISORY BOARD

The AGM has to pass a resolution in the course of item 8 of the agenda about the remuneration of the members of the Board of Directors and the Supervisory Board, related to which the following proposal is submitted: The Chairman of the Board of Danubius Hotels Nyrt. is to receive 355 thousand HUF/month, its members 240 thousand HUF/month while members of the Supervisory Board 193 thousand HUF/month from the current AGM until the forthcoming AGM, no change in remuneration compared to 2010.

PROPOSAL FOR THE RESOLUTION FOR ITEM 8 OF THE AGENDA:

The Board of Danubius Hotels Nyrt. proposes to the AGM to approve the proposal according to which the Chairman of the Board of Danubius Hotels Nyrt. is to receive 355 thousand HUF/month, its members 240 thousand HUF/month while members of the Supervisory Board 193 thousand HUF/month from the current AGM until the forthcoming AGM, no change in remuneration compared to 2010.

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