Granolio d.d., Zagreb

Annual Management Board Report on the business performance and position of the Company and unconsolidated financial statements for the year 2015, together with Independent Auditor's Report

Annual Management Board report on the business performance and position of the Company for the year 2015 …………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………
Responsibility for the unconsolidated financial statements
Independent Auditor's Report
Unconsolidated statement of profit or loss and comprehensive income
Unconsolidated statement of financial position
Unconsolidated statement of changes in shareholders' equity
Unconsolidated statement of cash flows
Notes to the unconsolidated financial statements

Annual Management Board report on the business performance and position of the Company for the year 2015

General information about Granolio d.d.

GRANOLIO d.d. ("the Company") is a joint stock company registered at the Commercial Court in Zagreb, Croatia. The Company's personal tax ident company registered at the Commercial Court in Zagreb, Croatia.
The Company's personal tax identification number (OIB) is 59064993527, and its (MBS) is 080111595.

The registered seat of the Company is in Zagreb, Budmanijeva 5.

The Company has a Shareholders' Assembly, a Supervisory Board and Management Board.

The members of its Management Board are as follows:

Hrvoje Filipović, Chairman Tomislav Kalafatić, Member Drago Surina, Member Vladimir Kalčić, Member

Members of the Supervisory Board are as follows:

Franjo Filipović, President Jurij Detiček, Deputy President Braslav Jadrešić, Member Davor Štefan, Member Josip Lasić, Member

At 31 December 2015 the total share capital of the Company amounts to HRK 19,016,430 and is divided into 1,901,643 ordinary shares, with a nominal value of HRK 10.00 each. The shares are traded under into and have been listed on the Official Market of the Zagreb Stock Exchange since 23 March 2015.

The majority shareholder of the company is Mr Hrvoje Filipović, who holds 60.74 percent of the shareholders' equity.

At 31 December 2015 the ten largest shareholders of Granolio held a total ownership interest of 95.1 percent.

The principal activity of the Company comprises the production of and trade in agricultural products and cattle. At 31 December 2015 the business were and the Company comprised fire active operations, of which two production centres: grain mills Farina and Kopanica, engaged in the production, packaging, warehousing and dispatch of grain mill products.

The business unit Bjeliš is a grain drying and storage silo.

The Osijek location is responsible for the storage, sale and dispatch of seed material, sale of grains and oleaginous plants and sales platform management.

The Granolio unit in Zagreb provides logistic, management, accounting and IT support to the Company's business.

Farina and Kopanica mills are subject to International Food Standards (IFS), which enables the Company to export
its flour to EU Member States its flour to EU Member States.

The Company sells five own flour brands on the market: Farina, Mlin Kopanica, Ekoklas, Mlineta, and Belje.

Because of Granolio's focus on the product and delivery quality as well as on building long-term relationships with e with of or anolio is english and delivery quality as well as on building long-tem relationships with
customers, Granolio is engaged in the production of private labels for

The output capacities of the Company's mills at 31 December 2015 are presented in the following table.

Min Output capacities at 31 December 2015: Mill
Farina	ton/24h
Kopanica	320
	230
	550

Subsidiaries

The Company holds the entire equity interest in Zdenačka farma d.o.o. and Prerada Žitarica d.o.o.

lt exercises the controlling influence in the decision-making process at Zdenka - miljec'n involved d.o.o. and Žitar
d.o.o. These companies have been consolidated as nart of an in the submit and graniaenoo in the decision-making process at Zdenka - milječni pro
d.o.o. These companies have been consolidated as part of the Granolio Group since 201

Žitar d.o.o., as the sole owner, has established another company, Žitar konto d.o.o., whose financial statements
have been included in the 2015 consolidated financial stateme have been included in the 2015 consolidated financial statements.

in addition, the Company has a minority interest in Žitozajednica d.o.o., Zagrebačke pekame Klara d.d., and

The ownership interests of Granolio in its subsidiaries are presented in the chart below:

Granolio Group Structure

Significant transactions in the current accounting period

ln February 2015 the Company increased the share capital of its subsidiary Zdenačka farma d.o.o. by exchanging the loan it provided to the subsidiary into its equity share capital of the subsidiary Zdenacka farma d
e million.

The shares of Granolio d.d. have been included in the Official Market of the Zagreb Stock Exchange since 23 March
2015.

To rationalise the production costs, leased mill operations were discontinued in March 2015, the production at mills owned by Belje d.d. and PIK Vinkovi d.d. ceased and was transferred to the Company's own production at mills
Farina and Kopanica as well as to Žiter d a a This humany's own p Farina and Kopanica as well as to Zitar d out was transleired to ine Company's own production centres
benefit cost in the amount of HRK 2 million benefit cost in the amount of HRK 2 million.

A legal action between the Company and Osatina grupa d.o.o. was finally concluded by a decision of the Commercial Court in Zagreb of 17 June 2015 establishing the claim as withdrawn.

Simultaneously, Agriculture Cooperative Doatina recovered its debt from Grandio d.o.o. arising from the warehouse fee and other storage costs in a public auction of wheat owned by Grandio d. on which the warehouse
held under warehouse keener's lion held under warehouse-keeper's lien.

The recognition of the transaction in the books of Granolio d.d. resulted in a net loss sightly below half a million
kunas.

In August 2015 the Company received, as a club deal, a long-term kuna-denominated loan in the amount of HRK 300 million. The loan funds were utilised to refinance the existing loan debt.

The loan has been granted in two tranche in the amount of HRK 47 million of the total nominal loan balance is due on 31 December 2017, and the reading in the antount of the tatal mind ban contractually scheduled to take place on a quarterly basis over a period of 10 years.

Analysis of the 2015 business performance

The total product and service sales for 2015 are 14 percent higher than the prior-year sales, the highest sales growth being reported in merchandise sales (16%) and flour salles (15%).

In 2015 the Company sold 160 thousand tons of flour, almost 18 percent more than in the prior year. The flour sales increase resulted from an acquisition of a mill product operation in the previous year, whereby the nour sales effects on the Company's performance started from the second half of the year onwards.

The average flour selling price for 2015 was around 1 percent lower than the 2014 average selling price, whereas the 2015 spread1 was 15 percent higher than in 2014.

Exports account for over 55 percent of the total merchandise sales for 2015. Of the total domestic sales, 65 percent are intermediary product sales. The higher merchandise sales comprise grains and oleaginous plant sales, whereas the seed material sales (as intermediary products) were lower than in the previous year.

The Other sales segment consist mainly of drying and warehousing service income, income from selling costs recharged to customers and cattle sales.

Individual segment revenue versus the total sales

Cost of material, which includes the cost of raw material, energy, fuels as well as external services such as transportation, quality control and similar, increased 10 percent from 2014. In 2015 grain and oleaginous plant sales margins were higher than in 2014. Higher margins in the wholesale and mill operations are one of two man reasons underlying an increase of EBITDA from HRK 17 million to HRK 38.5 million. The other reasons is increase in sales volume.

Staff expenses increased in comparison with the prior year because of reduced remuneration paid to key management for business year 2014. In early 2015 the key management remuneration was restored to the previous level.

In 2014 the Company recognised an impairment allowance for trade receivables and amounts owed from cooperatives past due over 360 days. At 31 December 2015 there were no receivables assessed as of doubtful collection

Out of the total balance of trade receivables and amounts owed from cooperatives that was initially provided against, HRK 1.4 million were recovered in 2015.

The total capital expenditure for 2015 amounts to HRK 4 million. This amount consists of an investment in the finished-product warehouse at Farina in the amount of HRK 1.1 million, purchases of mill equipment in the amount of HRK 1.7 million, upgrade of the existing ERP system in the amount of HRK 0.4 million and other items comprising purchases of two platform scales and improvements of the Farina Mill silo. The finished-product warehouse at Farina is currently presented as an asset under construction.

¹ Spread is defined as the difference between the selling price of 1 kilogramme of flour and the average price of one kilogramme of raw material used as input into production.

Significant events after the end of the accounting period and the strategic goals of the Company

In February 2016 the Marc

ln February 2016 the Management Board of the Company adopted a decision to ren's company
in the biogas plant because of market changes that resulted in a lower rolect pregled in the bogs plant because of market charges that revies its strategy of investments
in the bogas plant because that resulted in a lower project profitability expectation. Fur actions on the sockan became in a lower project in a lower project ins stredy of investments
actives on the 300-kW Bioget Plant Invel Project have porned project production a in and the ober w Bookw Blogat Project have been supers pronability and a feasibility and a feasibility and a feasibility and a feasibility and a feasibility and a feasibili for and serve as a basis for a lower power rating will be developed for a
farma and serve as a basis for assessing the potential sale of the project.

The Company has no significant investment plans for 2016. The next year's focus will be on strengthening flour
exports to the neighbouring countries to increase the sales vol exports to the no orghincant investment plans for 2016. The next
exports to the neighbouring countries to increase the sales volume .

Employees

Based on the total hours of work, the Company had 169 employees in 2015 (2014: 167 employees), structured by
formal qualification levels and gender as presented in the follo formal and the nother of work, the Company had 169 employees in 2011
formal qualification levels and gender as presented in the following charts:

Research and development

In the period observed, the Company had no research and development projects.

Purchase of own shares

As of the date of issue of the Annual Management Board Report on the business performance and the position of
the Company, the Company did not engage in any purchases of its the Company, the Company did not engage in any purchases of its own shares.

Environmental protection

In the area of environmental protection, the Company applies integrated and systematic solutions and implements
environmentally friendly production processes. environmentally friendly production processes.

Risks

Details about the risks to which the Company is exposed are presented in the notes to the annual financial

Granolio d.d., Zagreb

CORPORATE GOVERNANCE CODE ANNUAL SURVEY

DATE OF THE QUESTIONAIRE COMPLETION: CONTACT PERSON AND CONTACT PHONE: BASIC COMPANY INFORMATION:

GRANOLIO dd, Budmanijeva 5.	00 Zagreb, OID. 0702000 vona Pehar, vona Pehar,

All the questions contained in this question, it is period of one bussines year to which annual financial statements also relate, If question in questionnaire ask for explanation, it is needed to explain answer.

All answers in questionnaire will be measured in percentage as explained in the beggining of each chapter.

COMPANY HARMONIZATION TO THE PRINCIPLES OF CORPORATE GOVERNANCE CODE

Answers to this questionnaire chapter will be walter GOVERNANCE CODE
Corporate Governance Code

Question
No.	Question	Answer	Explanation
		YES/NO
	Did the Company accept the application of the Corporate Governance Code or did it accept its own Policy of Corporate Governance?	YES

2	Does the Company have adopted principles ot corporate governance within its internal policies?	YES

C	Does the Company announce within its annual financial reports the compliance with the principles of ' comply or explain'	YES

D	accordance with the principles of Corporate Governance Code while making Does the Company take into account the interest of all shareholders in
	decisions?	YES

SHAREHOLDERS AND GENERAL Assembley

Answers to this questionnaire chapter will be valued with max. 30% of whole questionnaire valuation of
Corporate Governance Code

Is the Company in a cross-shareholding relationship with another company convening the assembly, set the date for defining the status in the register of Does each share of the Company have one voting right? (If not, explain) shares, which will be relevant for exercising voting rights at the general assembly and not earlier than 6 days prior to the day of holding the Question explain) assembly of the company, by or other companies? (If not, assembly? (If not, explain) not, explain) Corporate Governance Code. Question No. 10 9 L 8 10 6	omiative varuation of company compulance to the principles of	Answer	Explanation YES/NO	NO	YES	YES	YES	Shareholders who are not able to vote their own discretion, proxies who are at the assembly in person appoint, at obliged to vote in accordance with instructions received from the shareholders. NO	voting rights and the right to participate in days before the General Assembly meeting persons who apply for participation at the before the General Assembly is held, and the assembly if they are registered with beginning of the 21st (twenty first) day General Assembly no later than 6 (six) According to the Company's Statute, the Central Depository and Clearing shareholders, i.e. their proxies, have Company as shareholders on the NO
						Does the Company treat all shareholders equally? (If not, explain)	assembly been fully simplified and free of any strict formal requirements? (If Has the procedure for issuing power of attorney for voting at the general	whatever reason, are not able to vote at the assembly in person, have proxies Has the Company ensured that the shareholders of the company who, for who are obliged to vote in accordance with instructions received from the shareholders, with no extra costs for those shareholders? (If not, explain)	setting that date prior to the day of holding the Did the management or Management Board of the company, when

	payment was not made in 2015. The decision on dividend	payment was not made in 2015. The decision on dividend		The technical conditions do not Assembly in such manner. participate in the General allow for shareholders to	participation has been introduced Registration for participation in in order to ensure orderly and advance as a requirement for lawful holding of the General Assembly.		challenging the decisions of the Company's General Assembly. There has been no legal action
YES	NO	NO	NO	NO	YES	YES	NO
company's premises as of the date of the first publication of the agenda? (If documentation with explanations relating to the agenda, announced on the website of the company and put at the disposal of shareholders on the Were the agenda of the assembly, as well as all relevant data and not, explain)	include information regarding the date when shareholders acquire the right to dividend payment, and information on the date or period during which Does the decision on dividend payment or advance dividend payment the dividend will be paid? (If not, explain)	Is the date of dividend payment or advance dividend payment set to be not later than 30 days after the date of decision making? (If not, explain)	Were any shareholders favoured while receiving their dividends or advance dividends? (If so, explain)	assembly of the Company using modern communication technology? (If not, Are the shareholders allowed to participate and to vote at the general explain)	Have the conditions been defined for participating at the general assembly by pursuant to the law and articles of association), such as registration for voting through proxy voting (irrespective of whether this is permitted participation in advance, certification of powers of attorney etc.? (If so, explain)	Did the Management of the Company publish the decisions of the general assembly of the company?	Did the Management of the Company publish the data on legal actions, if any, challenging those decisions? (If not, explain)
11	12	13	14	15	16	17	18

Granolio d.d.

	ANACEMENT AND SUPERVISORY BOA

PLEASE PROVIDE THE NAMES OF MANAGEMENT BOARD AND THEIR FUNCTIONS:

Tomislav Kalafatić (Member), Hrvoje Filipović (President), Vladimir Kalčić (Member). Drago Šurina (Member),

Štefan (Member), Braslav Jadrešić Jurij Detiček (Deputy-president), Josip Lasić (Member), Davor Franjo Filipović (President), (Member).

PLEASE PROVIDE THE NAMES OF SUPERVISORY BOARD AND THEIR FUNCTIONS:

Anwers to this questionnaire chapter will be valued with max. 20% of whole questionnaire valuation of company compliance with the principle
Corporate Code

(If not, explain) not, explain) 19 20	Did the Supervisory or Management Board adopt a decision on the master plan available to Supervisory Board members, regularly and in a timely manner? (If of its activities, including the list of its regular meetings and data to be made	YES/NO YES	Explanation



	Did the Supervisory or Management Board adopt its Internal Code of Conduct?	YSS

explain 21	Is the Supervisory Board mostly composed of non-executive directors and is the Management Board mostly composed of independent members? (If not,	YES

22	Is there a long-term succession plan in the Company? (If not, explain)		The Company does not have a formal succession plan.
		NO

ு

The remuneration received by members of the Supervisory	participation in Supervisory Board depends on their Board meetings.		members' total earnings received from the Company are listed in the Financial statements. The Management Board	change, acquisition or disposal of obligation to inform the company Supervisory Board, however, all So far we did not have a case of members are informed of the shares by members of the of such cases.			There are no such contracts or agreements.	There are no such contracts or agreements.
	NO	YES	NO	NO	YES	NO	NO	NO	NO
or partly determined according to their Is the remuneration received by the members of the Supervisory or Management Board entirely	contribution to the Company's business performance? (If not, explain)	Is the remuneration to the members of the Supervisory or Management Board determined by a decision of the general assembly or in the articles of (If not, explain) association of the company?	remunerations and other earnings of each member of the Supervisory or Management Board received from the Company or from other persons related to the Company, including the structure of such remuneration, been made public? (If not, explain) Have detailed records on all	Company 's shares, not later than five trading days, after such a change occurs Company of each change relating to their acquisition or disposal of shares of the Company, or to the possibility to exercise voting rights arising from the Does every member of the Supervisory or Management Board inform the (If not, explain)	Were all transactions involving members of the Supervisory or Management Board or persons related to them and the Company and persons related to it clearly presented in reports of the Company? (If not, explain)	Are there any contracts or agreements between members of the Supervisory or Management Board and the company?	Did they obtain prior approval of the Supervisory or Management Board? (If not, explain)	Are the important elements of all such contracts or agreements included in the Annual Report? (If not, explain)	Did the Supervisory or Management Board establish the Appointment Committee?
23		24	25	26	27	28	29	30	31

NO	established in December 2015 and The Audit Committee was YES	The Audit Committee has only started it's work in 2016. one member from the NO	Management Board, who is not independent.	established in December 2015. The Audit Committee was NO	established in December 2015. The Audit Committee was NO		not established in the Company. The Internal Audit function was NO		established in December 2015. The Audit Committee was NO	established in December 2015. The Audit Committee was NO
Did the Supervisory or Management Board establish the Remuneration Committee?	Did the Supervisory or Management Board establishe the Audit Committee?	Was the majority of the Committee members selected from the group of independent members of the Supervisory Board? (If not, explain)		Company, especially the correctness and consistency of the accounting methods consolidation of financial reports of the Companies belonging to the Group? (If used by the Company and the group it belongs to, including the criteria for the Did the Committee monitor the integrity of the financial information of the not, explain)	aim of adequately identifying and publishing the compliance with regulations), as well as managing those risks in an adequate main risks the Company is exposed to (including the risks related to the Did the committee assess the quality of the internal control and risk management system, with the	manner? (If not, explain)	department, and with regard to funds at his/her disposal, and the evaluation of the actions taken by the Management after findings and recommendations of Has the Committee been working on ensuring the efficiency of the internal audit system, especially by preparing recommendations for the selection, appointment, reappointment and dismissal of the Head of internal audit the Internal audit? (If not, explain)	If there is no Internal audit system in the Company, did the Committee	consider the need to establish it? (If not, explain)	Auditor, especially with regard to the rotation of authorised auditors within the Did the Committee monitor the independence and impartiality of the External Audit Company and the fees the company is paying for services provided by external auditors? (If not, explain)
32	33	34		35	36		37	38		39

40	received by the company from the audit company or from persons related to it? Did the Committee monitor nature and quantity of services other than audit,	NO	The Audit Committee was
41	to the Company by the external audit company and persons related to it, which Did the Committee prepar rules defining which services may not be provided services may be provided only with, and which without prior consent of the committee? (If not, explain)	NO	established in December 2015. established in December 2015. The Audit Committee was
42	taken by the Senior Management with regard to recommendations made by the Did the Committee analyse the efficiency of the External Audit and actions external auditor? (If not, explain)	NO	established in December 2015. The Audit Committee was
43	dependent and associated companies as well as by third parties (such as expert Did the Audit Committee ensure the submission of high quality in formation by advisors)? (If not, explain)	NO	established in December 2015. The Audit Committee was
44	Was the documentation relevant for the work of the Supervisory Board submitted to all members on time? (If not, explain)	YES
45	adopted decisions, accompanied by data on voting results? (If not, explain) Do Supervisory Board or Management Board meeting minutes contain all	YES
46	work of the committees established, and evaluation of the company's objectives individual members, as well as of joint activities of the Board, evaluation of the preceding period, including evaluation of the contribution and competence of Has the Supervisory or Management Board evaluated their work in the reached in comparison with the objectives set?	NO
47	Management, Management Board and the Supervisory Board as part of the Did the Company publish a statement on the remuneration policy for the Annual Report? (If not, explain	NO	The Company has not adopted a remuneration policy for the Management Board and the Supervisory Board
48	directors permanently available on the website of the company? (If not, explain) Is the statement on the remuneration policy for the management or executive	NO	The Company has not adopted a Management Board and the remuneration policy for the Supervisory Board

Annual Report of the Company. members of the Management Data on total earnings and remunerations received by Board are published in the NO	members of the Supervisory and receive any remuneration or According to their contract, Management Board do not NO	materially not relevant by the Except transaction treated as external auditor benefits. YES	YES
member of the Management or each executive director from the Company Are the detailed data on all earnings and remunerations received by each published in the Annual Report of the company? (If not, explain)	benefits of the management, made public, broken down by items and persons, Management Board and Supervisory Board, including options and other Are all forms of remuneration to the members of the Management, in the Annual Report of the Company? (If not, explain)	directors, and persons related to them, and the Company and persons related to Are all transactions involving members of the Management or executive it, clearly presented in reports of the Company? (If not, explain)	law, the evaluation of total business performance of the Company, of activities Does the report to be submitted by the Supervisory or Management Board to the General Assembly include, apart from minimum information defined by of the anagement of the company, and a special comment on its cooperation with the Management Board? (If not, explain)
49	50	51	52

AUDIT AND MECHANISMS OF INTERNAL CONTROL

Answers to this questionalire charters.
Corporate Governance Code

	Explanation
	Answer	YES/NO	YES		NO		YES
	Questions		Does the Company have an external auditor?	Is the External auditor of the company related with the company in terms of	ownership or interests?	Is the external auditor of the company providing to the company, him/herself	or through related persons, other services?
Question	No.	53		S		55

	YES/NO Answer NO NO YES NO YES YES NO NO	Did the company establish mechanisms to ensure that persons who have access to or possess inside information understand the nature and importance of such external auditors for the audit carried out and for other services provided? (If Has anyone suffered negative consequences for pointing out to the competent Did the management of the company hold meetings with interested investors, Has the company published the amount of charges paid to the independent Did the company establish mechanisms to ensure supervision of the flow of Does the Company have Internal Auditors and an Internal Audit system authorities or bodies in the company or outside, shortcomings in the Are the semi-annual, annual and quarterly reports available to the Did the company prepar the calendar of important events? application of rules or ethical norms within the company? inside information and possible abuse thereof? Questions information and limitations related to it? established? (If not, explain) in the last year? shareholders? not, explain)	No. 56 57 58 59 60 61 62 63
	YES	Board agree that the answers provided in this questionnaire are, to the best of Do all the members of the management, Management Board and Supervisory their knowledge, entirely truthful?	64







Question
with max. 20% of whole questionnaire valuation of company harmonization to the principles of Corporate Governance Code
TRANSPARANCY AND THE PUBLIC ANNOUNCEMENT OF BUSINESS Answers to this questionnaire chapter will be valued

Responsibility for the unconsolidated financial statements

Pursuant to the Croatian Accounting Law, the Management Board of Granolio d.d. ("the Company") is responsible for ensuring that unconsolidated finance of Grenolio d.d. ("the Company") is
responsible for ensuring that unconsolidated financial statements are prepared for ea accordance with International Reporting Standards are prepared for each financial year in
which give a true and fair view of the state of affers on really the European Union, which give a true and fair view of the state of affairs and results of the Company for the Europe

After making enquiries, the Management Board has a reasonable expectation that the Company has adequate resources to continue in operational existence for the the Company has
Management Board continue in operational existence for the foreseeable future. For this reason Management Board continues to adopt the for the foreseable future. For this reason, the unconsolidated financial

In preparing those financial statements, the responsibilities of the Management Board include ensuring that: · suitable accounting policies are selected and then applied consistently;
- judgements and estimates are reasonable and prudent;
- applicable accounting standards are followed, subject to any material departures disclosed and t
  explained in the financial statements: and explained in the financial statements; and
- " the unconsolidated financial statements are prepared on the going concern basis unless it is inappropriate to presume that the Company will continue in business

The Management Board is responsible for keeping proper accounting records, which disclose with reasonable accuracy at any time the financial position of the Company and must also ensure that the financial statements comply with the Croatian Accounting Law. The Management Board is also responsible for safements.
assets of the Company and hence for taking responsible for safeguraring the assets of the Company and here wane wants also responsible for safeguarding the
other irregularities, other irregularities.

Management is also responsible for the preparation and content of the annual report on the operations and position of the Company in accordance with the requirements of Article 18 of the Oroation of the operation Law.

Signed on behalf of the Management Board:

Hrvoje Filipović, dipl.oec. President of the Management Board

Tomislav Kalafatić, dipl.oec. Member of the Management Board

Deloitte.

Deloitte d.o.o. ZagrebTower Radnička cesta 80 10 000 Zagreb Croatia Tax Id. (OIB): 11686457780

Tel: +385 (0) 1 2351 900 Fax: +385 (0) 1 2351 999 www.deloitte.com/hr

Independent Auditor's Report

To the Shareholders of Granolio d.d .:

Report on the financial statements

We have audited the unconsolidated financial statements of Granolio d.d. ("the Company"), which comprise the unconsolidated statement of financial position at 31 December 2015, and the related unconsolider statement of profit or loss and other comprehensive income, unconsolidated statement of changes in sharehold outchline and unconsolidated statement of cash flows for the year then ended, and a summary of significant accounting policies and notes to the unconsolidated financial statements.

Responsibility for the Unconsolidated Financial Statements

Management is responsible for the preparation and fair presentation of the unconsolidated financial statements in accordance with International Financial Reporting Standards as adopted by the European Union, and for such internal control as Management determines is necessary to enable the preparation of unconsolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to an entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by Management, as well as evaluating the overall presentation of the financial statements

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Deloitte refers to one or nore of Delotte Touche Tohmatsu Limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see http://www.deloite.com/hr/hemmfrimment/infinition it he legal structure of Deloitte Touche Tohmatsu Limited and its member firms.

The company was registered at Zagreb Commercial Court: MBS 030022053; paid-in initial capital: Kn 44,900.00; Board Members: Branislav Vračnik, Eric Daniel Olodi, Maria Torali. Norak Morodović Najvića Najmen Josipa Jelacica 10, 10 000 Zagreb, bank account no. 2360000-1101 1001. Schl. Legrelack dank d., 1. 1. 1. 2. great. Bank a., 1. 1. 1. 1. 1. 1. 1. 1. 1. 1. 1. 1. Privredna barka Zagreb d.d., Radio de Jank account no. 234009-111009294, SWIFT Code: PBZGHR2X IS, HR3823400091110098294; Raifeisenbaooder, 10 co., Petrinjska 59, 10 000 Zagreb, SWFF Code PBZAHRZX BAN:
RZBHER2X IBAN: HR1024840081100240005 RZBHHR2X IBAN: HR1024840081100240905.

Independent Auditor's Report (continued)

Opinion

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as at 31 December 2015, its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards, as adopted by the Curopean Union.

Report on other legal or regulatory requirements

In accordance with legal and regulatory requirements, Management has drawn up a report presented on pages 1 to 5. The management is also responsible for the preparation of the Annual Report in accordance with the requirements of the Croatian Accounting Law. Our responsibility is to issue an opinion on the consistency of the Annual Report with the financial statements based on our audit, in accord nee with Article 17 of the Croatian Accounting Law. In our opinion, the financial information presented in the Annual Report is consistent, in all material respects, with the aforementioned financial statements as of 31 December 2015.

Other matters

The financial statements of the Company for the year ended 31 December 2014 were audited by another auditor, whose report dated 20 April 2015 expressed an unmodified opinion on those financial statements.

Emphasis of matter

Without qualifying our opinion, we draw attention to the fact that the Company has prepared the accompanying unconsolidated financial statements on the basis and as per the requirements of Croatin laws and regulations, and that investments in subsidiaries and associates are presented at crost. The Company has also prepared separately the consolidated financial statements of Granolio d.d. and its subsidiaries (the Group'), which are approved on 28 April 2016. For a better understanding of the Group as a availole, the consolidated financial statements should be read in conjunction with these financial statements.

Branislav Vrtačnik. President of the Board

Vanja/Vlak, Certified Auditor

Zagreb, 28 April 2016

Unconsolidated statement of profit or loss and comprehensive income

For the year ended 31 December 2015

in thousands of HRK
2015	2014 2013
reclassified

681,787 597,087	542,150
16,665	8,055 8,648
698,452 605,142	550,798

343	3,980 (725)
(620,684) (563,914)	(485,433)
(22,074) (16,529)	(18,896)
(9,988) (9,252)	(9,918)
(6,373) (5,036)	(4,233)
(18,418)	(6,249)
(11,136) (6,451)	(11,548)
(669,912) (615,620)	(537,002)

28,540 (10,478)	(13,796)

9,640 6,777	7,188
(25,564) (39,158)	(22,423)
(15,924) (32,381)	(15,235)

12,616 (42,859)	(1,439)
(3,543)	(1,647)
9,073 (42,859)	(3,086)

3,205	(3,205)
9,073 (39,654)	(6,291)


4.77 (34.59)	(2.49)

Approved on behalf of the Company on 28 April 2016

Hrvoje Filipovio, diplibec.
President of Management Board

Tomislav Kalafatić, dipl.oec. Member of Management Board

* The accompanying accounting policies and notes form an integral part of these financial statements.

Unconsolidated statement of financial position

At 31 December 2015

		31 December		in thousands of HRK
	Notes	2015	31 December 2014	1 January
I NON-CURRENT ASSETS			reclassified	2014 reclassified
Intangible assets 1. Goodwill
		60,379	60,379
2. Trademarks, concessions, licenses		120,000	120,000	12
3. Customer list		7,362	9,028
4. Software and other intangible assets		401	94
	15	188,142	189,501	141 141
Property, plant and equipment
1. Land		8,182	8,182
2. Buildings		113,392	116,824	8,182 119,061
3. Plant, equipment and tools		19,797	21,755
4. Other tangible assets		78	81	18,482
5. Plant and equipment under construction		2,366	1,591	50
	16	143,815	148,433	245
Financial assets				146,020
1. Investments in subsidiaries 2. Investments at fair value through profit or loss	17a	115,255	98,953	98,420
	17b	20,462	20,462	22,905
3. Given loans, deposits and similar	17c	901	745	733
		136,618	120,160	122,058
Long-term receivables		15	15	15
II CURRENT ASSETS
Inventories	18
Receivables		54,699	97,912	85,432
1. Receivables from related parties	26
2. Trade receivables	19a	3,880	7,525	7,179
3. Receivables from the State and other institutions		124,866	146,523	137,441
4. Other receivables	19b	5,474	1,811	13,877
	19c	4,204	3,338	7,051
Financial assets		138,424	159,197	165,545
1. Loans to related parties	26
2. Investments in securities	20a	35,402	49,193	50,260
3. Given loans, deposits and similar	20b	696	871	4,458
		6,375	4,414	4,399
		42,473	54,478	59.117
Cash and cash equivalents	21	16,973	1,214	6,910
Prepaid exenses and accrued income		5,053	1,374	861
TOTAL ASSETS		726,212	772.284	586 099

Unconsolidated statement of financial position

At 31 December 2015 (continued)

I EQUITY	Notes	31 December 2015	31 December	in thousands of HRK 1 January
			2014	2014
1. Subscribed capital			reclassified	reclassified
2. Premium for issued shares		19,016	19,016	12,000
3. Revaluation reserves		84,187	85,379
4. Legal reserves		64,473	67,384	83,504
5. (Accumulated loss)/ retained earnings		183	183	161
6. Profit or loss for the year		(7,077)	32,143	13,395
		9,073	(42,859)	(3,086)
	22	169,855	161,246	105,974
II LONG-TERM LIABILITIES
1. Deferred tax liabilities
2. Liabilities to banks and other financial institutions	14	16,118	16,846	21,677
	23	283,005
3. Liabilities to related companies	26		51,663	84,502
		299,123	10,853	13,356
III SHORT-TERM LIABILITIES			79,362	119,544
1. Liabilities to related companies	26
2. Received loans, deposits and similar liabilities		597	5,304	3,333
3. Liabilities to banks and other financial institutions				2,880
4. Advances received	23	62,657	288,337	228,297
5. Trade payables		2,845	2,714	3,760
6. Liabilities for securities	24a	97,020	115,321	105,639
7. Taxes, contributions and similar duties payable	24b	80,888	109,802	13,044
8. Accrued expenses and deferred income	24c	8,541	4,301	686
9. Other short-term liabilities		545		10
	24d	4,147	5,897	2,932
		257,234	531,676	630,581
TOTAL EQUITY AND LIABILITIES		726,212	772,284	586,099

Approved on behalf of the Company on 28 April 2016

Hrvoje Filipović, dipl.oec. President of Management Board

Tomislav Kalafatić, dipl.oec. Member of Management Board

* The accompanying accounting policies and notes form an integral part of these financial statements.

Jnconsolidated statement of changes in snarenoiders' equity For the year ended 31 December 2015

For the year ended 31 December 2015	onaliges in Sharenoiders equity						agion
	Share capital	Capital reserves	Legal reserves	Revaluation reserves	(Accumulated loss) / retained earnings	Profit / (loss) for the year	Total
Balance at 31 December 2013 Loss for the year, net	12,000		161	83.504	13,395	(3,086)	105.974
Reversal of fair value reserve on financial assets Revaluation reserve - Farina d.o.o.				(16,414)	16,414	(42,859)	(42,859)
Transfer of revaluation reserves to retained available for sale				3.205			3,205
Total other comprehensive income for the earnings				(2,911)	91 2
Income tax transfer year				(16,120)	9.325		3.205
Reversal of deferred tax liabilities					99		99
Premium on issue of shares		87,004			4.831		4.831
Allocation of capital gains from the share issue	7.016						87,004
Decrease in capital reserves by the costs of Dividends paid					(2,399)		7,016 (2,399)
share capital increase		(1,625)
Allocation of the result for the year 2013 Balance at 31 December 2014			22		(3,108)	3.086	(1,625)
Net profit for the year	19,016	85,379	183	67,384	32.143	(42.859)	161.246
Transfer of revaluation reserves to retained						9,073	9,073
Total other comprehensive income for the earnings vear				2,91	2.91

Approved on behalf of the Company on 28 April 2016

Decrease in capital reserves by the costs of

share capital increase

Reversal of deferred tax liabilities

year

Allocation of the result for the year 2014

Balance at 31 December 2015

President of Management Board Hrvoje Fjlipović, diploec.

Member of Managgement Board Tomislav Kalafatić, dipl.oec.

728 9,073

9,073

728 2,911

(2,911)

(1,192)

42,859 9,073

(42,859) (7.077)

64,473

183

84,187

19,016

(1,192)

169,855

* The accompanying accounting policies and notes form an integral part of these financial statements.

Granolio d.d., Zagreb

Unconsolidated statement of cash flows

For the year ended 31 December 2015

		in thousands of HRK
	2015	2014
		reclassified
Result before taxation	12,616	(42,859)
Adjusted by:
Depreciation and amortisation	9,988	9,252
Changes in equity - correction of prior periods		08
Increase in provisions	921
Loss on the disposal and retirement of fixed assets, net Value adjustment of trade receivables	(7)	(51)
Value adjustment of financial assets		18,418
Inventory surplus		11,036
Net interest expense	(2,258)	(1,340)
Net (gain) from investing	19,075	21,324
Increase/(decrease) in accrued expenses and deferred	(772)	(251)
income	291	(a)
Increase in prepaid expenses and accrued income	(4,013)	(513)
Operating result before changes in working capital	35,841	15,105
Decrease/ (increase) in inventories	45,471	(11,140)
Decrease/ (increase) in short-term receivables	16,261	(9,020)
(Decrease)/ increase in short-term liabilities	(17,761)	13,761
Advances received/ (made)	132	(1,047)
Operating result after changes in working capital	79,944	7,659
Income tax paid	(520)	(1,466)
Cash generated from operations	79,424	6,192
Interest received	4,977	3,906
Payments for the acquisition of mill operations Payments to acquire property, plant, equipment and		(193,679)
intangibles	(4,037)	(7,383)
Proceeds from the sale of property, plant and equipment Net cash paid to increase the equity investments in	33	88
subsidiaries	(16,302)	(533)
Proceeds from stock market transactions	772	251
Deposits paid/received	104	507
Net proceeds from received bills of exchange	154	509
Payments for given loans	(45,596)	(566,642)
Repayments of given loans	61,574	564,870
Cash generated from investing activities	1.679	(198.106)

Unconsolidated statement of cash flows (continued)

For the year ended 31 December 2015 For the year ended 31 December 2015

			in thousands of HRK
		2015	2014
Repayment of borrowings			reclassified
Proceeds from borrowings		(848,957)	(999,971)
Net (payments of)/ proceeds from securities		842,402	1,021,552
Repayment of finance leases		(28,915)	96,758
Proceeds from finance lease		(1,200)	(1,476)
Interest paid			2,833
Proceeds from initial public offering		(25,902)	(23,710)
Payments for initial public offering			94,020
Dividends paid		(1,192)	(1,625)
Other net payments from financing activities			(2,399)
Net cash from financing activities		(1,580)	234
Net change in cash and cash equivalents		(65,344)	186,217
Cash at the beginning of the year		15,759	(5,696)
Cash at the end of the year		1,214	6,910
	21	16,973	1.214

Approved on behalf of the Company on 28 April 2016

Hrvoje Filipović, dipl.oec. President of the Management Board

Tomislav Kalafatić, dipl.oec.

Member of Management Board

* The accompanying accounting policies and notes form an integral part of these financial statements.

1. GENERAL INFORMATION

Grandio d.d. (the Company') was incorporated as a Croatian joint stock company in December 1996. The registered seat of the Company in Liberporated as 'a Croatian Joint stock company in December 1996. The Closes
Velika Kopanica and Osilek Velika Kopanica and Osijek.

Subsidiaries constituting the Granolio Group are the following:

Zdenka - mliječni proizvodi d.o.o., Veliki Zdenci, Žitar d.o.o., Donji Miholjac, Žitar konto d.o.o., Donji Miholjac, Zdenačka farma d.o.o., Veliki Zdenci and Prerada žitarica d.o.o., Grubišno Polje.

The core activities of Granolio d.d. and its subsidiaries comprise the production of food, agricultural production, warehousing of agricultural products and trade in production of food, agricultural production,
intermediary products in arriculture intermediary products in agriculture.

Around the half of 2007 the Company acquired the entire share in Zdenačka farma d.o.o., Veliki Zdenci, for HRK 2,820 thousand. The subsidiary doquired the entre in Zdenacka farma d.o., Velik Zdenci, for high genetic potential.

Pursuant to the decision of the Company's Sharehoiders dated 16 March 2015, the share capital of Zdencika farma was increased from HRK 13,520 thousand to March 2015, me share capital of Zeinačka farma
of HRK 16,000 thousand to HRK 29,520 thousand by issuing a new business share in the of HRK 16,000 thousand.

Around the middle of 2008 the Company acquired the entire equity share in Prerada žitarica d.o.o., Grubišno Polje, for HRK 5,206 thousand. The subsidiary is engaged in grains warehousing and drying activities. In cr

In 2011 Granolio d.d. acquired a controlling interest in the subsidiary, enabling it to exercise power in making operational decisions of its subsidiaries as well as to govern the financial and business policies, the appointment of the members of the Management Boards of the majority of vote at Dusiness policies, the appointment of the appointment of the appointment of

At 31 December 2015 the Management Board of Granolio d.d. consisted of the following members:

Hrvoje Filipović - President (since 23 February 2011), Vladimir Kalčić - Member (since 23 February 2011), Drago Šurina - Member (since 23 February 2011) and Tomislav Kalafatić - Member (since 19 April 2011).

At 31 December 2015 the Supervisory Board of Granolio d.d. consisted of the following members: Franjo Filipović - Chairman (since 23 February 2011), Jurij Detiček - Member (since 23 February 2011), Braslav Jadrešić - Member (since 23 February 2011), Davor Štefan - Member (since 16 January 2015) and Josip Lasić - Member (since 16 January 2015).

2 ADOPTION OF NEW AND REVISED INERNATIONAL FINANCIAL REPORTING STANDARDS

2.1 current financial period

The following amendments to the existing standards and new interpretation issued by the International Accounting Standards Board (IASB) and adopted by the EU are effective for current financial period.

Amendments to various standards "Improvements to IFRSs from the 2011–2013 Cycle" resulting from the annual improvement project of IFRS 1, IFRS 13 and IAS 40 primarily with a view to removing inconsistencies and clarifying wording - adopted by the EU on 18 40) primarily with a view to removing
beginning on or after 1 January 2015) beginning on or after 1 January 2015),

IFRIC 21 "Levies", adopted by the EU on 13 June 2014 (effective for annual periods beginning on or after
2014). 17 June 2014).

The adoption of these amendments to the existing standards and interpretations did not cause changes in accounting policies of the entity.

2.2 Standards and interpretations issued by IASB and adopted by the European Union, but not yet effective

At the date of authorization of these financial statements the following standards, amendments to the existing standards and interpretations issued by IASB and adopted by the EU were in issue but not yet effective

Amendments to IFRS 11 "Joint Arrangements"

Accounting for Acquisitions of Interests in Joint Operations - adopted by the EU on 24 November 2015 (effective for annual periods beginning on or after 1 January 2016),

Amendments to IAS 1 "Presentation of Financial Statements"

Disclosure Initiative - adopted by the EU on 18 December 2015 (effective for annual periods beginning on or after 1 January 2016),

Amendments to IAS 16 "Property, Plant and Equipment" and IAS 38 "Intangible Assets"

Clarification of Acceptable Methods of Depreciation and Amortization - adopted by the EU on 2 December 2015 (effective for annual periods beginning on or after 1 January 2016),

Amendments to IAS 16 "Property, Plant and Equipment" and IAS 41 "Agriculture"

Agriculture: Bearer Plants - adopted by the EU on 23 November 2015 (effective for annual periods beginning on or after 1 January 2016),

Amendments to IAS 19 "Employee Benefits"

Defined Benefit Plans: Employee Contributions - adopted by the EU on 17 December 2014 (effective for annual periods beginning on or after 1 February 2015)

Amendments to IAS 27 "Presentation of Financial Statements"

Disclosure Initiative - adopted by the EU on 18 December 2015 (effective for annual periods beginning on or after 1 January 2016),

Amendments to various standards "Improvements to IFRSs from the 2010-2012 Cycle", resulting from the annual improvement project of IFRS (IFRS 2, IFRS 3, IFRS 8, IFRS 13, IAS 16, IAS 24, and IAS 38) primarily with a view to removing inconsistencies and clarifying wording - adopted by the EU on 17 December 2014 (applicable to annual periods beginning on or after 1 February 2015)

Amendments to various standards "Improvements to IFRSs from the 2012-2014 Cycle", resulting from the annual improvement project of IFRS (IFRS 5, IFRS 7, IFRS 19 and IAS 34) primarily with a view to removing inconsistencies and clarifying wording - adopted by the EU on 15 December 2015 (applicable to annual periods beginning on or after 1 January 2016),

2 ADOPTION OF NEW AND REVISED INERNATIONAL FINANCIAL REPORTING STANDARDS

(CONTINUED)

2.3

At present, IFRS as adopted by the EU do not significantly differ from regulations adopted by the International Accounting Standards Board (1/2 E/3 do flot significantly differ from regulations adopted by the International
and interpretations, which were not endorsed for use in ELL on and interpretations, which were not end the following standards, annendments to the existing standards
and interpretations, which were not endorsed for use in EU as at the 20

IFFRS 9 "Financial instruments" (effective for annual periods beginning on or after 1 January 2018)

IFFRS 14 "Regulation Cofferral Accounts" (effective for annual periods beginning on or after 1 January 2016), – the European Commission has decided not to lanna (andarpent process of this interim standard and to wait for

IFFRS 15 "Revenue from Contracts with Customers" and further amendments (effective for annual periods beginning
on or after 1 January 2018). on or after 1 January 2018),

Amendments to IFRS 10 "Consolidated Financial Statements", IFRS 12 "Disclosure of Interests in Other Entities" and IAS 28 "Investments in Associates and Joint Ventures" - Investment Entities: An Other Entities"
Exception (effective for annual periods beginning as as an finities: Apply Exception (effective for annual periods beginning on or after 1 January 2016),

Amendments to IFRS 10 *Consolidated Financial Statements" and IAS 28 "Investments in Associates and Joint Ventures" – Sale or Contribution of Assets between Investor and its Associate on Joint Venture and Joint Venture and Turther amendments (effective date was deferred indefinitely until the research project on the equity method has been

The Company anticipates that their adoption will have an impact on its financial statements in the period of initial application, however, the impact is currently not quantifiable.

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3.1 Statement of compliance

The unconsolidated financial statements are prepared in accordance with International Financial Reporting
Standards, as adopted by European Union.

3.2 Basis of preparation

The financial statements of the Company have been prepared on the historical cost basis, except for certain properties and financial instruments which are carried at revalued amounts or at fair alle, except for certain
corresponding accounting policies, and in accordence with breat corresponding accounting policies, and in accordance with international Financial Reporting Standard in the
by the European Union, and in accordance with International Fina by the European Union, and Croatian Ilaws. The historical Reporting Standards, as adoped
consideration given in exchange for an asset. consideration given in exchange for an asset.

The Company maintains its accounting records in the Croatian language, in Croatian Kuna and in accordance with Croatian laws and the accounting records in the Croatian language, in Croatian Kuna and

The preparation of financial statements in conformity with International Firencial Reporting Standards (IFRSs) requires the use of certain critical accounting with international Financial Reporting Standards (IFRS) requires
applying the Company accounting estimates. It also requires Minder des applying the Company accounting other shipher degree of judgment in the process of
where assumptions accounting policies. The areas involving a higher degree of judgment of c where assumptions and estimates are significant to the financial statements are disclosed in Note 4.
3.2

3.3 Business combinations

Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is consideration transferred in annonement in a
of the assets transferred by the Group, which is calculated as the sum o of the assets transferred by the Group, liabilities incurred by the former owners of the fair values
the equity interests issued by the Group, for correct of the former owne the equity interests issued by the Group in exchange for control of the tormer owners of the acquiree and
generally recognised in profit or loss as incurred generally recognised in profit or loss as incurred.

At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value,
except that:

deferred tax assets or liabilities and assets or liabilities related to employee benefit arrangements, which are recognised and mainmast, and assets on habilities related to employee benefit arrangements,
are recognised and measured in accordance with IAS 12 Income Taxes and IAS 19
· liabilities or equity instruments related to share-based payment arrangements of the acquiree or sharebased payment arrangements of the Group entered into to replace share-based payment arrangements of the acquiree are measured in accordance with IFRS 2 at the acquisition date; and
· assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 Non-current ment (producting caps) that are classified as neid for sale in accordance with lFRS 5 Non-cur
Assets Held for Sale and Discontinued Operations are measured in accordance with

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer's previously he amount of any non-controlling
over the net of the acquires of the identifielde equiry interest i over the net of the acquisition and or the identified by assets acquired and the labilities (if any)
reassessment, the net of the acquisition-date amounts of the ilabilities reassessment, the net of the acruisition of the identifiable assets acquired and life afsumed . If, after
exceeds the sum of the consideration transforced the entifiable asse exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquired and the fair value of the acquired spreviously held interest in the acquired in the acquiree and
in profit or loss as a bargain purchase gain in profit or loss as a bargain purchase gain.

Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity's net assets in the event of liquidation may be initie inflict in a fair value or at the of controlling interests' proportionate share of the recognised amounts of the acquiree's identifiable net assets. The choice of measurement basis is made on a transaction-by-transaction basis.

Other types of non-controllined on a fransactor-by-transacion basis.
another IFRS,

3.3 Business combinations (continued)

When the consideration transferred by the Company in a business combination includes assets or liabilities resulting from a continent consideration arrangement, the contination includes assess or liabilities
date fair value and included as part of the consideration is measured at date fair value and included an analigent me consideration is measured at its acquisition.
fair value of the consideration that qualify as mostress ombination. Change fair value of the neadada to per of the consider as measurement period adjustments are adjustments are adjusted retrospectively, with corresponding adjustments against goodwill.

Measurement period adjustments are adjustments that arise from additional information obtained during the 'measurement period' (which cannot exceed one year from additional information obtained during the
that existed at the acquisition date, that existed at the acquisition date.

The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period adjustments depends on how the consideration hat do not qualify as
consideration hat is clasified as equity is not remesured in s class continent is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for with equity. Continent consideration that is clasequent
remeasured at subsequent reporting consideration that is classified as an asset or a liabi remeasured at subsequent reporting dates in accordance with AS 39, or AS 37 Provisions, Continues in a liability is
and Contingent Assets, as appropriate, with the correspond and Continues and copyring autoo in accordance with IAS 39, or IAS 37 Provisions, Contingent Liability
and Contingent Assets, as appropriate, with the corresponding gain or l

When a business combination is achieved in stages, the Group's previously held equity interest in the ecquire is remeasured to its acquistion-rate fair value and the resulting gain in eld equity interest in the acquire is
Amounts arising from interests in the acquires nelles if any, is Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other comprehensive income are reclassified to profit or loss where such treadment would be appropriate if that interest was disposed of.

If the initial accounting for a business combination is incomplete by the reporting period in which the combination occurs, the Group reports provisional amounts for the eno of the reporting period in which the Those provisional amounts are adjusted during the measurement period (the acounting is incomplete.
Itabilities are recognised to reflection obtains at and the accounting is i liabilities are recognised, to reflect new information obtained about facts and circumstances that existed at the acquisition date that, if known, would have affected the amounts recognised at that date.

34 Goodwill

Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the business (see Note 3.18) less accumulated impairment losses, if any.

For the purposes of impairment testing, goodwill is allocated to each of the Group's cash-generating units (or groups of cash-generating units) that is expected to benefit from the synergies of the combination.

A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is an indication that the unit may be impairied. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and the other assets of the unit pro rata based on the carrying amount of eary goodwill in the unit. Any impairment loss for goodwill is recognised directly in profit or loss. An impairment loss recognised for goodwill is not reversed in subsequent periods.

On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

The Group's policy for goodwill arising on the acquisition of an associate and a joint venture is described in Note
3.18 3.18.

3.5 Interests in associates and joint ventures

An associate is an entity over which the Company has significant influence . Significant influence is the power to participate in the financial and operating policy ness significant influence is the power to
policies. A joint venture is a joint arrangement wherehy the not control or joint policies. A joint venture is a joint arrangement when be invested but is not control over those
rights to the net assets of the igint arrangement . Joint control of the arran rights to the net assets of the intention will be the contractually agreed sharing of the arrangement have
arrangement, which exists only when decisions about the contractual arrangement, which exists only when decisions about the relevant activities require unanimous control of an
parties sharing control. parties sharing control.

The results, assets and liabilities of associates or joint ventures are increated in financial statements using the equity method of accounting, except when the investinent, or a portion the mains using the mains using the case it is accounted for in accordance with IFRS 5. Under the equity method, an investment in which
joint venture is initially recognised in the consolidated etator an invest joint venture is initially recognised in the equity method, an investment in an associate or a
sociate the Company's share of the profit or loss and ethor at cost and adjuste to recognise the Company's share of the profit of inancial position at cost and adjusted thereafter
venture. When the Company's share of the profit or loss and other of the a venture. When the Company's share of losses of an associate or a joint venture exceeds or joint venture or joint venture exceeds the Company's interest in that associate or joint venture (which in lastclated on a John venture exceeds the Company's interest in
net investment in the associate of in assemment in substance, form pa net investment in the associate or in touter), the Company discontinues recognising its share of further losses.
Additional losses are recognised only to the extent that the Additional loses are recognised only to the extent the Company has incurred legal of uther osses.
or made payments on behalf of the associate or ioint vontred legal or constr or made payments on behalf of the associate or joint venture.

An investment in an associate or a joint venture is accounted for using the equity method from the date on which the investee becomes an associate or a joint venture. On acquisition of the investment in an associate or which the any excess of the investment over the Company's share of the met fair value of the relum,
liabilities of the investment over the Company's share of the inet fair value of the liabilities of the invested to the editible share of the net fair value of the identifiable assets and excess of the Group's share of the net fair value of the included within the carrying amount of the investment. Any after reassessment, is recognised in value of the lumilities over the cast of the investment is acquired.
The reassessment, is recognised immediately in profit or loss in thi

The requirements of IAS 39 are applied to determine whether it is necessary to recognise any impairment loss with respect to the Group's investment in an associate or a locessary to recognise any impairment loss with investment (including goodwill) is tested for impairment in accordance with IAS 36 Impaiment of Assets as a single asset by comparing its recoverale amount (higher of value in use and fair value less costs of disposal) with its carrying amount, Any impairment loss recognised forms part of the investment. Any reversal with its carying
impairment loss is recognised forms part of the carrying amount of the inv impairment loss is recognised in accordance with IAS 36 to the extent that the recoverable amount of the investment subsequently increases.

The Company discontinues the use of the equity method from the investment ceases to be an associate or a joint venture, or when the investment is classified an held for sale. When the Investment ceases to be an associate former associate or joint venture retained interest is a finen the Company retains an interest in the interest at fair value at that value is nor on is reced is a life fair value on initial recognition in retained IAS 39. The difference between the carrying amount of the associate or initial recordance with discontinued, and the fair value of any relained interest and any proceeds from disposing of a part interest in the associate or joint venture is included in the determination of the gain of a part interest in the esseciate or joint wentine In addition, the Company accounts for all amounts previously recognised in the associate or joint venture.
that associate or ioint venture on the same besis as would recognis that associate or joint venture on the same basis as would be required in bine comprehensive income in relation to disposed of the related assets or liabilities. Therefore, if a la required in that associated in other comprehensive income by that associate or joint venture would be recossified to profit of loss on the disposal of the related assets of liabilities, the Company reclassifies the gain of loss on the disposal of the deposal of the related assets of the equity method is discontinued.

The Company continues to use the equity method when an investment in an associate becomes an investment in a joint venture or an investment in a joint venture becomes an investment in an associate. There is no remeasurement to fair value upon such changes in ownership interests. When the Company reduces its ownership interest in an associate or a joint venture but the Company continues to use the equity method, the Company reclassifies to profit of loss the proportion of the gain or loss that had previously been recognised in other comprehensive in ome relating to that reduction in ownership interest if that gain or loss would be reclassified to profit or loss on the disposal of the relating to assets or liabilities.

36 Interests in joint operations

A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations whiles, the parties that have joint control is the arrangement. Joint on the cights
sharing of control of an arrangement. Julies, relating to t sharing of control of an arrangement, with exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.

When a group entity undertakes its activities under joint operations, the Company, as a joint operator, recognises in relation to its interest in a joint operation:

· its assets, including its share of any assets held jointly;
· its liabilities, including its share of any liabilities incurred jointly;
· its revenue from the sale of its share of the output arising from the joint operation;
· its share of the revenue from the sale of the output by the joint operation; and
· its expenses, including its share of any expenses incurred jointly.

The Company accounts for the assets, liabilities, revenues and expenses relating to its interest in a joint operation in accordance with the IFRSs applicable to the particular assets, liabilities, ravenues and expenses.

When a group entity transacts with a joint operation in which a group entity is a joint operator (such as a sale or contribution of assets), the Group is considered to be conducting the transaction with the other parties to the joint operation, and gains and losses resulting from the transactions are recognised in the Jours consolidated financial statements only to the extent of other parties' interests in the i oier oversion.

When a group entity transacts with a joint operation in which a group entity is a joint operator (such as a purchase of assets), the Group does not recognise its share of the gains and losses until it resells those are to a third party.

3.7 Functional and presentation currency

The financial statements are prepared in the Croatian currency, the Croatian kuna (HRK), which is also the Company's functional currency, rounded to the nearest thousand.

Transactions denominated in foreign currencies are translated to the Croatian kuna by applying the exchange rates in effect at the transaction dates. Assets and liabilities denominated in a foreign currency are retranslated at the exchange rates in effect at the reporting date. Gains and losses on the retranslation from transaction dates to the reporting date are included in the statement of comprehensive income.

38 Use of estimates and judgments

The preparation of financial statements in conformity with IFRS requires from management to make judgments, estimates and assumptions that affect the application of policies and the reported amounts of assets and liabilities, income and expenses. These estimates and the underlying assumptions are based on past experience and various other pertinent factors and are believed to be reasonable under given circumstances and constitute a reliable basis for developing estimates of the carrying amounts of assets and liabilities that are not readily available from other sources. Actual results may differ from those estimates.

The estimates and underlying are regularly reviewed. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period of revision and future periods if the revision affects both current and future periods.

Areas of judgement made by the Management Board in applying IFRS that have a significant impact on the financial statements as well as areas of judgement involving a risk of material adjustment in the following year are presented in Note 4

3.9 Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable for products, goods or services sold in the regular course of the ocharder of the ochalibr received or receivable for products, goods or services
sales discounts.

The Company recognises revenue when the amount of the revenue can be measured reliably, when future economic benefits will flow into the unfount of the Tevenue can be measured reliably, when future
below are met

(i) Income from the wholesale of products and merchandise

The Company produces and distributes its own products as well as third-party merchandise (wholesale operations). Wholesale revenue is recognised when the Company has delivered the chandise (wholesale operations).
controls the management of the goods and when is as is the wholesaler, whe controls the management of the goods and when there is no outstanding liability that could affect the acceptance of the products by the wholesaler.

A delivery is completed when the products are dispatched to a specific location, the risks of loss are transferred to the wholesaler and one of the following is met: the wholesaler has accepted the goods in accordance with the underlying contract; or the acceptance the wholosail has acceptar he goods in accordance with the with the acceptance criteria are met.

Products are sold at the agreed volume discounts, with the right of the customers to return faulty goods. Sales revenue is recognised based on the price from the underlying sales contract, less any estimated volume and sales discounts, and returns. The discounts and returns are assessed based on past experience. Volume and sales assessed based on anticipated annual sales. When sales are made under terms and conditions that involve financing elements, i.e. where the collection period is longer than 60 days, the receivables are classified as shortterm financial assets.

(ii)

Retail product and merchandise sales are recognised upon the sale to the customer. Retail sales are generated in cash. The Company operates no specific customer award schemes.

(iii) Service income

Service sales are recognised in the accounting period in which the services are rendered, by reference to completion of the specific transaction assessed on the basis of the actual service provided as a proportion of the total services to completion of the total services to be provided.

Financial income (iv)

Financial income consists of interest earned on investments and foreign exchange gains. Interest income is recognised when it arises using the effective interest method. Dividend income is recognised when the right to receive payment has been established.

3.10 Leasing

The Company as lessor

Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negatised on a stragins an operating lease are added to the relevant lease. Inital
asset and recognised on a straight-line basis over the lease are a asset and recognised on a straight-line basis over the lease term.

The Company as lessee

The Company leases certain property, plant and equipment. Leases of property, plant and equipment under which the Company bears all the risks and reveards of ownership are classified as financial leases of the relation of the capitalised at the inception of the local by reference to the lair neacial leases. Financial leases are
value of the minimum lease by reference to the lower of the leased pro value of the minimum lease payment. Each lease payment is allocaled between the lability and finance charges so as to achieve a constant rate on the balance outstanding. The interest element of the finance charges so as
statement of comprehensive income over the lase poriod. Desect of the statement of comprehensive income over the lease period. Propenty plant and equipment acquired under finance leases are depreciated over the shorter of the useful life of the asset and the lease term.

Leases under which the Company does not bear all the significant risks and rewards of ownership are classified as operating leases. Payments under operating lease are revards of ownership are classified as
a straight-line basis over the terror of the undersing lease a straight-line basis over the term of the underlying lease.

3.11 Foreign currencies

Foreign-currency transactions and balances

Transactions denominated in foreign currencies are converted to the functional currency using the exchange rate list in effect at the transaction dates. At the reporting date, monetary assets and liabilities denominated in foreign currencies are translated to the functional currency using handlers denominated in foreign
gains and losses resulting from the settlement of such has handled. Foreign exchan gains and losses resulting from the settlement of such the cruit a that a that date. Foreign exchange
liabilities denominated in foreign currencies as as as a secure the tran liabilities denominated in foreign currencies are recognised in profit or loss.

Non-monetary assets and items denominated in foreign currencies that are measured at historical cost are not retranslated.

Foreign-currency denominated non-monetary assets and liabilities measured at historical cost currencies are translated to the functional currency using the exchange rate list in effect at the transaction dates.

At 31 December 2014 and 31 December 2015 the official exchange rate of the Croatiaction a against 1 euro (EUR) was HRK 7.661471 and HRK 7.635047, respectively.

3.12 Borrowing costs

Borrowing costs directly attributable to the acquisition or production of qualifying assets, which are assets that necessarily take a substantial period of their intended or qualifying assets, which are
cost of those assets, until such time as the assets are their intended use cost of those assets, until such time as the assets are substantially ready for their intended use or sale, are a

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

3.13 Employee benefits

(i) Obligations in respect of retirement and other post-employment benefits

In the normal course of business the Company makes payments, through salancy bensions, to mandatory pension first and the are a buttled the contibutions and the mandator persion final of mandator pension
as salary expense when accued by law. All contibutions paid to the mandator p as salary expension accrued by law. All contributions paid to the mandatory pension funds are posion funds are research.
City of expense when accrued. The Company has no obl

(ii) Long-term employee benefits

The Company recognises no obligation for long-term employee benefits (jubilee awards), as they are not included in the employment contracts or defined by other legal acts.

(iii) Short-term employee benefits

The Company recognises a provision for bonuses to employees when there is a contractual obligation or a past
practice giving rise to a constructive obligation. practice giving rise to a constructive obligation.

(iv) Share-based payments

The Company makes no share-based payments to its employees.

3.14 Dividends

Dividends payable to shareholders are recognized as a liability in the financial statements in the period in which they are approved by the Company's shareholders.

3.15 Operating segment reporting

A segment is a part of the Company that may be separated either as a part engaged in the production of a product or provision of a service (an operating separated in the production of a production of a production of a production of a provision of service within an economic environment (a geographic segment) which is production of a provision
different from those of other segments different from those of other segments.

Based on the internal reporting structure, the Company monitors the performance of the following segments:

Mill operations
Wholesale
Others (services, cattle growing, other activities)

The Company identifies operating segments on the basis of internal reports about components of the Company that are regularly reviewed by the chief operating decision maker in order to allocate resources of the Company
and to assess their performance. Details about the energing to and to assess their performance. Details operating security segments of the segments
the Unconsolidated financial shalements Company are disclosed in Note 6 to the Unconsolidated finance in a stalle about the operating segments of the Company are discosed in Note 6 to
the principle

3.16 Taxation

(i) Income tax

Income tax expense comprises current and deferred taxes. Income tax expense is recognised in profit or loss to the extent of the tax relating to the expense is also micrne is recognised in profit or loss to the
extent of the tax relating to the expense is also recognised through other co profit. Current and deferred tax are recognised in arother they related through other comprehensive
in other comprehensive income or directly in which assess when they relate in other comprehensive income or directly in which case, the current and deferred tax are reognised
in other comprehensive income or directly in equity in which case, the are in other comprehensive income or directly in equity, in which case

Current tax represents tax expected to be paid on the basis of taxable profit for the year, using the tax rate enacted at the reporting date, adjusted by appropriate prior-period items.

(ii) Deferred tax assets and liabilities

Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for finance headling britemporary differences belwent the Such deferred tax assets and liablilities are not recognised if the emounts used for taxation purposes.
of goodwill, the initial recognition of assess and liabilition a stree of goodwill, the initial recognition of assess and liabilities in a transaction (other than a business combination)that affects neither the taxable profit nor the accounting profit and if temporary differences relate to investments in subsidiaries and jointly confect in the acounting probable in the near future relate to investments in
are measured at the tax rates that and in the near the near future. Def are measured at the tax rates that are expected to apply in the near future. Defered taxes
based on tax laws effective at the reocring det based on tax laws effective at the reporting date.

A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised through reversel of the temporary differences. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Deferred tax assets and deferred tax liabilities are offset when there is a legal right to offset a current tax liability and a current tax asset and if they relate taxes imposed by the same tax authority to the same taxable entity, or to various entities, but which intent to settle the current liablities and assets on a net basis, or to recover or settle the carrying amount of the tax assets and liabilities simultaneously.

(iii) Tax exposure

In determining current and deferred taxes, the Company considers the impact of uncertain tax positions as well as potential additional taxes and interest. The consideration is based on estimates and assumptions and may involve a series of judgements about future events. New data may become available that may involve a
judgement about the adequacy of the evisition the littii judgement about the adequacy of the existing tax libilities, and any changes in the tax liabilities will affect the tax expense in the period in which such a decision is made.

(iv) Value-added tax (VAT)

The Tax Authorities require that VAT is settled on a net basis. VAT on sale and purchase transactions is recognised in the unconsolidated statement of financial position on a net basis. If a trade debtor is impaired, the related impairment loss is included in the gross amount receivable from the debtor, which includes VAT.

3.17 Property, plant and equipment

Land and buildings held for use in the production or supply of goods or services, or for administrative purposes, are stated in the consolidated statement of financial position at their revalued announts, being the fair value at the date of revaluation, less any subsequent accumulated depreciation and subsequent accumulated impairment losses.
Revaluations are performed with such the such that the secumulated Revaluations are performed with sufficient regularity such the carmulated impairment losses.
those that would be defermined with such the earning amounts do not differ materi those that would be determined using fair values at the end of each reporting period.

Any revaluation increase arising on the revaluation of such land and buildings is recognised in other comprehensive income and accumulated in equity, except to the extent that it reverses a revaluation decreasive in other comprehensive
previously recognised in profit or loss, in which case previously recognised in chart of the extent that it feverses a revaluation decrease for the same asse
decrease previously expensed in the carning amore is credited to profit decrease previously expensed. A decrease in the earlying amount arising on the extent of the extent of the extent of the buildings is recognised in profit v or loss to the extent that it excludion of such land and and and revaluation reserve relating to a previous revaluation of that asset.

Properties in the course of construction, supply or administrative purposes are carried at cost, less any recognised impairment loss. Cost includes professions purposes are carried at oost, less
capitalised in accordance with the scounting notion evel for qu capitalised in accordance with the Group's accounting online are classified to the minute on the more with costs.
categories of property, plant and equipment when completes a categories of property, plant and equipment when completed and ready for intended use. Depreciation of these assets, on the same be supment when completed and ready tor intended use. Depreciation of these are
Depreciation as a me basis as other property assets are ready for their i

Depreciation on revalued buildings is recognised in profit or loss. On the subsequent sale or retirement of a revalued property, the attribution go roognised in profit of loss. On the subsequent sale or retirement of a revalued
retained earnings. retained earnings.

Freehold land is not depreciated.

Fixtures and equipment are stated at cost less accumulated depreciation and accumulated impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets (other than freehold land and properties under construction) less their residual values over their useful lives, using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

The useful lives applied for the purpose of determining the depreciation charge are as follows:

	2015	2014
Buildings	40 years	40 years
Plant and equipment	10 years	10 years
Office equipment and delivery vans	5 years
Telecommunication equipment	4 years	5 years 4 years
Vehicles	4 years	4 years

Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets. However, when the shorter of the lettainty that ownership will be obtained by the end of the lease term, assets are depreciated over the shorter of the lease term and their useful lives.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or lutler to nutle economic behants are
item of property, plant ond oguinment is a for the asset. Any gain or item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.

3.18 Intangible assets

lntangible assets may be acquired in exchange for a non-cash asset or for cash, or a combination of both, where the cost of such an asset is delming ion a nor-reasit asset of for cash, or a combination of both, where the
value of the asset is determined at the fair value unlerchal substanc value of the asset received or disposed of cannot be determined lacks commercial substance or the fair
carrying amount of the asset disposed of carrying amount of the asset disposed of.

(i) Brands and contracts with customers

Contracts with customers have a finite useful life and are carried at cost less accumulated amortisation and any accumulated impairment losses. Amortisation is provided using the straight-line method over the useful life which is estimated at 6 years.

Trademark licences are carried at cost and have an indefinite useful life, as the analyses of all relevant factors at the reporting date do not indicate any foreseable limit the period over which the identified matther that the at the art factors at the inflows. Intengible assets with in for the period over which the identified rights will generate cash
accumulated impairment losses accumulated impairment losses.

(ii) Computer software

Software licences are capitalised based on the cost, which includes the cost of purchase and costs incurred in bringing software into a working condition for the oost, which moduces the cost of purchase and costs incurred in bringing which has been estimated at 5 years.

(iii) Goodwill

Goodwill and any excess of the fair value of assets acquired above the cost of acquisition represent the difference between the cost of acquisition and the acquired above the cost of acquisition represent the difference
date date.

Goodwill arose on the acquisition of Mineta and Belje brands from Agrokor by the Company in 2014. The lotal consideration paid for the acquisition of the flour mill one mail of the Company in 2014. The Uola
in the amount of HRK 193 679 thousand. The belocations was recognised as a in the amount of HRK 193,679 thousand. The balance was allocated as follows:

HRK 65,000 thousand in respect of the Belje trademark;
HRK 55,000 thousand in respect of the Mlineta trademark;
HRK 60,379 thousand in respect of goodwill:
HRK 10,000 thousand in respect of the key customer contract;
HRK 3,300 thousand to equipment.

Goodwill was estimated assuming that the quantities sold will equal the history of the quantities sold obtained from Agrokor and that it will remain constant in the future. Another input into the calculation was the assumed constant spread (as the difference between the flour selling rise and the cast of the direct raw material). The discount rate was determined as the weighted average cost of chicalital based on the net debt-to-equity ratio of 68:32.

Goodwill is tested for impairment at each reporting date, as already disclosed in note Impairment test of intangible assets. (Note 4. iv)

3.19 Impairment of property, plant and equipment and intangible assets

At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (fi any). When it is not possible to estimate the recoverable in order to delen or the mpariment ioss (in the mpariment the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.

3.19

lf the recoverable amount of an asset (or cash-generating unit) is estimated to be less (continued)
carrying amount of the asset (or cash-generating unit) is reduced to be l carrying amount of the asset (or casi-generating unit) is reduced to its recoverable amount, the sum, the
recognised immediately in profit or loss, unless the relevant asses recognised immediately in profit at leading unity is recoverable amount. An impaiment loss is
the impairment loss, in loss, unless the relevant asset is carried at a revalued the impairment loss is treated as a revaluation decrease.

When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised edisequilt reverses, the carrying amount of the asset (or a cash-generating unit) is
exceed to the revised estimate of its recoverable anount, but no exceed the carrying amount hat would have been determined had no inpaiment loos not
asset (or cash-generating unit) in prior vears. A reversal of an impairment loss been reco asset (or cash-generalin and mare been deemmed had no impairment loss been recognised for the
or loss, unless the relevant as revel at a revel of an impairment loss is recogn or loss, unless the relevant asset is reversal of an impairment loss is recognised immediately in profit
or loss, unless the relevant asset is carried at a reversal of the im

3.20 Inventory

lnventories of raw material and spare parts are stated at the lower of cost and net realisable value. Cost is determined using the weighted and the plane are stated at the lower of cost and net realisable value. Cost is determined
course of business less all variable value represents the estima course of business less all variable selling costs.

The cost of work in progress and finished products comprises raw materials, direct labour, other direct costs and related production overheads (based on normal operating capacity).

Merchandise is carried at the lower of cost and the selling price (net of taxes and margins).

Small inventory and tools are written off when put into use.

3.24 Trade receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost, if significant, using the effective interest method. Other vare vare and adset at mortised cost, f significant, using
Impairment is made whenever there is nbiective evidence the Arminal amounts, l Impaiment is made whenever there is objective evidence that the locked by included to impaiment.
according to the originally areed terms. Significant financel armany will not according to the originally agreed terms. Significant financial intributies of the debtor, the probability of bankruptcy proceedings at the debtor, or delinquency in payment are considered indications of potential impartment.
amount of impairment loss of an item receivable is mooured notication amount of impairment loss of an item receivable is measured indications of potential impairment. The recoverable amount of the receivable.

3.22 Cash and cash equivalents

Cash and cash equivalents consists of balances on accounts with banks and cash in hand. Bank overdrafts are presented within current liabilities in the unconsolidated statement of financial position.

3.23 Equity

The share capital consists of ordinary shares. Amounts recognised in equity as a result of issuing new shares or options are presented net of the alled transaction costs and profit tax. Any fair value of the consideration received in excess of the nominal value of issued shares is recognised as capital gains.

3.24 Financial instruments

Financial assets and financial liabilities are recognised when a group entity becomes a party to the contractual provisions of the instruments.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.

3.25 Financial assets

Financial assets are recognised and derecognised on a trade-date basis where the purchase or sale of a financial asset is under a contract whose terms require delivery of the investment within the firme established by the market concerned, and are initially measured at fair value, plus transaction costs, except for those financial assets classified as at fair value through the statement of comprehensive income, which are initially measured at fair value.

Financial assets are classified into the following categories: financial assets at fair value through profit or loss (FVTPL), financial assets available for sale (AFS) and receivables. The classification depends on the nature and purpose of the financial assets and is determined at the time of rouch recognition.

Financial assets at FVTPI

Financial assets are classified as at FVTPL when the financial asset is (i) contingent consideration that may be paid by an acquirer as part of a business combination to which links on the may be paid
as at FVTPL.

A financial asset is classified as held for trading if:

· it has been acquired principally for the purpose of selling it in the near term; or
· on initial recognition it is part of a portfolio of identified financial instruments that the Company manages together and has a recent actual pattern of short-term profit-taking; or
· it is a derivative that is not designated and effective as a hedging instrument.

A financial asset other than a financial asset held for trading or consideration that may be paid by an acquirer as part of a business combination may be designated as at FVTPL upon initial recognition if

such designation eliminates or significantly reduces a measurement or recognition inconsistency that would . otherwise arise; or
the financial asset forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with is managed
management or investment strategy, and information with the Group's docu management or investment of a fall value basis, in accordance with the Group's documented internally on that basis; on
· it forms part of a contract containing one or more embedded derivatives, and IAS 39 permits the entire combined contract to be designated as at FVTPL.

Financial assets at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in profit or loss. The net gain or loss recognised in profit on temasurement recognised in
financial asset and is included in profit or loss incorporates any dividend or interes financial asset and is included in the 'other gains and losses' line item. Fair value is determined in the manner described in note 4.

Available-for-sale financial assets (AFS financial assets)

AFS financial assets are non-derivatives that are either designated as AFS or are not classified as (a) loans and receivables, (b) held-to-maturity investments or (c) financial as Ar-S or are not classified as a sub

Dividends on AFS equity instruments are recognised in profit or loss when the Group's right to receive the dividends is established

The fair value of AFS monetary financial assets denominated in a foreign currency is determined in that foreign currency and translated at the spot rate prevailing at the reporting period. The foreign exchange gains and losses that are recognised in profit or loss are determined based on the areal recharge game and rosses that losses that gains and losses are recognised in other comprehensive income.

3.25 Financial assets (continued)

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivaling trade and other receivables, bank balances and cash, and quoted in an measured at amortised cost using the effective interest method, less any impairment.

Interest income is recognised by applying the effective interest rate, except for short-term receivables when the effect of discounting is immaterial.

Impairment of financial assets

Financial assets, other than those at FVTPL, are assessed for indicators of impairment to the end reach reporting period. Financial assets are considered to include of impairment at the end reach reporting
period. Financial assets are considered to be impaired with evidence that, as a re more events that assurred after the initial recognition of the financial asset, the estimated future of the or
investment have been affected.

For AFS equity investments, a significant or prolonged decline in the fair value of the security below its cost is considered to be objective evidence of impairment.

For all other financial assets, objective evidence of impairment could include:

· significant financial difficulty of the issuer or counterparty;
· breach of contract, such as a default or delinquency in interest or principal payments;
· it becoming probable that the borrower will enter bankruptcy or financial re-organisation; or
· the disappearance of an active market for that financial asset because of financial of financial difficulties.

For certain categories of financial assets, such as trade receivables, assets are assessed for impairment on a collective base on if they were assessed not to be impaired individually. Objective evidence on a
collective basessed not the yore assessed not to be impaired including of im portfolio of receivables could include the Company's past experience of impairment for a
number of delayed payments in the Company's past experience in collecting payments, a number of delayed payments in the portfolio past the average credit period of 60 days, as incease in the changes in national or the portions past the average credit period of 60 days,
changes in national or local economic conditions that correlate with default on receivables.

For financial assets carried at amortised cost, the amount of the impairment loss recognised is the difference between the assets carrying and the present value of estimated future cash flows, discounted at the difference
financial assets original effective interest rate financial asset's original effective interest rate.

For financial assets that are carried at cost, the amount of the impairment loss is measured as the difference between the assets cance at cost, the anount of the imment loss is measured as the difference
between the assets carrying anount and the present value of the estimated future current market of canying anount and the present value of the estimated future cash flows discounted at the subsequent

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, whe informent loss directly for all financial assets with the lines.
When a trade receivables, where the carying amount is reduced through the When a trade reseivable is considered uncollectible, it is written off against the allowance account.
recoveries of amounts previously written off against the allowance accou recoveries of amounts previously written of are credited against the allowance account. Subsequent
amount of the allowance account are credited in profited account. Changes i amount of the allowance account are recognised in profit or loss.

When an AFS financial asset is considered to be impaired, cumulative gains or losses previously recognised in other comprehensive income are reclassified to profit or loss in the period.

For financial assets measured at amortised cost, if, in a subsequent period, the amount of the impairment loss decreases and the decease ou an an event occurring after the impairment loss the previously recognised impairment loss is reversed through pril of morning was recognised,
of the investment at the impairment is reversed through profit or loss to the ex of the investment at the impairment is reversed through profit of noss of the exering amount had the impairment not been recognised.

3.25 Financial assets (continued)

Impairment of financial assets (continued)

In respect of AFS equity securities, impairment losses previously recognised in profit or loss are not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss is not reversed in other comprehensive income and accumulated under the heading of investment loss is recognised in other
debt securities impairment losses are ubservations revaluation reserve. debt securities, impairment losses are subsequently reversed through profit or loss if an increase in the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment loss.

Derecognition of financial assets

The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset o another party. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and an ownership of a transferred financial asset, the Company recalls substantialy all the financial asset and rewards of recognises a collateralised borrowing for the proceeds received.

Classification as debt or equity

Debt and equity instruments issued by a group entity are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a sequily in
equity instrument. equity instrument.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liained to any onlinest that endences a residual merest in the assess of an entity aller decided on all
of of direct

Own equity instruments redeemed by the Company are recognised as a deduction directly in equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Company's own equity

Financial liabilities

Financial liabilities are classified as either financial liabilities 'at FVTPL' or 'other financial liabilities'

Financial liabilities at fair value through the display changes in fair value in the profit and loss

Financial liabilities are classified as at FVTPL when the financial liability is (i) contingent consideration that may be paid by an acquirer as part of a business combination to which IFRS 3 applies, (ii) held for trading, or (iii) it is designated as at FVTPL.

A financial liability is classified as held for trading if:

· it has been incurred principally for the purpose of repurchasing it in the near term;
· on initial recognition it is part of a portfolio of identified financial instruments that the Company manages together and has a recent actual pattern of short-term profit-taking; or
· it is a derivative that is not designated and effective as a hedging instrument.

3.25 Financial assets (continued)

Financial liabilities (continued)

A financial liability other than a financial liability held for trading or contingent consideration that may be paid by an as a more as and of a hirfanian ifability held for trading or contingent consideration that may be
acquirer as part of a business combination may be designated as at FVTPL up

such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise;
the financial liability forms part of a group of financial liabilities or both, which is managed in and its performance is evalued on a fair value basis, in accordance with the managed
management or investment strategy, and information abouth the Company's documented risk management or investment of a fair value basis, in accordance with the Company's documented risk on that
· it forms part of a contract containing one or more embedded derivatives, and IAS 39 permits the entire combined contract to be designated as at FVTPL.

Financial liabilities at FVTPL are stated at fair value, with any gains or losses arsining on remeasurement recognised in profit or loss. The ne are an vature, will in your consisted in the manusment recognised.
and is included in the 'other gainsed in profit or linerest paid on the financial and is included in the foo reognised in profit of loss incorporates any interest paid on the financial liability
and is included in the 'other gains and losses' line item. Fa

Other financial liabilities

Other financial liabilities (including borrowings and trade and other payables) are subsequently measured at amortised cost using the effective interest method.

The effective interest method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest of a mancial liability and of allocating and of allocating and future cash payments (including all fees and points paid or rate inte factive integral part of the effective interest rate, transaction costs and other premiums on discounts) through the effective interest appropriate) a shorter period, to the net carrying amount on initial recognition.

Financial guarantee contracts

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a sontract his requires the issuer to make specified by the terms of a debt instrument.

Financial guarantee contracts issued by a group entity are initially measured at their fair values and, if not designated as at FVTPL, are subsequently measured at the higher of:

· the amount of the obligation under the contract, as determined in accordance with IAS 37; and
· the amount initially recognised less, where appropriate, cumulative amortisation recognised in accordance with the revenue recognition policies.

Derecognition of financial liabilities

The Company derecognises financial liabilities when, and only when, the Company's obligations are discharged, cancelled or have expired. The difference between the carrying amount of the financial liability derecgnised and the consideration paid and payable is recognised in profit or loss.

4 CRITICAL JUDGEMENTS IN APPLYING ACCOUNTING POLICIES

In applying the Company's accounting policies, which are described in the Note 3, the directors of the Company are required to make judgements, estimates and assumptions and and and the Company
that are not readily annaren from other courses . The carrying amounts of asses and libilit that are not readily apparent from other sources. The estimates and liabilities and liabilities
historical experience and other sources. The estimates and associated assumpti historical experience for beller sources. The estimates and associated assumptions are based on
estimates, experience and other factors that are considered to be results may estimates.

The estimates and underlying are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates is revision to accounting estimates
of the revision and future netimate is revision affects only that period, or in the pe of the revision and future periods if the estimate is revised it the revision affects only the revision affects only the

Critical judgements in applying accounting policies

The following are the critical judgements, apart from those involving estimations, that the directors have made in the process of applying the Company's accounting policies and that has a mate in
the process of applying the Company's accounting policies and that have the mounts recognised in the consolidated financial statements.

(i) Revenue recognition

In making their judgement, the Management applied the detailed criteria for the recognition of revenue from the sale of goods set out in IAS 18 Revenue and, in particular, whether the Company had transferred to the buyer the significant risks and rewards of ownership of the goods.

Consequences of certain legal actions (ii)

The Company's Group entities are involved in legal actions and proceedings, which have arisen from the regular course of the operations. The management uses estimates of the probable outcome of the legal actions and recognises provisions for contingent liabilities of the Company arising from those actions on a consistent basis.

Recoverable amount of trade and other receivables (111)

The recoverable amount of trade and other receivables is determined as the present value of future cash flows, discounted using the market interest rate in effect at the measurement date. Short-term receivales without the interest rate are measured at the originally invoiced amounts if the discounting effect is not meetir al.

(iv) Impairment test of intangible assets

The Company tests the goodwill, brands and licences for impairment on annual basis. For the purposes of impairment test, they are allocated to cash-generating units of the Mill Operations segment and their corrying amounts at the reporting date were as follows:

	31 December 2015	in thousands of HRK 31 December 2014
Goodwill	60,379	60,379
Trademarks	120,000	120,000
Customer list	7,362	9,028
Software and other intangible assets	401	94
	188,142	189,501

The recoverable amount of the cash-generating units was determined as the value in use obtained from cash flow projections based on five-year financial plans approved by the Management Board.

Goodwill is tested for impairment by assessing the value in use of the cash-generated units to which the goodwill is allocated. In determining the value in use, the Management Board is required to estimate the expected future cash inflows from a cash-generating unit as well as the discount rate to be used in calculating the present value. If the actual cash flow received is below the expected, this may indicate material losses as a result of impairment.

At 31 December 2015 the carrying amount of goodwill was HRK 60 million (31 December 2014: HRK 60 million).

4 CRITICAL JUDGEMENTS IN APPLYING ACCOUNTING POLICIES (CONTINUED)

(iv)

Goodwill impairment test

The Company tests annually whether goodwill has suffered any impairment, in accordance with its accounting policy. The recoverable amounts of goodwill has sulered any imparment, in acocounting
calculations require the use of cash-generating units are determined based on value calculations require the use of assumptions (Note 15).

If the discount and long-term growth 15).
If the discount and long-term growth rate were different the management's estimates as at 31 December 2015 and 2014, the impact on recognition of imerent than the management's estin
and 2014, the impact on recognition of impairment of goodwill would be as follows:

Discount rate – Future cash flows of cash-generating units are discounted using the discount rate of 12.94 %.
Constant expected future cash flows were used as calculation inn Constant expected future cash flows were used as calculation inputs.

Intengible assets other than software and other intangible assets arose on the acquisition of the Mill Operations segment. At 31 December 2015 the Company performed impairment tests for godwill and the Mill (
The tests did not show any indicalize of impairment tests for goodwill and trad The tests did not show any indication of impairment of the intengible assets.

(v)

As described in Note 3.18 above, the Company reviews the estimated useful lives of property, plant and equipment
at the end of each reporting period, at the end of each reporting period.

(vi) Fair value of assets

Assets carried at fair value are remeasured based on periodic valuations of external independent valuation experts.

5 COMPARATIVE INFORMATION AND RECLASSIFICATION OF OPENING BALANCES

				in thousands of HRK
	Notes	31 December 2014		31 December 2014
		published	reclassified	reclassified
I NON-CURRENT ASSETS
1. Intangible assets		189,501		189,501
2. Property, plant and equipment		148,433		148,433
3. Long-term financial assets		120,160		120,160
4. Long-term receivables II CURRENT ASSETS	(e)	1,363	(1,348)	15
1. Inventories		97,912
2. Short-term receivables	(a),(b),(c), (e),(f)	111,383	47,814	97,912 159,197
3. Short-term financial assets	(a),(b),(c),(d)	100,944	(46,466)	54,478
4. Cash and cash equivalents		1,214		1,214
Prepaid expenses and accrued
income		1,374		1,374
TOTAL ASSETS		772,284		772,284
I EQUITY
1. Subscribed capital		19,016		19,016
2. Share premium		85,379		85,379
3. Revaluation reserves		67,384		67,384
4. Legal reserves		183		183
5. Retained earnings		32,143		32,143
6. Loss for the year		(42,859)		(42,859)
II LUNG-TERM LIABILITIES
1. Deferred tax liabilities		16,846		16,846
2. Liabilities to banks and other financial institutions		51,663		51,663
3. Liabilities to related companies		10,853		10,853
III SHORT-TERM LIABILITIES
1. Liabilities to related companies		5,304		5,304
2. Liabilities to banks and other financial institutions		288,337		288,337
3. Advances received		2,714		2,714
4. Trade payables		115,321		115,321
5. Liabilities for securities		109,802		109,802
6. Taxes, contributions and
similar duties payable		4,301		4,301
7. Other short-term liabilities		5,897		5,897
Accrued expenses and deferred income
TOTAL EQUITY AND LIABILITIES		772,284		772,284

Notes to the unconsolidated financial statements (continued)

For the year ended 31 December 2015 For the year ended 31 December 2015

5 COMPARATIVE INFORMATION AND RECLASSIFICATION OF OPENING BALANCES (CONTINUED)

Sales income Other income	Notes (g)	31 December 2014 published 597,087	reclassified	in thousands of HRK 31 December 2014 reclassified 597,087
Total operating income		8,055 605.142		8,055 605,142
Changes in inventories Material expenses Cost of goods sold Other external costs Staff expenses Depreciation and amortisation Value adjustment of current		3.980 (220,771) (301,388) (41,755) (16,529) (9,252)		3,980 (220,771) (301,388) (41,755) (16,529) (9,252)
assets Other expenses Other operating expenses Total operating expenses	(h)	(13,001) (5,036) (6,451) (610,203)	(5,417)	(18,418) (5,036) (6,451) (615,620)
Net financial result Result before taxation Income tax	(h)	(37,798) (42,859)	5,417	(32,381) (42,859)
Profit / (loss) after taxation		(42,859)		(42,859)

	Notes	2014		in thousands of HRK 2014
		published	reclassified	reclassified
Result before taxation		(42,859)		(42,859)
Operating cash flows	(1),(1),(1),(m),
Cash flows from investing	(n) (1),(j),(k),(l),	(8,559)	14,751	6,192
activities Cash flows from financing	(n)	(209,015)	10,909	(198,106)
activities	(i),(m)	211,878	(25,661)	186,217
Net changes in cash and cash equivalents Cash at the beginning of the		(5,696)		(5,696)
period Cash at the end of the		6,910		6.910
period		1,214		1,214

5 COMPARATIVE INFORMATION AND RECLASSIFICATION OF OPENING BALANCES (CONTINUED)

For the purposes of the publication of the financial statements for the year ended 31 December 2015, the Company disclosed reclassification adjustments to 2014 comparative information, in accordance with the transparency, comparability and integrity of the disclosures required by IAS 8, which are as follows:

a) Interest receivable on loans to related companies (Zdenačka farma d.o.o.) in the amount of HRK 1,000 thousand was reclassified from 'Short-term financial assets' to 'Short-term receivables from related parties'.

(b) Receivables from cooperatives in the amount of HRK 44,343 thousand were reclassified from 'Short-term financial assets' to 'Short-term trade receivables'.

(c) Receivables from related cooperatives in the amount of HRK 1,124 thousand were reclassified from 'Short-term financial assets' to 'Short-term receivables from related parties'.

(d) Within 'Short-term financial assets', HRK 4 thousand were reclassified from 'Investments in securities' to 'Given loans to individuals'.

(e) Current receivables in the amount of HRK 1,348 thousand were reclassified from 'Long-term receivables' to 'Short-term trade receivables'.

(f) Interest receivable on loans to related parties in the amount of HRK 263 thousand was reclassified from 'Other short-term receivables' to 'Short-term receivables from related parties'.

(g) Within 'Sales income', HRK 1,734 thousand were reclassified from 'Service income' to 'Domestic sales of goods'.

(h) Value adjustment of receivables from cooperatives in the amount of HRK 5,417 thousand was reclassified from financial expenses – impairment losses on financial assets charged to value adjustment of current assets, in line with the reclassification of receivables from cooperatives from current financial assets to short-term trade receivables.

(i) In the 2014 statement of cash flows, the cash flow was adjusted by interest paid and received in that period, by adjusting the loss before tax by the net interest expense in the amount of HRK 21,324 thousand, reaulting in a corrected balance of cash flows from operations, and the interest received in the amount of HRK 3,900 thousand was reclassified to cash flows from investing activities, whereas the balance of cash from financing activities was corrected by the interest paid for the period in the amount of HRK 23,710 thousand.

In addition, as a result of the adjustment of the net interest expense to the actual interest paid and collected, the cash flows from operating and financing activities were adjusted by a total of HRK 1,520 thousand.

(i) In the 2014 statement of cash flows, proceeds from the sale of fixed assets for 2014 in the amount of HRK 88 thousand were reclassified from cash flows from operating activities to the cash flows from investing activities.

(k) In the 2014 statement of cash flows, changes in proceeds from received bills of exchange were reclassified within the cash flows from investing activities, by separating them from 'Payments for issued foars' and 'Repayments of given loans' to a separate line item 'Net receipts/(payments) for securities' in the amount of HRK 509 thousand.

(I) In the 2014 statement of cash flows, changes in given loans were reclassified from cash flows from operating activities to the cash flows from investing activities in the net amount of HRK 6,664 thousand and added to the balance of proceeds from repayments of given loans.

(m) In the 2014 statement of cash flows, changes in received borrowings were reclassified from operating cash flows to the cash flows from financing activities in the net amount of HRK 1,194 thousand which were added to the balance of the higher cash paid than proceeds from borrowings.

(n) In the 2014 statement of cash flows, the net proceeds from stock market transactions in the amount of HRK 251 thousand were reclassified from the operating cash flows from investing activities.

The financial statements have been prepared on the principle of consistency. In case of any change in the presentation or classification of financial statement items, comparative amounts are restated accordingly whenever possible.

6 SALES INCOME

		in thousands of HRK
	2015	2014	2013
Sales income - domestic	450.242	527,701	369,650
Sales income - foreign Service income	214.089	47,208	164.131
	17,456	22.178	8,369
	681,787	597.087	542,150

The reporting segments form a part of the internal financial reports are reviewed regularly by the Company's Management Board, as the chief decision-reports are reviewed regularly by performance of the segments and for making operating decisions.

The Company monitors its performance through the following operating segments:

Mill operations
Wholesale
Other (services, cattle growing, other activities)

Segment information - industry analysis:

The operating income of the Company, analysed by reporting segments presented in accordance with IFRS 8, and the reconciliation of the segment performance with the profit or loss on taxation as reported in the unconsolidated statement of comprehensive income, is provided below:

			in thousands of HRK
	2015	2014	2013
Milling Operations	298.594	259,536	211.567
Wholesale Other	364.647	313,424	319,329
	18,546	24,127	11.254
	681,787	597,087	542,150

Geographic analysis

	In thousal lus of FRK
	2015	2014	2013
Croatia	467,666	548,751	377,965
Serbia	179,204	6,984	11,791
Italy	11,610	11,402	63,761
Bosnia and Herzegovina	10,642	7,237	9,576
Slovenia	6,074	10,390	1,576
France	4,293		5,913
Hungary	2,186	2,951	5,612
Libya	112
Switzerland		6,155	33,531
Romania	-	3,164	5,875
Slovakia		53
The Netherlands
Other countries			16,160 10,390
	681.787	597.087	542 150

7 OTHER INCOME

	in thousands of HRK
	2015	2014
Subsequent credit notes from suppliers	7,318	4,326
Income from the collection of damages by litigation	4,836
Inventory surplus	2,258	1,352
Subsequently identified income	1,316	1,576
Income from grants	325	286
Other income	612	515
	16,665	8,055

Damages credited to income upon the resolution of a legal action with PZ Osatina amount to HRK 4,836 thousand (2014: nil).

8 MATERIAL EXPENSES

The structure of material expenses is as follows:

	in thousands of HRK
	2015	2014
Cost of raw material	226,759	199,002
Energy used inventory spillage, breakage and similar costs Cost of inventories for sold livestock Cost of small inventory Other material expenses Cost of raw material	17,324 3,478 1,082 302 275 249,220	16,385 3,149 1,662
			301
			272 220,771
		Cost of goods sold		326,949

		Telecommunication and transportation expenses	23,007	19,363
Selling costs (freight-forwarding, goods handling, etc.)	4,945	4.450
Rental costs	4,218	7,787
External milling costs	2,620	2,033
Maintenance and security services	2,569	2,658
Intellectual services	1,949	1,568
Quality control costs	1,866	1,310
Promotions and sponsorships	1,214	782
Other external costs	2,127	1,804
Other external costs	44,515	41,755
	620,684	563,914

Inventory spillage, breakage and similar costs comprise mostly the standard spillage and breakage in the production in the amount of HRK 3,313 thousand (2014: HRK 2,951 thousand).

9 STAFF EXPENSES

	in thousands of HRK
	2015	2014
Salaries	12.660	10,107
Income tax and contributions from salaries costs	6.220	4.069
Contributions on salaries costs	3.194	2.353
	22,074	16,529

10 VALUE ADJUSTMENT

The entire value adjustment charge for 2014 consists of impairment losses on trade receivables and receivables from cooperative farms, determined on the basis of impairment test of the receivables. No indications of impairment were identified as a result of the impairment test performed in 2015 (Note 19).

11 OTHER EXPENSES

	in thousands of HRK
	2015	2014
Reimbursement of expenses to employees	2,904	924
Bank services	1,701	2,004
Contributions, membership fees and similar	622	512
Insurance premiums	605	715
Daily allowances	198	210
Taxes independent of the result	70	298
Other expenses	273	373
	6,373	5.036

Costs reimbursed to employees in 2015 comprise mainly termination benefits paid to the employees of the Beje Mills and PIK Vinkovci in the total amount of HRK 2,042 thousand (2014: HRK 40 thousand), based on the decision to optimise the production process. The remaining balance represents the commutation allowance cost.

12 OTHER OPERATING EXPENSES

	in thousands of HRK 2015 2014
Legal actions
Subsequently approved cassa sconto	5,248 4.442	4,867
Entertainment and hospitality	418	315
Spillage, breakage and similar damage on goods	309	430
Donations and sponsorships	169	101
Fines, penalties and damages	03	486
Other operating expenses	457	252
	11,136	6,451

The costs of legal action relate to a legal action involving PZ Osatina and amount to HRK 5,284 thousand (2014: nil).

13 FINANCIAL INCOME AND EXPENSES

Financial income

	in thousands of HRK
	2015	2014
Interest on given loans	2,590	3,388
Exchange differences	2,449	1,288
Late-payment interest	2,368	1,784
Gains from stock transactions	848	251
Gains from participating interest		11
Other financial income	1,385	55
	9,640	6,777

Financial expenses

			in thousands of HRK
	2015	2014	2013
Interest expense	16,243	19,264	17,013
Discount on bills of exchange	4,302	6,649	2,132
Default interest	3.488	583	1,049
Exchange differences	1,412	1,613	2,227
Losses on value adjustment of financial assets	115	11,036
Other financial expenses	4	13	2
	25 564	20 158	99 472

14 INCOME TAX

The tax expense/ (income) comprises the following:

in thousands of HRK
2015	2014
3,543
3,543

Adjustment by the effective tax rate

The following table analyses the tax expense recognised in the statement of comprehensive income using the statutory rate:

	in thousands of HRK
	2015	2014
Profit/(loss) before taxation	12,616	(42,859)
Income tax at the rate of 20% (2014: 20%).	2,523	(8,572)
Effect of non-taxable income		(317)
Effect of tax non-deductible expenses	1.080	8,829
Effect of unused tax losses and tax offsets not recognised as deferred tax
assets	(60)
Income tax expense from continuing operations recognised in profit or
loss	3.543	(80)

14 INCOME TAX (CONTINUED)

Unused tax losses

Under the applicable tax legislation, the Company reported no tax losses available for carry forward at 31 December 2015 (31 December 2014: 15 our and in the losses available for carry forward at 31 December 2015
carried forward expire five vears from the vear of the amount of HRK 299 thou carried forward expire five years from the year of their origination.

The gross balance of unused tax losses at the reporting date was as follows:

	in thousands of HRK
Tax losses carried forward available for use until 2019	2015	2014
		299
		299

Deferred tax liabilities are arising from:

2015 Non-current asset adjustments	Opening balance 16.846	Recognised in profit or loss (728)	In thousands of HRK Closing balance 16.118
Deferred tax liabilities	16,846	(728)	16.118

2014 Non-current asset adjustments	Opening balance 21,677	Recognised in profit or loss (4,831)	in thousands of HRK Closing balance 16.846
Deferred tax liabilities	21,677	(4,831)	16.846

Movements in deferred tax liabilities:

	31 December 2015	in thousands of HRK 31 December 2014
Balance at 1 January	16.846	21,677
Decrease	(728)	(4.831)
	16,118	16.846

Under Groatian regulations, the Tax Administration may at any time audit the books and records of the Company in a period of three year in which the year in which the books and impose additional taxes and penalies. The Management Board of the Company is not any circumstances which may give rise to a potential material liability in this respect.

Granolio d.d., Zagreb

ASSETS ﺎ TANGIBI

5 INTANGIBLE ASSETS
Movements in intangible assets in 2015					in thousands of HRK
	Goodwill	concessions, licenses Trademarks,	Customer list	Software	TOTAL
Cost
Balance at 1 January 2015	60,379	120.000	10.000	1,446	191,825
Additions				410	410
Balance at 31 December 2015	60.379	120.000	10.000	1.856	192.235
Accumulated amortisation
Balance at 1 January 2015			972	1,352	2,324
Charge for the year			1.666	103	1.769
Balance at 31 December 2015			2.638	1.455	4.093

Net book value at 1 January 2015	60,379	120,000	9,028	04	189.501
Net book value at 31 December 2015	60.379	120.000	7.362	401	188.142
Movements in intangible assets in 2014					in thousands of HRK
	Goodwill	concessions, licenses Trademarks.	Customer list	Software	Goodwill
Cost
Balance at 1 January 2014				1,331	1,331
Additions	60,379	120.000	10.000	115	190.494
Balance at 31 December 2014	60.379	120.000	10.000	1.446	191.825
Accumulated amortisation
Balance at 1 January 2014				1,190	1,190
Charge for the year			972	162	1.134
Balance at 31 December 2014			972	1.352	2.324

Net book value at 1 January 2014			-	141	141
Net book value at 31 December 2014	60.379	120.000	9.028	94	189.501

Intangible assets in the amount of HRK 120,000 thousand (2014: nil) have been pledged as collateral for the Company's borrowings (Note 23).

Granolio d.d., Zagreb

Notes to the unconsolidated financial statements (continued) For the year ended 31 December 2015

16 PROPERTY, PLANT AND EQUIPMENT

Movements in property, plant and equipment in 2015

in thousands of HRK

	Land	Buildings	Plant, equipment and tools	Other tangible assets	Assets under construction	TOTAL
Cost
Balance at 1 January 2015	8,182	162.026	87,633	175	1,591	259.607
Additions		452	1,956	5	1,217	3,627
Transfers			442		(442)
Disposals			(46)			(46)
Retirement			(340)	(5)		(345)
Balance at 31 December 2015	8.182	162,478	89,645	172	2.366	262,843
Accumulated depreciation
Balance at 1 January 2015		45,202	65,878	94		111.174
Depreciation of revaluation		2.165	1.472			3.637
Charge for the year		1,719	2.862			4,582
Disposals			(24)			(24)
Retirement			(340)			(341)
Balance at 31 December 2015		49,086	69.848	ਰੇ ਕੇ		119.028
Net book value at 1 January 2015	8.182	116.824	21,755	81	1,591	148,433
Net book value at 31 December 2015	8.182	113.392	19,797	78	2.366	143,815

Tangible assets in the anount of HRK 133,398 thousand have been pledged as collateral for the Company's borrowings (Note 23).

Granolio d.d., Zagreb

16 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

Movements in property, plant and equipment in 2014

	Land	Buildings	Plant, equipment and tools	Other tangible assets	Assets under construction	TOTAL
Cost
Balance at 1 January 2014	8,182	160.415	80.303	143	245	249.288
Additions		163	3.542	32	6.832	10.569
Transfers		1.448	4,038		(5,486)
Disposals			(250)			(250)
Balance at 31 December 2014	8,182	162.026	87.633	175	1.591	259,607
Accumulated depreciation
Balance at 1 January 2014		41.354	61.821	વેરૂ
Depreciation of revaluation		2,165	1.474			103.268 3.639
Charge for the year		1.683	2.795			4.479
Disposals			(212)			(212)
Balance at 31 December 2014		45,202	65.878	94		111.174

Net book value at 1 January 2014	8.182	119.061	18,482	50	245	146.020
Net book value at 31 December 2014	8,182	116,824	21.755	81	1.591	148,433

17 NON-CURRENT FINANCIAL ASSETS

(a) Investment in subsidiaries

	31 December 2015	in thousands of HRK 31 December 2014
Zdenka mliječni proizvodi d.o.o., Veliki Zdenci Zitar d.o.o., Donji Miholjac Zdenačka farma d.o.o., Veliki Zdenci Prerada žitarica d.o.o., Grubišno Polje	42,767	42,754
	39.621	39,332
	27.661	11.661
	5.206	5,206
	115.255	98 053

(b) Investments at fair value through profit or loss

	31 December 2015	in thousands of HRK 31 December 2014
Zagrebačke pekarne Klara d.d., Zagreb Prehrana trgovina d.d., Zagreb Zitozajednica d.o.o., Zagreb	19,925	19,925
	536	536

	20.462	Car UC

Ownership interest

	31 December 2015	31 December 2014
Zdenačka farma d.o.o., Veliki Zdenci	100.00%	100.00%
Prerada žitarica d.o.o., Grubišno Polje	100.00%	100.00%
Zdenka mliječni proizvodi d.o.o., Veliki Zdenci	50.00%	49.99%
Zitar d.o.o., Donji Miholjac	49.69%	49.69%
Zagrebačke pekarne Klara d.d., Zagreb	18.25%	18.25%
Prehrana trgovina d.d., Zagreb	11.48%	11.48%
Zitozajednica d.o.o., Zagreb	1.28%	1.28%

In 2015 the Company purchased additional shares in Zdenka mliječni proizvodi d.o.o. of 0.01 percent and increased its total ownership interest from 49.99 percent to 50.00 percent.

(c) Given loans, deposits and similar

	31 December 2015	in thousands of HRK 31 December 2014
Loans to individuals Guarantee deposits	550	329
	351	416
	901	745

Guarantee deposits were furnished as a security for obligations under finance lease contracts.

Movements in long-term given loans are presented in Note 20.

18 INVENTORY

Raw materials	31 December 2015	in thousands of HRK 31 December 2014
	41,614	11.433
Merchandise	7,886	82,061
Finished products	3.412
Non-invoiced goods		3,170
Work in progress	1,038	391
	749	857
	54,699	97,912

Since 2015 the Company has been accounting for wheat as raw material, while in 2014 it was accounted for as merchandise (at 31 December 2015 the balance of wheat on stock at the Company amounts to ras
thousand and at 31 December 2014 the balance of wheat on stock at the Company amo thousand and at 31 December 2014 the balance was HRK 65,357 thousand).

19 TRADE RECEIVABLES, RECEIVABLES FROM THE STATE AND OTHER INSTITUTIONS AND OTHER RECEIVABLES

a) Trade receivables

			in thousands of HRK
	31 December 2015	31 December 2014	1 January 2014
Domestic Foreign	96.680	112.530	81,695
	20,420	9,374	12,470
Cooperators	30,349	48.507	50,322
Value adjustment	(22,583)	(23,888)	(7,046)
	124,866	146,523	137,441

Amounts owed by cooperative farmers relate to intermediary products (seeds) sold to farmers who are at the same time suppliers of raw material for the production and of merchandise.

Value adjustment of trade receivables

	in thousands of HRK
	2015	2014	2013
Balance at 1 January	23.888	7,046	7,108
Increase - trade receivables		13.001	35
Increase - cooperators Subsequent recovery of impaired trade receivables and		5,417
receivables from cooperative farmers	(1.305)	(1.576)	(97)
Balance at 31 December	22,583	23.888	7.046

19 TRADE RECEIVABLES, RECEIVABLES FROM THE STATE AND OTHER INSTITUTIONS AND OTHER RECEIVABLES (CONTINUED)

a) Trade receivables (continued)

Maturity analysis of receivables not impaired:

	in thousands of HRK
	31 December 2015	31 December 2014	1 January 2014
Not yet due	71.084	80,912	69.691
0 - 90 days past due	36,283	53,656	44,734
91 - 180 days past due	11.685	6.372	8.576
181 - 360 days past due	666	772	3,681
> 360 days past due	5,148	4.811	10,759
	124,866	146.523	137.441

All the trade receivables and receivables from cooperative farmers were tested for impairment, and the Company assessed that all the receivables grouped as at 31 December 2015 as past due beyond 360 days are recoverable.

b) Receivables from the State and other institutions

	in thousands of HRK
	31 December 2015	31 December 2014
VAT refund	5,474	193
Overpaid income tax		1.466
Other receivables from the State and other institutions		152
	5 474	1 811

c) Other receivables

	in thousands of HRK
	31 December 2015	31 December 2014	1 January 2014
Receivables under assignment and offsetting arrangements	1,798	1.626	2.690
Prepayments made	1,950	1.087	4.105
Interest receivable	357	556	195
Other receivables	gg	eg	60
	4.204	3,338	7,050

20 Current Financial Assets

a) Investments in securities

	31 December 2015	in thousands of HRK 31 December 2014
Investments in stocks at fair value through profit or loss	542	494
Investments in bills of exchange Investments in options	154	309
		68
	દકેદ	871

b) Given loans, deposits and similar

		in thousands of HRK
	31 December 2015	31 December 2014	1 January 2014
Loans to legal entities Short-term loans to individuals Deposits	5.500		11
	829	4,350	4,137
	46	64	251
	6,375	4.414	4.399

	Opening January 2015 balance at 1	receivables Increase in	financial assets receivables to Transfer from		portion of long- Transfer of a receivables to term	Exchange	Closing balance at 31
Given long-term loans				Principal repaid	short-term	differences	December 2015
Loans to individuals	329	30	1	(58)	249
Total long-term loans	329	30		58	249	1	550
Short-term loans						-	550
Loans to individuals	4,350			(3,267)	(249)	(5)
Loans to related parties	49,193	19.816	4,392	(37,999)			829
Loans to third parties		25,750		(20,250)			35,402
Total short-term loans	53.543	45.566	4.392	(61.516)	(249)	(5)	5.500
TOTAL	53.872	45.596	4.392	(61,574)		(5)	41.731 42.281
Movement in given loans in 2014					portion of long- Transfer of a
	Opening January 2014 balance at 1	receivables Increase in	Principal repaid	Principal written off/written down	receivables to short-term term	differences Exchange	Closing balance at 31
Given long-term loans							December 2014
Loans to individuals	300	112	(15)		(68)
Total long-term loans	300	112	(15)		(୧୫)		329
Short-term loans							329
Loans to individuals	4,137	872	(454)	(278)	68	9
Loans to related parties	50,258	22.658	(21,401)	(2,322)			4.350 49.193
Loans to third parties	11	543.000	(543,000)	(11)
Total short-term loans	54,406	566.530	564.855)	2,611)	68	9	53.543
TOTAL	54.706	566.642	(564,870)	(2,611)		9	53.872

Granolio d.d., Zagreb

Notes to the unconsolidated financial statements (continued) For the year ended 31 December 2015

20 CURRENT FINANCIAL ASSETS (CONTINUED)

....

Notes to the unconsolidated Tinancial statements (continued)





	For the year ended 31 December 2015

20 CURRENT FINANCIAL ASSETS (CONTINUED)

Movement in given loans in 2013

Given long-term loans Total long-term loans Loans to individuals Loans to individuals Short-term loans	balance January 268 963 2013 268 Opening at	Increase in receivables 100 3.247 100	Principal repaid (141)	portion of long- Transfer of a receivables to short-term term 68 (୧୫) 168	December 2013 Closing 300 balance at 31 300 4.137
Loans to related parties	46,671	18.698	(15,111)		50,258
Loans to third parties		240.000	(240,000)
Total short-term loans	47.645	261.945	(255,252)	68	54,406
TOTAL	47,913	262,045	(255,252)		54.706

Granolio d.d., Zagreb

21 CASH AND CASH EQUIVALENTS

	in thousands of HRK
	31 December	31 December
Cash in bank	2015 15.581	2014
Foreign currency accounts	1.390	858 355
Cash on hand	2
	16.973	1,214

22 EQUITY

Equity represents own permanent sources of funding the operations of the Company. It consists of the share capital, legal reserves, revaluation reserves, retained earnings and the result for the year.

Pursuant to a decision adopted in the General Shareholders Meeting in 2012, Granolio d.o.o. changed its legal form from a Croatian limited liability company (d.o.o.) into a joint stock company through an issue of ordinary shares. The share capital of the Company in the amount of HRKK 5,000 thousand was divided into 500,000 ordinary Aseries shares, with a nominal value of HRK 10 each.

The new legal form of the Company was registered at the Commercial Court in Zagreb on 21 February 2012.

Pursuant to the decision of the Company's Shareholders the share capital of the Company was increased from HRK 5,000 thousand to HRK 12,000 thousand by transferring retained earnings in the amount of HRK 7,000 thousand. The share capital was increased through an issue of ordinary shares with a nominal value of HRK 10 per share, subscribed by the shareholders in proportion to their respective shares in the Company's capital as of that date. The share capital increase was registered at the Commercial Court in Zagreb on 28 September 2011.

Pursuant to the decision of the Company shareholders dated 2 September 2014, the share capital was increased by an additional contribution of HRK 7,016,430.00 from HRK 12,000 thousand to HRK 19,016,430.00. Based on a public invitation to the subscription of the new shares, the share capital was increased by cash contributions made based on an issue of 701,643 new non-materialised shares in the nominal value of HRK 10 per share at a single final issue price per share of HRK 134.00. The Company made a public invitation to subscribe minimum 671,642 up to maximum 789,157 new shares. The share subscription took place in the period from 25 to 27 November 2014.

As of 31 December 2015, the Company's subscribed capital, as registered in the court registry, amounts to HRK 19,016,430 thousand. The total number of shares is 1,901,643, and the nominal value per share amounts to HRK 10. The outcome of the public share offering includes a capital gain in the amount of HRK 87,004 thousand, which was reduced in the period from 1 January 2014 to 31 December 2015 by the costs of the share capital increase incurred in that period which amounted to a total of HRK 2,817 thousand.

22 EQUITY (CONTINUED)

The ownership structure of the share capital at 31 December 2015 is presented below, with the largest 10 shareholders holding 95.09 percent of the shares at that date:

	31 December 2015		31 December 2014
	No. of shares in thousands	Ownership in %	No. of shares in thousands	Ownership in %
Hrvoje Filipović	1.155	60.74%	1.155	60.74%
Podravska banka d.d.	164	8.63%		0.00%
Hypo Alpe-adria-bank d.d./PBZ.CO. B- Category mandatory pension fund Societe Generale-Splitska banka	150	7.89%	150	7.89%
d.d./Erste plavi B-Category mandatory pension fund	149	7.85%	149	7.85%
HOK - osiguranje d.d.	75	3.93%	45	2.36%
Primorska banka d.d. Rijeka/Joint account of a legal person	35	1.82%	15	0.78%
PBZ d.d.	28	1.45%	28	1.47%
Hypo Alpe-adria-bank d.d./SZAIF d.d.	27	1 42%	30	1.58%
Erste & Steiermaerkische Bank d.d./CSC	15	0.79%	15	0.79%
Primorska banka d.d. Rijeka/Joint account of private banking customers - DF	11	0.58%	27	1 420%
Others	93	4.91%	288	15.12%
	1,902	100.00%	1,902	100.00%

23 LIABILITIES TO BANKS AND OTHER FINANCIAL INSTITUTIONS

		in thousands of HRK
	31 December 2015	31 December 2014
Long-term liabilities
Bank loans	282,290	50,434
Finance lease	715	1,229
	283,005	51,663
Short-term liabilities
Bank loans	60,647	287,136
Finance lease	510	1,201
Liabilities under assumed payment obligations (cession, assignment and debt assumption contracts)	1,500
	62,657	288,337
	345,662	340,000

Summary of borrowing arrangements

On 31 July 2015 the Company signed an agreement on a long-term club facility of HRK 300 million. The club facility involves Erste&Steiermärkische Bank d.d., Privredna banka Zagrebačka banka d.d. (ZABA), as the mandate agents and the creditors, and Privredna banka Zagreb d.d. as the Agent. The banks creditors have equal participation in the loan facility, i.e. each with HRK 100 million.

The long-term club facility was granted in Croatian kunas and used by the Company to extinguish its existing longterm loan debt and a portion of its current liabilities.

The Company is subject to covenants under the syndicated loan a part of which were not met at 31 December 2015. The banks creditors have not exercise their right to early repayment subsequent to the date of issue of these financial statements, as confirmed in their letter of intent.

The portion of the long-term debt, including the finance lease obligations, which falls due until 31 December 2016 amounts to HRK 15,690 thousand and is presented under current liabilities. The remaining debt falls due in the period from 1 January 2017 until August 2025.

Short-term loans received by the Company are intended for working capital purposes, financing the sowing and purchase of wheat.

At 31 December 2015 non-current assets mortgaged as collateral for the bank loans amount to HRK 335,786 thousand (31 December 2014: HRK 215,471 thousand).

23 LIABILITIES TO BANKS AND OTHER FINANCIAL INSTITUTIONS (CONTINUED) Liabilities to banks and other financial institutions in 2015

	January 2015 Opening balance at 1	liabilities Increase in	Principal repaid	Transfer of a portion of long-term loans to short-term loans	differences Exchange	2015 Closing balance at 31 December
Long-term bank loans Long-term loans	1,229 50,434	300.000	(52,819)	(15,182) (508)	(143) (6)	715 282,290
Long-term finance lease obligations Total long-term loans	51,663	300,000	(52,819)	(15,690)	(149)	283,005
Liabilities under assumed payment obligations Short-term bank loans Short-term loans	36 287,1	102.912	(343,296)	15,182	(1,287)	60.647
(cession, assignment and debt assumption contracts)	,201	21.020	(19,520) (1,200)	508		510 1.500
Current portion of the lease obligations	288,337	123.932	(364,016)	15,690	(1,286)	62,657
Total short-term loans TOTAL	340,000	423,932	(416,835)		(1,435)	345.662
Liabilities to banks and other financial institutions in 2014	January 2014 balance 1 at Begining	Increase in liabilities	Principal repaid	portion of long- term loans to short-term loans Transfer of a	Exchange differences	at 31 December 2014 Closing balance -
Long-term finance lease obligations Long-term bank loans Long-term loans	446 84.056	2,833	(836)	(33.685) (1,201)	63 (13)	1,229 50.434
Total long-term loans	84.502	2,833	(836)	(34,886)	50	51.663
Short-term bank loans Credit cards liabilities Short-term loans	683 214,770	365,384	(326,843) (682)	33,685	(1) 140	287,136
obligations (cession, assignment and debt Current portion of the lease obligations Liabilities under assumed payment assumption contracts)	640 12.204	5,259	(17,463) (640)	1,201		1,201
Total short-term loans	228,297	370.643	(345,628)	34.886	139	288,337
TOTAL	312,799	373,476	(346,464)		183	340.000

Granolio d.d., Zagreb

23 LIABILITIES TO BANKS AND OTHER FINANCIAL INSTITUTIONS (CONTINUED)

The bank loans and finance leases mature as follows:

					in thousands of HRK
	Balance 31 December 2015	2016	2017	2018		2019 From 2020
Domestic banks	342,937	60.647	62.180	15,180	17.710	187.220
Finance lease Liabilities under assumed payment obligations (cession, assignment and	1,225	510	438	173	104
debt assumption contracts)	1,500	1.500
	345,662	62,657	62,618	15.353	17.814	187,220

The foreign-currency balance of the loans is shown in the following table:

	31 December 2015
Total liabilities to financial institutions, in thousands of EUR	160	9.139

24 SHORT-TERM LIABILITIES

(a) Trade payables

		in thousands of HRK
	31 December 2015	31 December 2014
Domestic	92.195	106,898
Foreign	3,788	8.032
Amounts not yet billed	1.037	391
	97.020	115,321

The maturity structure of trade payables at 31 December 2015:

	in thousands of HRK
31 December 2015	31 December 2014
31.342	69.626
56,800	40.150
6.609	4.149
948	588
1.321	808
97.020	115,321

24 SHORT-TERM LIABILITIES (CONTINUED)

(b) Liabilities for securities

The entire balance of liabilities for securities relates to amounts payable under issued bills of exchange.

(c) Taxes, contributions and similar duties payable

	in thousands of HRK
	31 December 2015	31 December 2014
VAT payable	4,533	3,550
Income tax payable	3,023
Taxes and contributions from and on salaries	775	567
Other taxes and contributions	210	184
	8,541	4,301

(d) Other short-term liabilities

		in thousands of HRK
	31 December 20115	31 December 2014
Interest - liabilities towards banks	3.012	4,879
Liabilities to employees	1.094	996
Other short-term liabilities	41	22
	4,147	5.897

25 COMMITMENTS

At 31 December 2015 the Company has commitments under operating lease arrangements entered into for tangible fixed assets in the total amount of HRK 2,165 thousand and rent agreements in the total amount of HRK 2,054 thousand which are not yet active or disclosed in the statement of financial position.

The contractual commitments under operating leases for vehicles and production equipment as well as under space rental agreements are as follows:

	31 December 2015	2016	2017	2018		2019 From 2020
Operating leases	2.165	876	750	419	120
Rentals	2.054	545	383	352	352	422
	4.219	1,421	1.133	771	472	422

in thousands of HRK

26 RELATED-PARTY TRANSACTIONS

				in thousands of HRK
				31 December 2015
	Assets		Liabilities
	Trade and other receivables	Given loans	Long-term liabilities	Short-term liabilities
Zitar d.o.o., Donji Miholjac Zdenačka farma d.o.o., Veliki	811			440
Zdenci Zdenka- mliječni proizvodi d.o.o.,	2.561	15.281
Veliki Zdenci Prerada žitarica d.o.o., Grubišno				35
Polje				116
Stan arka d.o.o., Zagreb	88	14.810
Key management personnel	420	5,311
	3.880	35.402		591

in thousands of HRK

				31 December 2014
	Assets		Liabilities
	Trade and other receivables	Given loans	Long-term liabilities	Short-term liabilities
Zitar d.o.o., Donji Miholjac	1.041	2,550	10.853	4.468
Zdenačka farma d.o.o., Veliki Zdenci Zdenka- mliječni proizvodi d.o.o.,	1,828	30,814
Veliki Zdenci Prerada žitarica d.o.o., Grubišno				2
Polje				834
Stan arka d.o.o., Zagreb	4.392	10,718
Key management personnel	264	5,111
	7,525	49,193	10,853	5.304

in thousands of HRK
---------------------	--	--

				1 January 2014
	Assets		Liabilities
	Trade and other receivables	Given loans	Long-term liabilities	Short-term liabilities
Zitar d.o.o., Donji Miholjac	1.477		13,365	3,253
Zdenačka farma d.o.o., Veliki Zdenci Zdenka- mliječni proizvodi d.o.o.,	578	34.856
Veliki Zdenci Prerada žitarica d.o.o., Grubišno				32
Polje				48
Stan arka d.o.o., Zagreb	4,392	10.604
Tepih galerija d.o.o., Zagreb	366	1,148
F.I.V.E.S. d.o.o., Zagreb	366	1,173
Key management personnel		2.477
	7.179	50.258	13,365	3.333

26 RELATED-PARTY TRANSACTIONS (CONTINUED)

Income and expenses arising from transactions with related parties for the years ended 31 December 2015 and 31 December 2014 were as follows:

				in thousands of HRK
	2015		2014
	Income	Expenses	Income	Expenses
Zitar d.o.o., Donji Miholjac Zdenačka farma d.o.o., Veliki	4,986	(8,511)	14.117	(15,312)
Zdenci Zdenka- mliječni proizvodi d.o.o.,	2.677	(231)	3,217	(224)
Veliki Zdenci Prerada žitarica d.o.o., Grubišno		(41)		(83)
polje	50	(1,398)	91	(2,342)
Stan arka d.o.o., Zagreb	88		3,027
	5,391	(10,181)	20,452	(17,971)

The key management personnel consists of the members of the Management Board of Granolio d.d.

Remuneration paid to the key management personnel in 2015 amounts to HRK 2,831 thousand (2014: HRK 1,363 thousand).

The total remuneration paid to the members of the Supervisory Board in 2015 amounts to HRK 187 thousand (2014: HRK 194 thousand).

27 EARNINGS PER SHARE

		in thousands of HRK
	31 December 2015	31 December 2014
Profit (Loss)	9.073	(42,859)
Profit/(Loss) attributable to the shareholders	9.073	(42,859)
The weighted average number of ordinary shares used in the calculation of the basic earnings per share	1.901.643	1,239,003
Earnings per share (in kunas and lipas)	4.77	(34.59)

28 RISK MANAGEMENT

28.1 Financial risks

Equity risk management

Net debt-to-equity (Gearing ratio)

The Company reviews the capital structure annually. As part of this review, the cost of capital and the risks associated with each class of capital are presented.

The gearing ratio at the date of the statement of financial position was as follows:

		in thousands of HRK
Debt (long-term and short-term loans and liabilities for	31 December 2015	31 December 2014
securities)	425,325	447,372
Lease liabilities (long-term and short-term)	1.225	2.431
Cash and cash equivalents	(16,973)	(1,214)
Net debt	409,577	448,589
Equity	169,855	161,246
Net debt-to-equity ratio	241%	278%

Debt is defined as long-term and short-term loans, liabilities under securities and lease obligations. Equity represents the value of capital and reserves.

The Company's capital consists of a debt, which includes received loans and leases, cash and cash equivalents and of the equity attributable to the shareholders comprising share capital, reserves, retained earnings and profit for the year.

Categories of financial instruments

	in thousands of HRK
	31 December 2015	31 December 2014
Financial assets
Cash	16,973	1,214
Loans and receivables	181,391	213,998
Financial liabilities at amortized cost
Loans received and liabilities for securities	426,550	449,803
Trade payables	97,020	115,321
Other liabilities	8.128	24,768

Financial risk management objectives

The Company finances a part of its operations using foreign-currency denominated borrowings. Therefore, the Company is subject to an impact of changes in the applicable foreign exchange and interest rates. The Company is also exposed to credit risk which arises from the sales it has made with deferred payment.

The Company seeks to minimise the effects of these risks.

28.1 Financial risks (continued)

Market risk management

The largest market on which the Company provides its services is the market of the Republic of Croatia. The Company's Management Board determines the prices is the Republic of Croatia. The Floatia. The Prodia. The purchase function is centralised, which in itself provides the Company an image of a respectable customer with a good negotiating position from the start.

Currency risk

The Company is exposed to the risk of changes in foreign exchange rates. The exchange rate risk arises from the portion of the Company's loan debt tied the movements in the exchange rate risk arises from the the euro. Significant fluctuations in the HRK/EUR exchange rate of the Croatian kuna against currency denominated assets and liabilities. In addition, according to the 2015 data, the Company's foreign, and around 30 percent of its total revenue on foreign markets and in euros, which is another aspect of the Company's performance being subject to the fluctuations in the EUR/HRK exchange rate.

At the reporting date, the Company did not use any financial instruments to hedge its position from unfavourable exchange rate movements.

The table below analyses the carrying amounts of the Company's foreign-currency denominated monetary assets and monetary liabilities at the reporting date.

				In thousands of the original
	Assets		currency Liabilities
	31 December 2015	31 December 2014	31 December 2015	31 December 2014
European Union (EUR)	2,211	749	500	10.099

Foreign currency sensitivity analysis

The Company is mainly exposed to the fluctuations in the exchange rate of the Croatian kuna against the Euro (EUR) because this is the currency in which the majority of intermediary food product purchase and sale transactions on international markets is carried out.

The following table details the Company's sensitivity to a 5-percent increase and decrease of the Croatian kuna against the relevant currency. The 5-percent sensitivity rate represent the managements assessment of the reasonably possible change in the foreign exchange rate. The sensitivity analysis includes only uitstanding foreign currency denominated monetary items and adjusts their translation at the year end for the 10-percent change in the relevant foreign exchange rate. A positive number below indicates an increase in profit or equity where the Groatian kuna strengthens 5 percent against the relevant currency. For a 5 percent weakening of the Croatian kuna against the relevant currency, there would be an equal and opposite impact on the profit or equity, and the balances below would be negative.

in thousands of HRK

	Increase / decrease of exchange rate	Effect on profit before taxes
2015
EUR	+5%	653
	-5%	(653)
2014
EUR	+5%	(3,582)
	-5%	3,582

28.1 Financial risks (continued)

Credit risk

The Company is exposed to the risk of default of a portion of its trade receivables. The Company transacts generally with retail chains with which it has a long history of cooperation. The Company transacts
is lower and present mainly to the city is a long history of cooperation. is lower and present mainly to the extential issues in the relail industry. The Company's credit risk industry. The Company seeks to minise its credit risk exposure by monitoring the financial position of its customers, applying strict collection measures and obtaining various instruments of collateral such as promissory notes and bills of exchange.

In addition to credit risk arising from trade debtors, the Company is also exposed to credit risk from dealing with cooperative farmers in the production of grains and oleaginous plants, as it extends with them for required seeds and intermediary products during the sowing season. The cooperative famers generally settle the liabilities for the intermediary products and seeds by delivering oleaginous plants and crops if the parties agree on the product price during the harvest season. It is possible and it hoppens and crops if the parties arrest of the fail to produce crops and oleaginous plans in quantities sufficient to settle the commodity loans for a variety of reasons. The Company protects itself from such situations by obtaining additional online for a variety o guarantees of the agricultural farm owners, their family members, establishing pledge on the agricultural equipment and facilities, fiduciary title to harvested crops or grains on stock, co-ownership of the crops, and similar. The instruments to secure the settlement are negotiated separately with each individual farmer, depending on the relationship history.

Where an individual farmer cannot repay a commodity loan due to unfavourable weather conditions and/or market prices of crops/oleaginous plants, the Company enters into a deferred payment arrangement with such farmers at a certain interest rate, a settlement arrangement involving the next season's harrest or settlement in another crop not affected by poor weather conditions (e.g. rain during wheat havest may reduce the wheat quility, but the the same time improve the quality of crops harvested in the autumn). It is common for farmers to sow several different types of crops/plants to reduce the risk of poor weather conditions adversely affecting a particlar crop/plant, but also as a safeguard against unfavourable movements in the prices of a particular crop, i.e. to disperse the risk.

In the course of its operations, the Company enters into factoring contracts and/or discounted bills with factoring houses. The ultimate risk arising from the recoverability of the principal debtor is borne by the Company. At the reporting date, the contingent liabilities of the Company arising from from from from the byth recourse amount to HRK 46.5 million (2014: HRK 128.9 million).

Interest rate risk

Given the level of debt owed to financial institutions, which mostly bears interest at a variable rate based on benchmark interest rates (EURIBOR, LIBOR, ZIBOR and interest rates on the treasury bills of the Croatian Ministry of Finance), the Company is exposed to the risk of growth in interest rates. At the reporting date, the Company did not use any financial instruments to hedge its position from unfavourable interest rate movements.

As the Company borrows both at fixed and variable rates, it is exposed to the interest rate risk. A vast majority of the loans raised by the Company bear interest at variable rates.

The sensitivity analysis below is based on the risk of changes in interest rates at the statement of financial position. For variable-rate debt, the analysis is prepared assuming the amount of the liability outstanding at the date of the statement of financial position was outstanding for the whole year. If the interest rates would change by 0.5 percent, and all other variables remained constant, there would be a change in the interest expense of the Company in the amount of HRK 1,703 thousand at 31 December 2015 (2014: HRK 1,583 thousand). The increased level of long-term debt at variable rates increases the impact of a potential change in the interest rates on the Company's profit.

28.1 Financial risks (continued)

Liquidity risk

There is a risk that the Company may not be able to meet all of its obligations as they fall due, which may be caused by inadequate level of recoverability of amounts owed by customers, inappropriately matched may be of the debt, or the inability to obtain loans from financial institutions, in order the liquidity isk, the liquidity risk, the Company applies on-going measures to received institutions. In order the liquidity of its , the liquidity of its customers, seeks to optimise the maturity structure of the research is routing the lightig of its clisioners, seeks, seeks able to continue servicing its debt in unforeseen circumstance.

However, the Company cannot provide any assurance that its liquidity management will be efficient and that the potential liquidity risk will not have a significant impact on its ndancement will be emclific

The following tables detail the remaining contractual maturities of the Company's non-derivative financial liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities by reference to the earliest date on which the Company can be required to pay. The tables include both principal and interest cash outflows. The undiscounted amount of interest payments has been derived from interest rate curves at the end of the reporting period. The contractual maturity is defined as the earliest date on which the Company can be required to make the payment.

	Weighted average effective interest rate 9/0	Up to 1 month	1 month to 3 months	3 months to 1 year	1 year to 5 years	Over 5 years	Total
31
December 2015
Non-interest
bearing
liabilities Interest		91,120	42,827	48,709	327		182,983
bearing
liabilities	6.23%	5,391	19,221	57,425	194,699	170,140	446,877
31		96,511	62,048	106,134	195,026	170,140	629,860
December 2014 Non-interest
bearing liabilities		115,853
Interest bearing			96,546	17,271		-	229,670
liabilities	5.73%	89,289	54,815	164,895	65,722	772	375,493
		205,142	151,361	182,166	65,722	772	605,163

28.1 Financial risks (continued)

Liquidity risk (continued)

The following table details the Company's remaining contractual maturity for its non-derivative financial assets. The tables have been drawn up bened on the undiscusived cash flows from the financial assets, including the interest earned on those assets. The information on non-derivative financial assets including the interest
understand the Company's linformation on non-derivative financial assets is understand the Company's liquidity of mormation on non-defivative financial assets is necessar in order to
understand the Company's liquidity risk management, as the liquidit

	Weighted average effective interest rate 9/0	Up to 1 month	1 month to 3 months	3 months to 1 year	1 year to 5 years	Over 5 years	Total
31 December
2015
Non-interest bearing
assets		103,542	27,701	22,298	1,418	1,124	156,083
Interest bearing
assets	3.32%	75	149	42,777	290	260
		103,617	27,850	65,075	1,708	1,384	43,551
31 December 2014							199,634
Non-interest bearing
assets		105,051	30,489	25,236	564		161,340
Interest bearing
assets	5.30%	2,200	4,724	48,389	257	94	55,664
		107,251	35,213	73,625	821	94	217.004

28.1 Financial risks (continued)

Fair value measurement

Some of the Company's financial assets and financial liabilities are measured at fair value at the end of each reporting period. The following table provides the information at fair values of the end of each
and financial liabilities are defermined its nationalion ine fair values of s poling pollour "The following table provides the information about how the fair values of these
and financial liabilities are determined (in particular, the valuation tech

Financial assets and financial liabilities	Fair value as at		Fair value hierarc hy	Valuation technique(s) and key input(s)	Significant unobservable input(s)	Relationship of unobservable inputs to fair
Shares and units in private equity firms (Note 20).	31.12.2015 18.25 % shares of Zagrebačke pekarne Klara d.d., a company from the bakery industry (bread, pastry and other related food products): HRK 19,925 thousand; and 11.48 % shares of Prehrana trgovina d.d., a trade company: HRK 536 thousand:	31.12.2014 18.25 % shares of Zagrebačke pekarne Klara d.d., a company from the bakery industry (bread, pastry and other related food products): HRK 19,925 thousand; and 11.48 % shares of Prehrana trgovina d.d., a trade company: HRK 536 thousand:	Level 3	Income approach - in this approach, the discounted cash flow method was used to capture the present value of the expected future economic benefits to be derived from the ownership of these investees	Based on the management's experience and knowledge of market conditions of the specific industries, a long-term revenue growth rate of 7 percent (2014: 7 %). Long-term pre-tax operating margin, based on the management's expenence and knowledge of market conditions of the specific industries. ranging from 8 to 11 percent. A weighted average cost of capital (WACC), determined	value A slight increase in the long-term revenue growth rates used in isolation would result in a significant increase in the fair value (see under 1 above). A significant increase in the long term pre tax operating margin used in isolation would result in a significant increase in the fair value. A slight increase in the WACC used in
				using a Capital Asset Pricing Model (CAPM), of 10.38 percent.	isolation would result in a significant decrease in the fair
						value.

Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties under common market conditions.

The Management Board considers that the carrying amounts reported in these financial statements of financial assets and financial liabilities carried at amortised cost approximate their fair values.

28.2 Industry risk

One of the food industry risks arises from the fact that eating and diet habits of consumers as well as consumer awareness of the impact of the diet on their health have significantly evolved over the past two decades. Such trends pose an imperative for the producers in terms of seeking to existing line of past wo decades. Such improve the quality of the current products.

Flour production

Flour production could be adversely affected by extraordinary events such as fire, explosions, failure of production equipment, prolonged or unplanned maintenance, conntruction of roads or closing of main transport routes, flooding, storms or other extreme weather conditions. Although the Company of Thain Transport routes, for its facilities, the insurance coverage is inherently limited by caps on insuralize coverage coverage coverage in cover all the costs. In addition, the Company may be exposed to costs not covered by insurance.

28.3 Risks arising from the ordinary course of business

Market risk

The food product demand is relatively steady in relation to product prices. Factors impacting the demand are of the following nature: demographic (increase of population), economic (increase in the number of tourists and food consumption at hospitality facilities; higher production volumes in the confectionery and baking industries), political (EU membership that enables seamless export to both EU Member States, but also a higher competition on domestic markets on the part of producers coming from other Member States).

Input commodity and product delivery risks

Wheat, being the key flour production input, has a significant influence on the flour production and prices, both in terms of wheat production and price levels. A key domestic source of the input is represented by a broad base of farmers with whom the Company cooperates by making deliveries of seeds and other intermediate products required for sowing and accepting settlement using mostly offsetting arrangements involving produced wheat/crops at a pre-defined purchase price.

The input commodity purchase risk is mitigated, as the Company has established a sales division that is present on international commodity markets and is currently able to purchase, at an time, sufficient quantities of wheat t the current market price. Croatia's accession to the European Union has lifted all administrative barriers to inout commodity purchases from the territory of the Union.

The product delivery risk arises from a potential discontinued production as a result of fault of the milling plant or cancellation of existing contract with the flour transporter.

The Company seeks to mitigate the production downtime risk by hiring staff resident in the vicinity of the mill plants who possess adequate skills to eliminate fault within a reasonable time. As the expansion of the milling operations is expected to bring a higher level of finished product orders, the warehousing capacities are beining expanded to accommodate sufficient stock required to make timely deliveries.

The Company seeks to mitigate the product delivery risk arising from the potential cancellation of the contract with the flour transporter by relying on a broad base of transporters without being concentrated to either transporter by the scope of the services used.

Competition risk

The Company sells its products and goods mainly on the domestic market. As a result of Croatia's accession to the European Union, the administrative burden to entering the markets of other Member States has become smaller, which also applies to competitors entering the Croatian market.

The flour market is being increasingly concentrated, i.e. the total number of flour producers is decreasing (by integration or liquidation of small mills), with the aim to leverage from the economies of scale in order to reduce the unit production cost and strengthen the competitive position on the market. To this end, the Company acquired in 2014 the milling operations of Belje d.d., Darda, and PIK Vinkovci d.d. from the Agrokor Group. Following the full EU membership of Croatia, the Company is no longer exposed to domestic competitors only, which is why the need to improve the Company's competitiveness has been gaining on importance.

28 RISK MANAGEMENT (CONTINUED)

28.3 Risks arising from the ordinary course of business (continued)

Key supplier and key customer concentration risk

Pursuant to the Business Cooperation Agreement concluded with Konzum d.d. on 2 May 2014, the shares of the Company's line of flour products in the Korean retail and wholesale networks has been defined according to the Company's market share. Consequently, the Company expects to have a largest future exposure to Konzum as the largest single counterparty, which also bears the risk of potential changes in the commercial relationship with the counterparty after the expiry of the Agreement.

The Company's major suppliers are those supplying the raw material and seeds for sowing. The Company seeks to cooperate with as many suppliers as possible to mitigate the risk of discontinued cooperation with a key supplier. Despite this the Company cannot provide any assurance that a potential termination of cooperation with a key supplier will not have a significant impact on the Company's performance and financial position.

The risk of change of the owner

The majority shareholder of the Company is Mr Hrvoje Filipović, who holds an ownership interest of 60.74 percent. As the majority shareholder, Mr Hrvoje Filipović has the controlling influence over the shareholders of the Company, by means of the rights and powers pertaining him as a Company shareholder. The majority share enables Mr Filipović to exercise his influence in all decisions made in a General Shareholders' Meeting. No assurance can be provided that the influence of Mr Filipović, as the majority shareholder, will not have a significant effect on the performance and financial condition of the Company.

Acquisition risk

The Company's strategy includes the expansion of operations, both through organic growth and acquisitions. Further implementation of the strategy will depend, among others, on identifying aquisition opportunities and their successful implementation. Future acquisitions may be scrutinised by the Competition Agency to dentify any potential market concentration, which means that there is a risk of an acquisition to be fornd non-permissible or permissible under certain prerequisites.

The ability of the Company to efficiently integrate and manage the acquiree as well as to address adequately the future growth would depend on a number of factors, and a potential failure could have an adverse effect on the Company's performance and financial positions as well as acquisitions outside the current markets of the Company are possible in the future. The Company has no experience in acquisitions outside its current markets, which could impact the success of an acquisition as well as the level of acquisition and integration costs. A large acquisition could prove to be much more difficult from the integration point of view as well as gruire significantly higher funds than any acquisition performed in the past. Acquisitions beyond the Company's current markets could be a challenge also because of cultural and language barriers as well as from the aspect of integrating and managing the operations in territories much more remote from the ones on which the Company presently operates.

The Company cannot provide any assurance that it will be able to address properly all the risks of future acquisitions or integrations. As a result of an acquisition, the Company's level of debt may increase, both through raising funds to finance the acquisition and through the assumption of the acquiree, which could considerably limit the level of debt the Company would be able to take on in the future. Any considerable increase in the Company's debt in connection with an acquisition could have a material impact on the Company's performance.

In undertaking any future acquisition and as part of the related acquisition analysis, the Company will have to make assumptions about expected cost savings and potential synergies to be achieved. Such estimates are uncertain and subject to a series of significant operational, economic and competition risks that might have a significant influence, as the actual results could differ from the initial estimates. The Company is faced with a risk of failure to achieve all or a part of savings and synergies envisaged at the beginning of an acquisition.

28.3 Risks arising from the ordinary course of business (continued)

Acquisition risk (continued)

In addition, in an acquisition process, the Company usually assumes all the liabilities and acquires all assets of the acquires. Although the Company is cliligned and securities and acquires all assets of
and assurance as to the value of assets and lightige and seeks to obtain adequate gu and assurance as to the value of as paranti additions it will acquire, it cannot provide any assurances guarantees
able to identify all actual and contineer liobilities in ad able to identify all actual and contines in will acquile, it cannot provide any assurance that it will be
resulting in the Company assuming continent liabilities in adval acq resulting in the Company assuming continent liabilities without receiving adequate assurance or warration. Acquisitions have a material impact on the performance and financial position of the Company.

Working capital risk

Managing working capital successfully is a key area of the Company's operations. The Company may become exposed to a pressure both by competitors and key suppliers to reduce the settlement period for purchases, while simultaneously being under pressure from customers to eace the settlement period for sales.

The Company has made significant investments in improving its logistics to improve the inventory turnover ratio and the operational efficiency ratio. Although the Company has been managing its working turnover ratio
no assurance can be given that this will sestimar in the working capit no assurance can be given that this will continue in the future, and the Company's performance and financial position may become affected.

The input commodity price risk

The operating results are largely influenced by the price of wheat as the key input commodity for the Company's production. Poor weather conditions, diseases and pests, political instability and other external factors may cause the volatility of the wheat prices. Overall economic ponditions, unforeseeable demand and problems ocurring in the production and distribution, along with potential diseases and pests, as well as weather conditions at the time of havest may have a negative impact on the wheat prices. Regardler conditions at the time ime wheat demand on the wheet, movements in wheat prices on the Company's ablity to satisfy the fluctuations in the wheat prices on global commodity exchanges. The Company's past performance is conclusive of the past wheat purchase price fluctuations positively correlating with historic flour price fluctuations. However, a certain period of time is required for the flour price to become aligned with the wheat price fluctuations, as a result of which there is a short time in which the Company's margin becomes negatively impacted where the wheat prices increase. Regardless of the past indications of the correlation between the flour and wheat prices, the Company cannot warrant that a potential future increase in when the nour and whield prices with higher flour prices and that the historic margin levels will be preserved.

The Company seeks to mitigate the risk of changes in wheat prices by participating actively on futures markets. Grandio has been managing the risks and input commodity purchase prices actively, by using various future trading techniques on global commodity markets, and without any pronounced open positions.

Dependence on the management and key personnel

The Company relies heavily on its staff as one of its key competitive advantages. This means that the Company should exercise great efforts in an attempt to retain top personnel at all levels in order to preserve its leading position on the market. The Company cannot warrant that it will be able to retain its current management and other leading employees or to attract new top personnel in the future. The potential loss of the current and the inability to attract new key personnel could have a significant impact on the Company's operations.

IT risks

The Company relies on a number of IT systems in support of the efficient management of the distribution capacities, for the purpose of communication with its customers and suppliers, human resource management and performance evaluation and to collect all information for management decision-making purposes. The Company's operations are becoming increasingly dependent on the use of such systems, and any system downtine on failure resulting from malicious codes, hacking attacks, hardware or software issues or otherwise could blanding on finitiant impact on the Company's operations and financial position.

28 RISK MANAGEMENT (CONTINUED)

28.3 Risks arising from the ordinary course of business (continued)

Antitrust and competition law non-compliance risk

It is a part of the overall strategy of the Company to become the leading flour producer on the Croatian market and flour supplier in the region, you have repart to Company non-compliant with the market competition rules.
The Croatian legislation governing market assess the Company non The Croatian legislation governing market competition, which is aligned with the market competition rules, forbids any form of abuse of the dominant position, especially any direct or indirect imposition of purchase or selling prices or other unfair commercial terms and conditions, limiting production, markets or selling process or other disadvantage of customers, or imposing any unequal conditions for the same type of deals with other enterprises that may bring them in a disadvantaged competition, or additional obligations to counterprises as a precequisite for entering contracts with them that are in their nature and according to the customary commercial practice not directly related to the subject matter of such contracts.

In addition, the legislation forbids any agreements, decisions, associations or joint actions on the part of enterprises aimed at, or resulting in infringing the competition rules on a given market.

Although the Company is not aware of any infringement of competition rules and has never been a respondent in proceedings initiated before the Competition Agency, it cannot warrant that no such proceedings will never be initiated. Any infringement of the competition rules is subject to significant administrative sanctions. For instance, a fine of up to 10 percent of the total annual revenue generated in the most recent year for which final final final final final final final final final final final final fin statements are available may be imposed for entering into not receive year of the mind final mancial position. Therefore, any administrative sanction could have an adverse impact on the financial position and performance of the Company.

To mitigate the risk, the Company intends to arrange additional education for its employees in the area of market competition rules and implement procedures to be followed in concluding contracts and undertaking other actions that may result in a breach of competition rules and make sure that the procedures are consistently follow d.

Furthermore, before undertaking any future acquisition, the Company may have to ask from the Competition Agency to assess the eligibility of the intended concentration. The Company cannot warrant that a concentration will be assessed as permissible under conditions precedent, such as the disposal of certain assets or certain other steps that might affect the revenue, profit or cash flows of the Company. The concentration eligibility assessment itself could affect the timing of the acquisition.

Litigation risk

As any business entity, is also the Company exposed to the risk of becoming a counterparty in legal actions initiated before courts, regulatory or other competent authorities that may arise from its ordinary course of business. These include mainly claims involving the Company's debtors or suppliers. The risk of potential future claims raised by customers on the grounds of losses or injuries caused by the consumption of products cannot be excluded. The Company cannot provide any assurance that the outcome of potential future legal and regulatory proceedings or measures will not have a significant impact on its performance and financial cogitiin

The risk of obligations or losses not covered by insurance

The level of insurance coverage is common for the industry in which the Company operates. The insurance policies of the Company include mainly those providing coverage for occupational injuries, mcchinery faulters, property damage, as well as crop insurance. Still, not all contingent liabilities and losses can be noved by insurance, and the Company cannot warrant that it will not be exposed to situations in which no insurance coverage will be available or that such situations would not have a material impact on the 10 minutine and financial condition.

28.4 General risks

Business environment risk

The business environment risk includes political, legal and macroeconomic risks prevailing in the business environment of the Company, which is primarily the Croatian macroeconomic nisks prevailing in the business
percent of its total revenue (according the Croatian market on whic percent of its total revenue (according the Ordalian market of Winds the Company generates almost 70
Herzegovina, and Slovenia Herzegovina, and Slovenia.

The governments in power so far have introduced economic reforms to develop and stabilise free market economy by privatising state-owned companies, attracting foreign direct investments and implemented reforms required in the pre-accession stage. Despite the significant progress towards establishing a full market economy, reaching the level of infrastructure of West European counties will take several more years and additional investments. The Company cannot warrant that Croatia will filly implement the intended reforms or that the political intended reforms or that the political environment will favour their implement the Intent the Intended Tenchise of that the politically power will not introduce new regulations, fire Company cannot warrant that the Government in
procurement policy, an indemaily nolicies, including taxation, environmental and procurement policy, an indemnity policy for nationalised property or a new foreign exchange policy.

The legal framework of the Republic of Croatia is still evolving, which may give rise to a certain level of legal uncertainty. As a result, the Company may come into a position of not being able to a certain level of legal protecting some of its rights.

The Company's operations are subject to the impact of the macroeconomic environment, economic conditions and economic activity developments. In the periods of this moreonomic conditions, the Company conditions, the Company could have problems in expanding its business or meeting its financial obligations. Under such circumstances, the Company's access to financial markets could become no manolar obligations. Uncel Circumstances, the would affect the performance and financial position of the Company. if the current economic situation would persist, the Company, its customers and suppliers could face difficulties in accessing capital markets, which could have an adverse impact on the current revenue and profit levels.

The Company is also under the influence of international trends, as wheat, being the Company's key input commodity, is an exchange traded commodity and hence subject to potential political instability in the major wheat producing countries (China, Russia, the USA). Still, as already mentioned above, the Company is able to meet to core input commodity needs entirely from domestic sources, while seeking to neutralise any fluctuations in the commodity price with an active access to futures markets.

The risk of changes in the legal framework

As a food producer, the Company is exposed to strict regulatory requirements applicable to human foods, product safety, ocupational health and safety, security and environmental protection (including those applicable to waste waters, sewage, clean air, noise, waste disposal, environmental cleaning and similar), as well as product ingredients and contents, packaging, designation, advertising and market competition. Food production generales waste, emission of hazardous agents into the atmosphere and waters, which is why the Company has the regulation in obtain various licences and adhere to a variety of regulation. Health, safety and environmental regulations in Europe and other developed countries are becoming increasingly stringent, and their implementation is increasingly gaining on importance. The Company seeks to keep pace and anticipate any such changes, as any non-compliance could result in various sanctions. The Company considers to be currently compliant with all the applicable regulations and rules as well as deadlines set by different regulators However, it cannot warrant that it will not incur significant costs to eliminate any potential instances of non-complishever the resulting negative publicity, or to adapt to amended regulations, as well as that the resulting impact on to operations and financial condition would not be significant. For instance, the Company is the current or lessee of a number of properties and facilities, including production plants and distribution centress some of which were previously used for other commercial or industrial purposes. Although the Company is currently not aware of any facts that would give rise to additional obligations regarding the environmental status of the properties and facilities, any contamination identified as a result of current or previous operations and the resulting obligation to eliminate it could cause significant costs to the Company. Additional regulations, or interpretations of current regulations, could be introduced in the future, which may affect the Company's business and products. The Company cannot provide any warranty that any costs of complying with any such future initiatives will not have a significant impact on the performance and financial condition of the Company.

29 CONTINGENT LIABILITIES

The Company as guarantor or co-debtor

	Amount	Balance in original currency at 31 December 2015	Balance in HRK at 31 December 2015	Maturity
Žitar d.o.o.o .- Loan 1	EUR 6, 190,000	EUR 3,126,221	23,868,842	1.9.2020
Žitar d.o.o.o.- Loan 2	EUR 5,980,000	EUR 3,068,290	23,426,536	1.9.2020
Zitar d.o.o.o .- Loan 3	HRK 4,100,000	HRK 4,100,000	4,100,000	31.5.2016
Zitar d.o.o.o .- Loan 4 Zdenka-mliječni proizvodi d.o.o. -	EUR 787,000	EUR 787,000	6,008,782	1.12.2016
Loan 1 Zdenka-mliječni proizvodi d.o.o. -	EUR 3,294,190	EUR 1,744,225	13,317,241	31.12.2024
Loan 2 Zdenka- mliječni proizvodi d.o.o. -	HRK 40,000,000	HRK 25,856,693	25,856,693	30.4.2024
Loan 3	EUR 1,395,751	EUR 1,234,268	9,423,694	31.12.2023
Bills of exchange issued to CERP Corporate guarantee issued to	HRK 40,500,000	HRK 40,500,000	40,500,000	13.9.2015
CERP	HRK 40,700,000	HRK 40,700,000	40,700,000	23.9.2015
Total			187,201,788

The bills of exchange and corporte guarantees issued to the Restructuring and Sale Centre (CERP; former Croatian Privatisation Fund) were furnished under the contract on the acquisition of Prerada žitarica d.o.o. and the annex to the contract dated 19 November 2009.

Legal cases

There are no significant legal actions outstanding against the Company. The Management Board of the Company is confident of a successful defence as well as of no losses suffered by the Company. Hence, no litigation provision has been recognised.

30 EVENTS AFTER THE REPORTING DATE

No events or transactions have taken place subsequent to 31 December 2015 that would have a significant impact on the financial statements for the year then ended, or be of such significance for the Company's operations that would require them to be disclosed in the notes to the financial statements.

31 MANAGEMENT AUTHORISATION OF FINANCIAL STATEMENTS FOR ISSUE

The financial statements were approved by the Management Board and authorized for issue on 28 April 2016.

Hrvoje Filipović, diploec.	President of the Management Board

Tomislav Kalafatić, dipl.oec. Management Board member

Granolio d.d. Budmanijeva 5, HR-10000 Zagreb tel .: +385 | 6320 200; faks: +385 | 6320 222; e-mail: [email protected]; http://www.granolio.hr

Zagreb, 28 April 2016

Statement of Executives responsible for preparing annual financial statements

Pursuant to the current Croatian Accounting Act (Official Gazzette 109/07), the Management Board is required to ensure that the financial statements of Granolio d.d. for each financial period are prepared in accordance with the International Financial Reporting Standards (IFRS), issued by the International Accounting Standards Board (IASB) and that they give a true and fair view of the financial position and results of the Company's operations in the given period.

To the best of our knowledge, annual audited unconsolidated financial statements for the year ended 31 December 2015 present a fair view of assets and liabilities, profit and loss, financial position and business operations of the Company, and all subsidiary companies involved in the consolidation as a whole.

Reports prepared by:

Olice Jasenka Kordić

Accounting Director 2

MB: 1244272; OIB: 59064993527; IBAN HR6024020061100063532 Erste&Steiermarkische bank d.d. Rijeka, IBAN HR1423400091110416692 Privredna banka Zagreb, IBAN HR5123900011100014261 Hrvatska poštanska banka Zagreb; temeljni kapital: 19.016.430,00 kn uplaćen u cijelosti podijeljen na 1.901.643 redovnih dionica serije A nominalnog iznosa 10,00 kg; tvrtka je upisana u Trgovačkom sudu u Zagrebu, MBS: 080111595; predsjednik Uprave: Hrvoje Filipović, članovi Uprave: Vladimir Kalčić, Drago Šurina i Tomislav Kalafatić, predsjednik Nadzornog odbora: Franjo Filipović

Pursuant to Article 263. of the Companies Act and Article 39. of the Statute of the Company Granolio d.d. (hereon in the text: the Company), the Supervisory Board at its meeting held on 28 April 2016, brings

THE DECISION ON ESTABLISHING THE FINANCIAL STATEMENTS FOR 2014

Pursuant to Article 300.c of the Companies Actthe Supervisory Board has examined the Company's Annual financial statements for 2015 together with the Audit Report, the consolidated Annual financial statements of the Granolio Group for 2015 together with the Audit Report, the Management Report for the Company and affiliated Companies as well as the draft decision on the proposal for covering the loss from the previous period, distribution of earnings from 2015 and payment of dividend.

It is the opinion of the Supervisory Board that the Company's Annual financial statements for 2015 have been prepared in line with the Company's business books and that they reflect the true financial and business standing of the Company.

Also, the Supervisory Board does not have any objections regarding the consolidated Annual financial statements of the Granolio Group for 2015.

Therefore, the Supervisory Board approved the Company's Annual financial statements for 2015 and the consolidated Annual financial statements of the Granolio Group for 2015 which are confirmed by the Management Board and Supervisory Board in line with Article 300 d of the Companies Act.

The Supervisory Board has no objections concerning the Auditor's Audit Report regarding the Company's Annual financial statements for 2015 and the Auditor's Report regarding the consolidated Annual financial statements of the Granolio Group for 2015.

Article 2.

This Decision will bevalid at the day of its adoption.

Franjo Filipović

(the president of the Supervisory Board )

Zagreb, 28 April 2016 __________________________

Granolio d.d. Supervisory Board Number: 28-04-01/2016

THE DECISION

OF THE PROPOSAL FOR COVERING THE LOSS FROM THE PREVIOUS PERIOD, DISTRIBUTION OF EARNINGS FROM 2015 AND PAYMENT OF DIVIDEND

Pursuant to Article 300.c of the Companies Actthe Supervisory Board has examined the Company's Annual financial statements for 2015 together with the Audit Report, the consolidated Annual financial statements of the Granolio Group for 2015 together with the Audit Report, the Management Report for the Company and affiliated Companies as well as the draft decision on the proposalfor covering the loss from the previous period, distribution of earnings from 2015 and payment of dividend.

The Supervisory Board agrees with the Board's draft decision that:

I. The loss from the previous period in the amount of HRK 10,717,092.12 is to be covered through retained earnings in the amount of HRK 3,638,819.68.

II. The earnings from 2015 in the amount of HRK 9,073,131.33 (after taxes) are distributed as follows:

loss coverage in the amount of HRK 7,078,272.44,
legal reserves in the amount of HRK 99,742.94,
reserves for company's own shares in the amount of HRK 800,000.00,
retained earnings in the amount of HRK 144,294.45.
payment of dividend HRK 950,821.50.

III. The Management Board proposes that the dividend for 2015 is set in the amount of HRK 0.50 per share. The shareholders may claim the payment of dividend from the Company upon the expiry of the day of the General Assembly meeting when the decision on dividend payment is made, and the dividends are paid within 30 days from the date of the decision, in line with Article 59 of the Company's Articles of Association.

Article 2.

This Decision will be valid at the day of its adoption.

(the president of the Supervisory Board )

Franjo Filipović

Zagreb, 28 April 2016 __________________________

AI Terminal

Granolio d.d.

2089_10-k_2016-04-29_b4fbfbdc-78b3-4d72-b96f-95e60d161082.pdf

Granolio d.d., Zagreb

Contents

Annual Management Board report on the business performance and position of the Company for the year 2015

General information about Granolio d.d.

Subsidiaries

Significant transactions in the current accounting period

Analysis of the 2015 business performance

Significant events after the end of the accounting period and the strategic goals of the Company

Employees

Research and development

Purchase of own shares

Environmental protection

Risks

CORPORATE GOVERNANCE CODE ANNUAL SURVEY

COMPANY HARMONIZATION TO THE PRINCIPLES OF CORPORATE GOVERNANCE CODE

SHAREHOLDERS AND GENERAL Assembley

AUDIT AND MECHANISMS OF INTERNAL CONTROL

Responsibility for the unconsolidated financial statements

Deloitte.

Independent Auditor's Report

Report on the financial statements

Responsibility for the Unconsolidated Financial Statements

Auditor's responsibility

Independent Auditor's Report (continued)

Opinion

Report on other legal or regulatory requirements

Other matters

Emphasis of matter

Unconsolidated statement of profit or loss and comprehensive income

Unconsolidated statement of financial position

Unconsolidated statement of financial position

Granolio d.d., Zagreb

Unconsolidated statement of cash flows

Unconsolidated statement of cash flows (continued)

1. GENERAL INFORMATION

2 ADOPTION OF NEW AND REVISED INERNATIONAL FINANCIAL REPORTING STANDARDS

2.1 current financial period

2.2 Standards and interpretations issued by IASB and adopted by the European Union, but not yet effective

Amendments to IFRS 11 "Joint Arrangements"

2 ADOPTION OF NEW AND REVISED INERNATIONAL FINANCIAL REPORTING STANDARDS

2.3

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3.1 Statement of compliance

3.2 Basis of preparation

3.3 Business combinations

3.3 Business combinations (continued)

34 Goodwill

3.5 Interests in associates and joint ventures

36 Interests in joint operations

3.7 Functional and presentation currency

38 Use of estimates and judgments

3.9 Revenue recognition

(i) Income from the wholesale of products and merchandise

(ii)

(iii) Service income

Financial income (iv)

3.10 Leasing

The Company as lessor

The Company as lessee

3.11 Foreign currencies

Foreign-currency transactions and balances

3.12 Borrowing costs

3.13 Employee benefits

(i) Obligations in respect of retirement and other post-employment benefits

(ii) Long-term employee benefits

(iii) Short-term employee benefits

(iv) Share-based payments

3.14 Dividends

3.15 Operating segment reporting

3.16 Taxation

(i) Income tax

(ii) Deferred tax assets and liabilities

(iii) Tax exposure

(iv) Value-added tax (VAT)

3.17 Property, plant and equipment

3.18 Intangible assets

(ii) Computer software