Granolio d.d.

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All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or opinions, the original language version takes precedence over translation. Granolio d.d., Zagreb Contents Annual report of the Management Board on the operations and state of the Company for the year 2024 ............... 1 Statement on the application of the Corporate Governance Code…….....................................................................7 Responsibility for the annual financial statements .................................................................................................. 12 Independent Auditor's Report ................................................................................................................................. 13 Unconsolidated Statement of Comprehensive Income ........................................................................................... 21 Unconsolidated Statement of Financial Position ..................................................................................................... 22 Unconsolidated statement of Changes in Equity .................................................................................................... 24 Unconsolidated Statement of Cash Flows .............................................................................................................. 25 Notes to the unconsolidated annual financial statements……………………………………..………………..............26 Granolio d.d., Zagreb 1 Management Report General information GRANOLIO d.d. (“the Company”) is a joint stock company registered at the Commercial Court in Zagreb, Croatia. The Company's personal tax identification number (PIN) is 59064993527, and its company registration number (MBS) is 080111595. The name of the company has not been changed. The registered seat of the Company is in Zagreb, Budmanijeva 5. The Company has a General Assembly, a Supervisory Board, and a Management Board. Members of the Management Board: Hrvoje Filipović, President Vladimir Kalčić, Member Davor Mitrović, Member Members of the Supervisory Board: Franjo Filipović, President Jurij Detiček, Deputy President Davor Štefan, Member Tihomir Osmak, Member The total amount of the Company's share capital as of 31 December 2024 is EUR 2,523,914 and is divided into 1,901,643 ordinary shares with a nominal value of EUR 1.327. The shares are listed under the symbol GRNL 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 held 58.11% of the ownership capital on 31 December 2024. On the same day, the ten largest shareholders of Granolio held 95.77% of the capital The Company's primary activity is the production and trade of agricultural products and livestock. As part of its business system, on 31 December 2024, the Company had six active business units, three of which were production centres: the Farina, Kopanica and Tena mills, for the production, packaging, storage and shipping of mill products. Business unit Bjeliš is a silo used for drying and storing grain. The business unit in Osijek is responsible for storing, selling and shipping raw materials for sowing, selling grains and oilseeds, and managing sales runways. The Granolio business unit, located in Zagreb, provides logistical, management, accounting and IT support to the Company's operations. In addition to ISO and HACCP standards, the Farina mill is subject to IFS standards, which gives the Company the ability to export flour to European Union countries, while the Kopanica mill, and the Tena mill are subject to ISO and HACCP standards. The company markets eight brands of flour: Farina, Farina Speciale, Mlin Kopanica, Ekoklas, Mlineta, No No gluten-free flour and Belje flour and Tena flour Due to the focus on product quality and delivery and building long-term relationships with customers, Granolio produces private labels for most of the leading retail chains in the Republic of Croatia. The Company currently produces flour for 15 private brands. Granolio d.d., Zagreb 2 Management Report (continued) General information (continued) Group’s mills production capacities as of 31 December 2024 are shown in the following table: Mills production capacity as of 31 December 2024: Mill ton/24 hours Farina 320 Kopanica 230 Tena 180 730 Subsidiaries On 31 December 2024, the Company held 100% of the shares in the company Zdenačka farma d.o.o. The dominant influence in decision-making was exerted in the company Zdenka - mliječni proizvodi d.o.o. which has been consolidated into the Granolio Group since 2011. The Company has a minority share in the company Žitozajednica d.o.o. Granolio's ownership shares in these subsidiaries on 31 December 2024 are shown in the following organizational chart: The organizational structure of the Granolio Group on 31 December 2024 Significant business events in the current accounting period 2024 was marked by the successful acquisition of additional milling operations, the continuation of the war in Israel and Ukraine, which continued to increase the cost of raw materials and production costs. The conflicts of war contributed to negative consequences for the entire global economy. Despite very unfavourable circumstances and the impact of the crisis on global and local flows of goods, long-term and strong relationships with suppliers contributed to stable business. The company managed to avoid interruptions or significant delays in production and ensured an uninterrupted supply of the market with demanded products. According to the CNB, core inflation in Croatia is expected to slow down from 4.0%. to 3.5% in 2025. Granolio d.d. Zdenačka farma d.o.o. 100% Zdenka mliječni proizvodi d.o.o. 50% Granolio d.d., Zagreb 3 Management Report (continued) Significant business events in the current accounting period (continued) The Company will continue to be focused on achieving business goals, but also on creating a foundation that will bring good results in the coming years, i.e. long-term successful operations and growth. The Company regularly settles its liabilities to financial institutions and continues to repay liabilities in accordance with the pre-bankruptcy settlement. Analysis of the 2024 business performance in EUR ‘000 Granolio d.d. 1-12 2024 1-12 2023 change Operating income 61.794 54.065 7.730 14% Operating expenses 58.148 51.845 6.304 12% EBIT 3.646 2.220 1.426 64% margin % 6% 4% EBITDA 4.723 3.269 1.459 45% margin % 8% 6% Net financial result (314) 224 (537) 240% Net result for the period 2.820 1.970 850 43% in EUR ‘000 Granolio d.d. 31.12.2024 31.12.2023 change Net assets (capital and reserves) 24,205 21,209 2,816 13% Total debt 23,172 10,726 12,446 115% Cash and cash equivalents 276 955 (679) (71%) Loans given, deposits and similar* 2,942 2,271 671 30% Net debt 19,954 7,501 12,445 165% Net debt/ EBITDA 4,22 2,29 EBITDA for the last 12 months 4,723 3,269 1,459 45% * Financial loans, securities and deposits provided. Total debt reported on 31 December 2024 includes all financial liabilities to financial institutions and non- financial entities. The Company's total debt increased due to new long-term debt for the purpose of acquiring additional milling operations. The Company regularly settles existing liabilities under credits and loans. Granolio d.d., Zagreb 4 Management Report (continued) Significant business events in the current accounting period (continued) Analysis of the 2024 business performance The total revenue from the sale of products and services realized in 2024 is higher then the revenue realized in the previous year by 12%. The largest increase was recorded in the milling segment. The wholesale segment consists of the sale of raw materials for sowing, the sale of grains and oilseeds, and the sale of bakery products. The volume of business in this segment mostly depends on the availability of financing. The Other segment mainly represents revenues from the provision of drying services, storage, receiving goods and other services. - 10,000 20,000 30,000 40,000 50,000 Milling Trading goods Wholesale Other Uncosolidate sales income per business segments (2024 vs 2023) 2024 2023 Milling 79% Other 0,1% Wholesale 21% Share of individual segment in total sales in 2024 Granolio d.d., Zagreb 5 Management Report (continued) Analysis of the 2024 business performance (continued) Employee expenses are 30% higher than in the previous year as a result of the acquisition of additional milling operations. Total capital investments in tangible assets in 2024 amounted to EUR 13,558 thousand (2023: EUR 2,072 thousand). Acquisitions relate mainly to the acquisition of additional milling operations (EUR 12,910 thousand). Net financial result in 2024 amounted to EUR 314 thousand (2023: EUR 224 thousand). Significant business events after the accounting period and the Company's strategic objectives The Company's Management Board undertakes all necessary actions in order to minimize the newly created risks. The completed investment in the construction of solar power plants at all major consumers of electricity in the Granolio Group will enable a reduction in consumption by about 30 percent and reduce the impact of a possible further increase in electricity prices on the Company's operations. The required amount of raw material is secured until the new harvest, and the packaging until the end of the year, which reduces the risk of shortages and eventual procurement at high prices. The Company will respond to the overall increase in operating costs by increasing the prices of its products. As far as capital investments are concerned, all plants are technologically advanced to the maximum and there is currently no need for capital investments. The Company expects to continue to operate successfully in 2025 and beyond. Employees In 2024, the Company had 177 employees based on working hours (2024: 163 employees). The structure of employees as of 31 December 2024, according to the criteria of professional qualifications and gender, is shown in the following graphs: Skilled workers 4% Unskilled workers 11% High school degree 61% Unversit y degree 20% College degree 4% Employee structure by professional qualification Male 73% Female 27% Employee structure by gender Granolio d.d., Zagreb 6 Management Report (continued) Research and Development In the observed period, the Company had no research and development projects. Purchase of own shares Until the date of issuance of this Management Report, as of 30 September 2024, the Company acquired 500 of its own shares in total amount of 3.500 euros for the purpose of rewarding employees. Environmental Protection In the area of environmental protection, the Company implements complete and systematic solutions and establishes environmentally friendly production processes. Risks The risks faced by the Company are explained in detail in the Notes to the annual financial statements. Granolio d.d., Zagreb 7 Statement on the application of the Corporate Governance Code The statement on the application of the Corporate Governance Code was drawn up based on the provisions of Article 272.p of the Companies Act. As a company whose shares are listed on the Official Market of the Zagreb Stock Exchange, Granolio d.d. (hereinafter referred to as "the Company") in 2024 applied the recommendations of the Corporate Governance Code, prepared by the Croatian Financial Services Supervisory Agency (HANFA) and the Zagreb Stock Exchange d.d., in force from 1 January 2020, with deviations from some recommendations and guideline of the Code. Deviations from the recommendations of the Code are limited to the provisions of the application of which is not practical or enforceable at a given moment given the circumstances of the business or is not foreseen given the legal framework in which the Company operates. Related to the recommendations contained in Chapter 1 of the Code, during 2024 the Company published the Statute and part of the internal acts prescribed by the Code on its website and plans to take actions to expand the number of acts published on its website. Related to the recommendations contained in Chapter 2 of the Code, the Company plans to make available the Policy for managing conflicts of interest on the Company's website during 2025. The Company has not adopted special procedures for approving and publishing transactions between members of the Management Board or the Supervisory Board and the Company, but it plans to adopt them during 2025 and currently applies the current regulations and policies for the management of conflicts of interest governing that area. Related to the recommendations contained in Chapters 3 and 4 of the Code, the Supervisory Board has not adopted a formal procedure for appointment to the Company's Management Board but plans to adopt it during 2025. The Supervisory Board, which consists of male members, in the term that began before 2020, set as a goal the percentage of female members of the Supervisory Board and the Management Board, which must be achieved in the next five years, but the detailed plan is still being developed, and the set goal that in in the five-year period until 2025, at least one member of the Supervisory Board will be a woman, in 2024 was not achieved. In this regard, given that all members of the Supervisory Board who were elected to the Company's Supervisory Board in 2022 were also members of the previous Supervisory Board. Data from Art. 16 of the Code were not made available among the materials for the General Assembly and were not published on the Company's website, and also no act was adopted that determined the expected minimum time load of each member of the Supervisory Board at the time of his appointment. The Supervisory Board of the Company has four members, two of whom are independent. The Supervisory Board of the Company did not establish a nomination committee and a remuneration committee for the reason that, according to the provisions of the Statute, the Supervisory Board of the Company has from three to five members and performs tasks within the competence of the aforementioned committees. The function of the audit committee, in accordance with the Audit Act, is performed by the established Audit Committee composed of three members, who are also members of the Company's Supervisory Board, of which one member is independent, and the description of the tasks of the established Supervisory Board (Audit Committee) is planned to be published by the Company on websites during 2025. The Supervisory Board did not evaluate its effectiveness and the individual results of its members, as well as the established committees (Audit Committee) in accordance with the Code, but it is preparing to do the same for 2025. In relation to the recommendations contained in Chapter 5 of the Code, the Statute and/or internal acts of the Company do not contain formal rules governing responsibilities and reporting procedures at the level of the leading company and subsidiary companies, but the financial managers of the subsidiary companies are responsible for reporting. No formal act was adopted on the profile of the administration for the effective execution of the administration's responsibilities, given that the administration has been operating effectively in the majority of its current composition for many years. The Management did not evaluate its own effectiveness and the effectiveness of individual members in 2024, but it is preparing to do the same in relation to its work in 2025. Granolio d.d., Zagreb 8 Statement on the application of the Corporate Governance Code (continued) In relation to Chapter 6 of the Code, as stated above, the remuneration committee was not established, and the remuneration policy for the members of the Management Board was adopted in 2020 and was approved at the General Assembly of the Company. The policy of receipts for members of the Company's Management Board stipulates that a member of the Management Board has no right to payment of receipts in shares, nor does it provide for delayed payment of part of the receipts or circumstances in which part of the receipts of a member of the Management Board would be withheld or their return would be requested. The remunerations of the president and members of the Supervisory Board of the Company do not provide for special remuneration for membership in the established committees of the Supervisory Board. The Decision on the remuneration of the Supervisory Board has been made available on the Company's website, while the Decision on the remuneration of the Management Board members is planned to be made available in 2025. Related to the recommendations from Chapter 7 of the Code, internal business control and risk management is partly performed through the activities of the Controlling business function, and partly through the activities of the Company's management body and external auditors and certification companies. Also, not all formal policies and procedures from this chapter of the Code were adopted in 2024, but the Company plans to adopt them in 2025. The Company applies the recommendations from Chapter 8 of the Code, except in terms of Art. 72, as already mentioned, and the information from Art. 74 of the Code were partially published. Regarding the recommendations from Chapter 9 of the Code, asking questions directly to the President of the Management Board and the President of the Supervisory Board is possible through the Company's contact email, which is published on the Company's website, while the Company's Statute provides for voting at the Company's Assembly by picking up ballots or submitting ballots. Due to personal justified reasons, the Deputy Chairman of the Supervisory Board was not present at the General Assembly of the Company in 2023. With regard to the recommendations from Chapter 10 of the Code, in 2025 the Company plans to carry out the activities defined by the adopted policies and carry out the identification of key stakeholders. Detailed explanations related to the non-application or deviation from certain recommendations of the Code in 2024 were presented by the Company in the annual questionnaire, which is an integral part of the Code, and which is submitted to the Zagreb Stock Exchange d.d. together with the annual financial statements due to public disclosure. Internal audit and risk management Although the Company does not have an organized internal audit function, internal business supervision and risk management are partly performed through the activities of the business function of Controlling. Also, the main responsibilities of the Audit Committee of the Supervisory Board include monitoring the financial reporting process and submitting recommendations or proposals to ensure its integrity regarding financial reporting, as well as monitoring the effectiveness of the internal quality control system and risk management system. In addition to the recommendations of the Code, the Management and the Supervisory Board of the Company increased efforts in order to establish adequate corporate governance and transparent information, respecting the structure and organization of the Company, its strategy and business goals, the distribution of powers and responsibilities with special emphasis on effective procedures for determining, measuring and monitoring and reporting about risks in business, as well as the establishment of appropriate internal control mechanisms. The Company has prepared separate and consolidated financial statements for the Granolio Group, which consists of Granolio d.d. and the subsidiary Zdenačka farma d.o.o. which is fully owned by Granolio d.d. and for the subsidiary Zdenka - mliječni proizvodi d.o.o., where the Company is a co- owner. Granolio d.d., Zagreb 9 Statement on the application of the Corporate Governance Code (continued) Si g n i f i c a n t s h a r e h o l d e r s a n d l i m i t e d s h a r eh o l d e r s ’ ri g h t s In the ownership structure of the Company, the majority shareholder with 1,105,000 shares and 58.10765% of the share capital and voting rights at the general assembly is Hrvoje Filipović. Member of the Management Board Davor Mitrović is the owner of 3,676 shares, which is 0.19% of the share capital and voting rights, member of the Management Board Vladimir Kalčić is the owner of 3,000 shares, which is 0.15776% of the share capital and voting rights, and the member of the Supervisory Board, Mr. Tihomir Osmak, the holder is 3,000 shares, which constitutes 0.15776% of the share capital and voting rights. Other members of the Supervisory Board and the Management Board are not holders of Company shares. All the shares have been fully paid in, and there are no restrictions to the rights arising from the shares. Rules for the appointment and revocation of the Supervisory Board The Supervisory Board of the Company consists of three or five members. The exact number of the Supervisory Board members is determined by the decision of the Company’s shareholders at their General Assembly. As long as there is a prescribed obligation, one member of the Supervisory Board is a representative of employees, who is appointed and revoked as specified in the Labour Act. One member of the Supervisory Board is appointed and revoked directly by Hrvoje Filipović, as long as he holds at least 25% of the total number of issued ordinary shares of the Company. Other Supervisory Board members are elected and revoked by the Company’s General Assembly, based on the proposals of shareholders who individually or collectively represent at least one twentieth of the share capital of the Company at the time of the election. Rules for the appointment and revocation of the Management Board, amendments to the Statute and special powers of the Management Board Pursuant to the Statute of Granolio d.d., the Management Board consists of three to seven members, depending on the decision adopted by the Supervisory Board. The members and President of the Management Board are appointed by a decision of the Supervisory Board for a mandate up to five years, with the possibility of re-appointment. The Supervisory Board may issue a decision revoking a member or the President of the Supervisory Board for a relevant reason. The Statute can be amended only by a decision adopted in the General Assembly by majority vote as defined for in the applicable legislation or the Statute. The affairs and operations of the Company are managed by the President and members of the Management Board based on the principle of segregation of duties and responsibilities for individual areas of operations or scope of responsibilities. The work and segregation of duties and responsibilities are regulated by the Rules of Procedure for the Management Board, adopted by the Management Board with the consent of the Company’s Supervisory Board. The President of the Management Board represents the Company solely, and the Management Board members represent the Company jointly with the President of the Management Board or another Management Board Member. The Company’s Management Board must receive a consent from the Supervisory Board for, inter alia, deciding about the overall maximum indebtedness of the Company for a particular business year, maximum exposure on loans granted to related companies, maximum exposure of the Company with respect of guarantees, sureties and other security instruments issued to third legal and natural persons, about establishing and/or discontinuing any directly related companies, branch offices and business units, about purchasing or selling the shares in other companies in Croatia and abroad, about any fixed asset investments in excess of EUR 1,990,842.13, acquisition and sale of property with a net carrying value higher than EUR 663,614.02 ; establishing a lien on the property for purposes other than disposal in the ordinary course of business and conclusion of contracts worth in excess of EUR 663,614.02, with the exception of product, goods, energy, short-term debt and service sales contracts as part of the Company’s ordinary business; decisions that affect the reputation of the Company and in all other cases determined by the Supervisory Board or the General Assembly. Granolio d.d., Zagreb 10 Statement on the application of the Corporate Governance Code (continued) Composition and operation of the Supervisory Board Pursuant to the Companies Act and the Company’s Statute, the principal responsibilities of the Supervisory Board comprise permanent supervision of the Company’s operations and appointing and revoking the President and members of the Management Board. The composition of the Supervisory Board and changes of its members are presented in the accompanying financial statements. In 2024, the Supervisory Board held 6 sessions, which were attended by all members of the Supervisory Board. In 2024, the Audit Committee held one session attended by all committee members. The Supervisory Board received reports on the Company's operations and organizational and other changes related to the Company's operations on a regular and timely basis, according to the established standard form and content, from the Company's Management Board. The Supervisory Board assessed the cooperation between the Supervisory Board and the Management Board, as well as the adequacy of the support and information it received from the Management Board during 2024, as satisfactory. Composition and operation of the Management Board Pursuant to the Companies Act, the Company’s Statute and the Rules of Procedure for the Management Board, the principal power of the Management Board comprises managing the operations and affairs of the Company and representing the Company before third parties. In addition, the Management Board is charged with the responsibility to undertake, autonomously or with a prior consent of the Supervisory Board, any actions and adopt any decisions it considers necessary for effective management and control of the Company’s operations. This, inter alia, implies adopting Company by-laws, decisions on the business and development plans of the Company, reporting to the Supervisory Board about the business performance and position of the Company, establishing bodies or boards of the Company, as well as deciding on all other issues for which the Management Board is responsible according to the Statute or another by-law, and those issues that, under the positive law or Statute, do not fall within the area of responsibilities of another corporate body of the Company. Description of the work of the General Assembly At the General Assembly, the Company shareholders may participate and vote themselves or through their proxies, which applies to the shareholders registered at the Central Depositary and Clearing Company 21 days before the Assembly. Each ordinary share entitles to one vote at the General Assembly. The Company shareholders may participate in a General Assembly in person or through their representatives, i.e. proxies. A General Assembly is convened in cases specified by law and the Company’s Statute. The Assembly is convened by the Company’s Management or Supervisory Board when it is necessary for the benefit of the Company. The invitation and the agenda are published at least one month before the date of the General Assembly. Any propositions of the shareholders which counter those of the Management Board and/or Supervisory Board, containing the full name of the proposing shareholder and his or her explanation, or propositions of the shareholders regarding the appointment of the Company’s auditor must be received by the Company at least 14 days prior to the General Assembly, excluding the date of receipt of the counterproposition. Shareholders representing at least one twentieth of the share capital of the Company may require an issue to be included in the General Assembly agenda, by providing an explanation and the decision proposal. The request must be received by the Company at least 30 days in advance of the General Assembly, excluding the day of the request receipt. The Company's General Assembly may validly work and make decisions if at least 50% of the shares with voting rights are represented at the meeting, and all decisions on proposed agenda items are made by a simple majority of the votes cast, except for decisions made by a qualified majority, i.e. votes representing three quarters of the share capital represented at the General Assembly. Each share gives the right to one vote at the General Assembly. Granolio d.d., Zagreb 11 Statement on the application of the Corporate Governance Code (continued) The General Assembly is chaired by the President or Deputy president in case of the President’s absence. The Chairperson and the Deputy President are elected by the General Assembly for a term of 4 (four) years based on the proposal of the Supervisory Board. The President chairs the Assembly and, before opening the discussion on the agenda items, determines the validity of proxies and the quorum. The President determines the sequence of the individual agenda item discussions, the sequence and manner of voting on the individual proposals, as well as on all procedural matters not regulated by law or the Statute. In addition, the President signs decisions adopted at the Assembly, the list of the present shareholders, the manner of voting and the voting results, makes other required notes, communicates on behalf of the Assembly with other bodies of the Company and third parties in cases stipulated by law and the Statute and performs other tasks, duties and responsibilities specified by law and the Statute. The Members of the Management Board of Granolio d.d. in 2024 were the following: President of the Management Board: Hrvoje Filipović (reappointed on 24 February 2021) Members of the Management Board: Vladimir Kalčić (reappointed on 24 February 2021) Davor Mitrović (appointed for the first time on 28 April 2022) The Supervisory Board of Granolio d.d. in 2024 comprised: President of the Supervisory Board: Franjo Filipović (reappointed on 6 June 2022) Deputy President of the Supervisory Board: Jurij Detiček (reappointed on 6 June 2022) Members of the Supervisory Board: Davor Štefan (reappointed on 6 June 2022) Tihomir Osmak (appointed for the first time on 6 June 2022) This Statement on the Application of the Corporate Governance Code is an integral part of the Annual Report on the Company's status for 2024. Granolio d.d., Zagreb Responsibility for the annual financial statements The Management Board of Granolio d.d., Zagreb, Budmanijeva 5, Zagreb (hereinafter: the Company) is obliged to ensure that the annual unconsolidated financial statements of the Company for 2024 are prepared in accordance with the applicable Croatian Accounting Act and International Financial Reporting Standards adopted by the European Union, so as to provide a true and fair view of the unconsolidated financial position, unconsolidated results of operations, unconsolidated changes in equity and unconsolidated cash flows of the Company for that period. After making enquiries, the Management Board has a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. For this reason, the Management Board continues to accept the going concern principle when preparing the financial statements. In preparing financial statements, the Management Board is responsible for: « selecting and then consistently applying suitable accounting policies in accordance with the applicable standards of financial reporting, * making reasonable and prudent judgments and estimates. + acting in accordance with the applicable accounting standards, with disclosure and explanation of all materially significant deviations in unconsolidated financial statements; and « preparing the financial statements on the going concern basis unless it is inappropriate to presume so. The Management Board is responsible for keeping proper accounting records, which disclose, with reasonable accuracy, at any time the unconsolidated financial position, unconsolidated business results, unconsolidated changes in equity and unconsolidated cash flows of the Company and their compliance with the applicable Croatian Accounting Act. Furthermore, the Management Board is responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. Signed on behalf of and for the Management Board: 30 April 2025 Hrvoje Filipovié dipl.fec. President of the Marjagement Board ec. ement Board Vladimir Kalgi¢ dipl.oec. Member of ‘D Management Board | 3 wranolio dd. Budmanijeva S T 12 Tel: +385 1 2395 741 Fax: +385 1 2303 691 E-mail: [email protected] BDO Croatia d.o.o. 10000 Zagreb Radnička cesta 180 Registrirano kod Trgovačkog suda u Zagrebu pod brojem 080044149 OIB 76394522236 13 INDEPENDENT AUDITOR'S REPORT To the shareholders of Granolio d.d., Zagreb: Report on the audit of the unconsolidated annual financial statements Opinion We performed an audit of the annual unconsolidated financial statements of Granolio d.d., Zagreb, Budmanijeva 5 (''the Company''), which include the Unconsolidated Statement of financial position as at 31 December 2024, Unconsolidated Statement of comprehensive income, the Unconsolidated Statement of cash flows and the Unconsolidated Statement of changes in equity for the year then ended, as well as the accompanying Notes to the unconsolidated financial statements, including the information on significant accounting policies. In our opinion, the accompanying annual unconsolidated financial statements present a true and fair view of the Company's financial position as of 31 December 2024 and its financial performance and cash flows for the year then ended, in accordance with the International Financial Reporting Standards adopted by the European Union (“IFRS”). Basis for Opinion We conducted our audit in accordance with the International Auditing Standards (ISAs). Our responsibilities under those standards are further described in our Independent Auditors' report under section Auditors' responsibilities for the audit of the unconsolidated annual financial statements. We are independent of the Company in accordance with the Code of Ethics for Professional Accountants (IESBA Code), as well as in accordance with the ethical requirements relevant to our audit of the financial statements, and we have fulfilled our other ethical responsibilities in accordance with the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Material Uncertainty Related to Going Concern We draw attention to Note 3.2. “Basis of preparation” to the unconsolidated financial statements, which indicates that, based on the submitted request for pre-bankruptcy proceedings of the Company, the Commercial Court in Zagreb on 28 December 2018 adopted the final Decision on the Company’s pre-bankruptcy settlement with its creditors. The Company continues to carry out measures included in the restructuring programme of the Company. The Management Board of the Company believes that the Company can continue its operations assuming a going concern principle. Our opinion is not modified in respect of this matter. Emphasis of Matter The Company has prepared the annual consolidated financial statements of the Company, and in order to better understand the operations of the Company as whole, users should read the annual consolidated financial statements of the Company related to these annual unconsolidated financial statements. Key audit matters Key audit matters are those matters that, in our professional judgment, are of most significance in our audit of the unconsolidated annual financial statements for the current period. These matters were addressed in the context of our audit of the unconsolidated annual financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. BDO Croatia d.o.o. 14 INDEPENDENT AUDITOR'S REPORT (continued) Report on the audit of the unconsolidated annual financial statements (continued) Key audit matter We have determined the matter described below as the key audit matter to be communicated in our Independent Auditor’s report: Key audit matter How we addressed the key audit matter Revenue recognition In 2023, the Company has stated sales revenues in the amount of EUR 52,517 thousand (for the year ended 31 December 2022, EUR 62,404) in its unconsolidated Statement of comprehensive income. Sales revenue includes: • Sales revenue – domestic • Sales revenue – foreign • Revenue from services Revenue comprises the fair value of the consideration received or receivable for the sale of goods or services in the ordinary course of the Company's activities. Revenues are stated in amounts less value added tax, quantity rebates and sales discounts. In accordance with International Financial Reporting Standard 15, Sales Revenue is recognized when the Company delivers goods to a customer, when it no longer has the influence on the management of the goods and when there is no outstanding liability that could affect the acceptance of the product by the customer. Delivery is made when the products are shipped to a specific location; the risks of loss are transferred to the customer and when one of the following is determined: the wholesaler accepts the products in accordance with the contract, or the deadline for acceptance of products has expired or the Company has objective evidence that all acceptance criteria are met. Considering the significance of revenues presented in the Statement of Comprehensive Income and the risk of recognizing them, we concluded that the occurrence, accuracy and completeness of revenues and their distribution in the correct reporting period is a key audit matter. See notes 3.8 “Revenue Recognition” and 6 “Sales revenue” in the accompanying annual unconsolidated financial statements. Our audit procedures related to this matter included, but were not limited to: - Gaining an understanding of the sales process by interviewing key sales personnel; - Gaining an understanding of key controls related to the recognition of sales revenue; - Examining the design and effectiveness of key controls related to occurrence and accuracy of the revenue recognition; - Performing substantive testing to verify the consistency, accuracy, completeness and timeliness of revenue recognition; - Comparing the external confirmations received of the amounts of outstanding trade receivables at the reporting date with the balances shown in the Company's books of accounts at the same date; - Assessing the compliance of the policy for recognizing revenue from sales with International Financial Reporting Standard 15 – Revenue from Contracts with Customers; - Assessing the adequacy of the disclosures related to the recognition of revenue from sales in accordance with International Financial Reporting Standard 15 – Revenue from Contracts with Customers. BDO Croatia d.o.o. 15 INDEPENDENT AUDITOR'S REPORT (continued) Report on the audit of the unconsolidated annual financial statements (continued) Other information Management Board is responsible for other information. Other information includes the Management Report and the Statement of Application of the Corporate Governance Code but does not include the annual unconsolidated financial statements and our Independent Auditor's Report thereon. Our opinion on the annual unconsolidated financial statements does not include other information. In relation to our audit of the annual unconsolidated financial statements, it is our responsibility to read other information and consider whether the other information is materially inconsistent with the annual unconsolidated financial statements or our audit findings or otherwise appear to be materially misstated. Regarding the Management Report and the Statement on the Application of the Corporate Governance Code, we also carried out the procedures required by the Croatian Accounting Act. These procedures include considering whether the Company’s Management Report has been prepared in accordance with Article 21 of the Accounting Act and whether the Statement on the Application of the Corporate Governance Code has been prepared in accordance with Article 22 of the Accounting Act. Based on the procedures performed, to the extent we are able to assess, we report that: 1. The information in the attached Management Report and Statement on the Application of the Corporate Governance Code is harmonized, in all significant respects, with the attached unconsolidated annual financial statements; 2. The attached Management Report is compiled in accordance with Article 21 of the Accounting Act; and 3. The attached Statement on the Application of the Corporate Governance Code includes the information defined in Article 22 of the Accounting Act. Based on our knowledge and understanding of the Company's operations and the environment in which it operates, which we acquired during our audit, we are required to report whether we have identified material misstatements in the Management Report and Corporate Governance Statement received up to the date of this Independent Auditor's Report. In that sense, we have nothing to report Responsibilities of the Management Board and those charged with governance for the unconsolidated annual financial statements Management Board is responsible for the preparation of unconsolidated annual financial statements that give a true and fair view in accordance with IFRSs, and for those internal controls that the Management Board determines are necessary to enable the preparation of unconsolidated annual financial statements that are free from material misstatement due to fraud or error. In preparing the unconsolidated annual financial statements, Management Board is responsible for evaluation of the Company's ability to continue operations assuming going concern principle, disclosure, if applicable, of issues related to going concern, and using accounting based on going concern principle, unless the Management Board intends to liquidate the Company or discontinue its business or there is no realistic alternative but to do so. Those charged with governance are responsible for overseeing the financial reporting process established by the Company. BDO Croatia d.o.o. 16 INDEPENDENT AUDITOR'S REPORT (continued) Report on the audit of the unconsolidated annual financial statements (continued) Auditor’s Responsibility for the audit of unconsolidated annual financial statements Our goals are to obtain reasonable assurance about whether the unconsolidated annual financial statements, as a whole, are free from material misstatement as a result of fraud or error, and to issue an Independent Auditors’ Report that includes our opinion. Reasonable assurance is a higher level of assurance, but this is no guarantee that an audit performed in accordance with IAS will always detect a material misstatement when it exists. Misstatements may result from fraud or error and are considered as important, if it can reasonably be expected that, individually or in aggregate, they affect the economic decisions of users made based on these unconsolidated annual financial statements. As an integral part of the audit report in accordance with ISA, we make professional judgments and maintain professional scepticism throughout the audit process. We also: • identify and assess the risks of material misstatement of the annual unconsolidated financial statements due to fraud or error, design and perform audit procedures in response to those risks and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of non-detecting a material misstatement of fraud is greater than the risk of error, as fraud may involve collusion, forgery, intentional omission, misrepresentation or circumvention of internal controls. • acquire an understanding of internal controls relevant to the audit 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 Company's internal controls. • assess the appropriateness of the accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. • conclude on the appropriateness of the accounting basis used based on the going concern principle used by the Management Board and based on the obtained audit evidence, we conclude on whether there is significant uncertainty regarding events or circumstances that may create significant doubts about the ability to continue operating for an indefinite period of time. If we conclude that there is significant uncertainty, in our independent auditors’ report we are required to call our attention to related disclosures in the unconsolidated annual financial statements or, if these are inappropriate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our independent auditors’ report. However, future events or conditions may cause the Company to discontinue its operations on a going concern basis. • evaluate the overall presentation, structure and content of the unconsolidated annual consolidated financial statements, including disclosures, as well as whether the annual unconsolidated financial statements reflect the transactions and events which they are based on in a way that achieves a fair presentation. BDO Croatia d.o.o. 17 INDEPENDENT AUDITOR'S REPORT (continued) Report on the audit of the unconsolidated annual financial statements (continued) Auditor’s Responsibility for the audit of unconsolidated annual financial statements (continued) We communicate with those charged with governance, among other issues, the intended scope and timing of audit and important audit findings, including any significant deficiencies in internal controls identified during our audit. We also make a statement to those charged with governance that we have complied with the relevant ethical requirements regarding independence and that we will communicate with them any relationship and other matters that may reasonably be considered to affect our independence as well as, where applicable, on related safeguards. Among the issues communicated to those charged with governance, we identify those issues that are the most important in auditing the annual unconsolidated financial statements of the current period and therefore present the key audit matters. We describe these matters in our Independent Auditor's Report, unless the law or regulation prevents the matters from being publicly disclosed, or when we decide, in extremely rare circumstances, that the matter should not be reported in our Independent Auditors’ Report because the negative consequences of the disclosure could reasonably be expected to outweigh the benefits of public interest from such communication. Statement on other legal requirements On 13 June 2023, the General Assembly of the Company appointed us to audit the annual unconsolidated financial statements of the Company for the year 2023. As of the date of this report, we are continuously engaged in performing statutory audits of the Company from the audit of the annual unconsolidated financial statements for the year 2019 to the audit of the annual unconsolidated financial statements of the Company for the year 2023, which is a total of five years. In the audit of the Company's annual unconsolidated financial statements for the year 2023, we determined the material significance for the annual unconsolidated financial statements as a whole in the amount of EUR 788 thousand, which represents approximately 1.5% of the realized sales revenue for the year 2023. We have chosen sales revenue as a measure of materiality because we believe it is the most appropriate measure given the significant fluctuations in profit before tax in the current and prior periods. Our audit opinion is consistent with the supplementary report for the Audit committee of the Company prepared in accordance with the provisions of Article 11 of Regulation (EU) no. 537/2014. During the period between the starting date of the audited annual consolidated financial statements of the Company for 2023 and the date of this Independent Auditor’s Report, we did not provide prohibited non-audit services to the Company and did not provide services for the design and implementation of internal control procedures or risk management related to preparation and/or control of financial information or the design and implementation of technological systems for financial information, and we have maintained independence in relation to the Company. BDO Croatia d.o.o. 18 INDEPENDENT AUDITOR'S REPORT (continued) Report on the audit of the unconsolidated annual financial statements (continued) Report based on the requirements of Delegated Regulation (EU) 2018/815 amending Directive 2004/109/EC of the European Parliament and the Council regarding regulatory technical standards for the specification of the European Single Electronic Format Auditor's assurance report on the compliance of annual unconsolidated financial statements (hereinafter: financial statements), prepared pursuant to the provision of Article 462, paragraph 5 of the Capital Market Act (Official Gazette, nos. 65/18, 17/2, 83/21 and 151/22) by applying the Delegated Regulation (EU) 2018/815 establishing a single electronic reporting format for issuers (hereinafter: the ESEF Regulation). We conducted the engagement with expressing reasonable assurance as to whether the financial statements prepared for the purposes of public disclosure pursuant to Article 462, paragraph 5 of the Capital Market Act, which are contained in the electronic file granoliodd-2024-12-31-hr, in all material aspects prepared in accordance with the requirements of the ESEF Regulation Responsibilities of Management and those charged with governance The Management of the Company is responsible for the preparation and content of the financial statements in accordance with the ESEF Regulation. In addition, the Management is responsible for maintaining a system of internal controls that reasonably assures the preparation of financial statements without material non-compliance with the reporting requirements of the ESEF Regulation, whether due to fraud or error. The Management is also responsible for: - public disclosure of the financial statements contained in the annual report in a valid XBRL format, and - selection and use of XBRL codes in accordance with the requirements of the ESEF Regulation. Those charged with governance are responsible for overseeing the preparation of financial statements in the ESEF format as part of the financial reporting process. Auditor's responsibilities It is our responsibility to express a conclusion, based on the audit evidence gathered, as to whether the financial statements are free from material non-compliance with the requirements of the ESEF Regulation. We conducted this reasonable assurance engagement in accordance with International Standard on Assurance Engagements (ISAE) 3000 (revised) - Assurance engagements other than audits or reviews of historical financial information. BDO Croatia d.o.o. 19 INDEPENDENT AUDITOR'S REPORT (continued) Report on the audit of the unconsolidated annual financial statements (continued) Report based on the requirements of the ESEF Regulation (continued) Procedures performed The nature, timing and extent of the procedures selected depend on the auditor's judgment. Reasonable assurance is a high level of assurance. However, it does not assure that the scope of testing will reveal all significant (material) non-compliance with the ESEF Regulation. As part of the selected procedures, we have performed the following activities: - we have read the requirements of the ESEF Regulation, - we have gained an understanding of the Bank's internal controls relevant to the application of the requirements of the ESEF Regulation, - we have identified and assessed the risks of material non-compliance with the ESEF Regulation due to fraud or errors; and - based on that, we have planned and designed procedures for responding to assessed risks and for obtaining reasonable assurance for the purpose of expressing our conclusion. The aim of our procedures was to assess whether: - the financial statements, which are included in the unconsolidated annual report, are prepared in the valid XHTML format, - the information contained in the unconsolidated financial statements required by ESEF Regulation, are labelled and all labels meet the following requirements: - XBRL mark-up language was used, - the elements of the basic taxonomy listed in the ESEF Regulation with the closest accounting meaning were used, unless an additional element of taxonomy has been created in accordance with Annex IV ESEF Regulations, - the labels comply with the common labelling rules under the ESEF Regulation. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our conclusion. 20 Granolio d.d., Zagreb 21 Unconsolidated Statement of Comprehensive Income for the year ended 31 December 2024 in EUR ‘000 Note 2024 2023 Income Sales revenue 5 58,706 52,517 Other operating income 6 3,089 1,548 Total operating income 61,794 54,065 Change in inventory value 17 37 (155) Material expenses 7 (51,581) (46,600) Employee expenses 8 (4,292) (3,313) Depreciation and amortisation 13, 14,15 (1,077) (1,048) Other expenses 9 (593) (456) Value adjustment expenses (5) - Other operating expenses 10 (637) (272) Total operating expenses (58,148) (51,845) Operating profit 3,646 2,220 Financial income 11 995 857 Financial expenses 11 (1,308) (633) Net financial result (314) 224 Profit before tax 3,333 2,444 Profit tax 12 (513) (474) Profit after tax 2,820 1,970 Other comprehensive income - - Total comprehensive income 2,820 1,970 Earnings per share Basic and diluted earnings per share (in euros and cents) 29 1.48 1.04 * The accompanying notes are an integral part of these financial statements. Granolio d.d., Zagreb 22 Unconsolidated Statement of Financial Position as of 31 December 2024 in EUR ‘000 in EUR ‘000 Note 31 December 2024 31 December 2023 FIXED ASSETS Intangible asset 13 997 32 Right-of-use assets 14 89 71 1,086 103 Property, plant and equipment Land 1,318 1,219 Buildings 18,411 13,079 Plants, equipment and tools 4,541 2,344 Other tangible assets 15 10 Advances for tangible assets - 185 Investment property 770 613 Tangible assets under construction 5,190 1,240 15 30,245 18,690 Financial assets measured at amortized cost Loans, deposits and similar 16c 7 21 Investments in subsidiaries 16a 9,347 9,347 Long-term receivables 16b 375 225 9,730 9,593 CURRENT ASSETS Inventories 17 8,480 2,376 Receivables Receivables from related parties 28 1,179 1,188 Receivables from customers 18a 10,073 7,793 Receivables from the state and other institutions 18b 1,763 189 Other receivables 18c 1,951 411 14,966 9,581 Financial assets measured at amortized cost Loans to related parties 19, 28 1,106 1,097 Loans, deposits and similar granted 19b 1,433 1,133 Investment in securities 19a 20 20 2,559 2,250 Cash and cash equivalents 20 276 955 Prepaid expenses and accrued income 21 66 83 TOTAL ASSETS 67,408 43,631 Granolio d.d., Zagreb 23 Unconsolidated Statement of Financial Position (continued) as of 31 December 2024 in EUR ‘000 in EUR ‘000 Note 31 December 2024 31 December 2023 CAPITAL AND RESERVES Registered capital 2,524 2,524 Capital reserves 11,171 11,175 Revaluation reserves 5,264 5,663 Legal reserves 1,239 1,141 Reserves for own shares 110 106 Retained earnings/ (Loss carried forward) 897 (1,370) Profit of the current year 2,820 1,970 22 24,025 21,209 LONG-TERM LIABILITIES Deferred tax liability 12 1,156 1,243 Liabilities to banks and other financial institutions 23 16,354 6,133 Loan liabilities 24 531 265 Lease obligations 14 47 18 Liabilities to suppliers - 171 Liabilities for securities 25 332 499 18,420 8,329 SHORT-TERM LIABILITIES Liabilities for loans from affiliated companies 28 - - Liabilities to affiliated companies 28 128 1,142 Liabilities to banks and other financial institutions 23 1,261 1,254 Loan liabilities 24 4,469 2,409 Lease obligations 14 30 35 Liabilities for securities 25 166 166 Liabilities for advances 26a 1,002 1,096 Liabilities to suppliers 26b 16,253 6,383 Liabilities for taxes, contributions and similar benefits 26c 190 577 Accrued expenses and deferred income 26d 701 785 Other short-term liabilities 26e 763 246 24,963 14,093 TOTAL EQUITY AND LIABILITIES 67,408 43,631 * The accompanying notes are an integral part of these financial statements. Granolio d.d., Zagreb 24 Unconsolidated Statement of Changes in Equity for the year ended 31 December 2024 in EUR ‘000 Share capital Capital reserves Legal reserves Reserves for own shares Revaluation reserves (Loss carried forward/Retained earnings) Profit for the current year Total Balance as of 1 January 2023 2,524 11,175 965 106 6,061 (5,202) 3,610 19,239 Schedule of results for 2023 - - 176 - - 3,433 (3,610) - Release of revaluation reserve - - - - (398) 398 - - Total transactions with owners - - 176 - (398) 3,831 (3,610) - Profit for the current year - - - - - - 1,970 1,970 Total comprehensive income for the year - - - - - - 1,970 1,970 Balance as of 31 December 2023 2,524 11,175 1,141 106 5,663 (1,370) 1,970 21,209 Schedule of results for 2023 - - 98 - - 1,872 (1,970) - Release of revaluation reserve - - - - (398) 398 - - Acquisition of treasury shares (4) 4 (4) (4) Total transactions with owners - (4) 98 4 (398) 2,266 1,970 (4) Profit for the current year - - - - - - 2,820 2,820 Total comprehensive income for the year - - - - - - 2,820 2,820 Balance as of 31 December 2024 2,524 11,171 1,239 110 5,264 897 2,820 24,025 * The accompanying notes are an integral part of these financial statements. Granolio d.d., Zagreb 25 Unconsolidated Statement of Cash Flows For the year ended 31 December 2024 in EUR ‘000 in EUR ‘000 in EUR ‘000 Notes 2024 2023 Result before tax 3,333 2,444 Reconciliation of results: Depreciation 13,14,15 1,077 1,048 (Gain)/Loss on sale and disposal of fixed assets, net (14) 31 Value adjustment of inventories - 6 Dividend income 11 (500) (800) Write-off of receivables - 266 Inventory surplus 6 (307) (367) Gains from other financial activities 11 (57) (225) Net interest expense 11 864 570 Operating result before changes in working capital 4,396 2,973 (Increase)/Decrease in inventories (5,797) 771 (Increase)/Decrease) in receivables (3,910) 1,771 Increase/(Decrease) in liabilities 8,235 (1,836) Advances preceived (1,615) 798 Operating result after changes in working capital 1,308 4,477 Profit tax paid (440) (714) Interest paid (864) (614) Cash flow from operating activities 4 3,149 Interest collected 420 40 Cash expenditure for acquisition of property, plant, equipment and intangible assets (13,562) (2,072) Cash expenditure for acquired shares (93) - Cash expenditure for loans granted (5,038) (1,341) Cash receipts from collection of loans granted 4,742 1,048 Cash receipts from sale of shares - - Cash receipts from dividends received 500 800 Cash flow from investing activities (13,031) (1,525) Cash expenditure for repayment of loans and borrowings (8,508) (4,696) Cash receipts for loans received 21,061 4,048 Net expenditure on securities 25 (166) (246) Cash expenditure for repayment of leases 29 (35) (35) Cash expenditure for acquiring own shares (4) - Cash flow from financing activities 12,348 (929) Net changes in cash and cash equivalents (679) 695 Cash at the beginning of the period 955 260 Cash at the end of the period 276 955 in EUR ‘000 * The accompanying notes are an integral part of these financial statements. Granolio d.d., Zagreb Notes to the unconsolidated financial statements (continued) for the year ended 31 December 2024. 26 1. GENERAL INFORMATION Granolio d.d. was incorporated as a Croatian joint stock company in December 1996. The registered seat of the Company is in Zagreb and its business units are located in Gornji Draganac, Slavonski Brod, Velika Kopanica and Osijek. Based on Decision No. 48. St-2021/2017 dated 27 July 2017; Commercial Court in Zagreb has opened a pre- bankruptcy procedure against Granolio d.d. and nominated Nada Reljić for the commissioner. On 6 December 2018, at the hearing for the amended restructuring plan vote at the Commercial Court in Zagreb, the restructuring plan was approved. The Court’s Decision confirming the pre-bankruptcy agreement entered into force on 28 December 2018. The following subsidiaries made up the Granolio Group as of 31 December 2024: Zdenka - mliječni proizvodi d.o.o., Veliki Zdenci, Zdenačka farma d.o.o., Veliki Zdenci. The core activities of the company Granolio d.d. and its subsidiaries comprise the production of food, agricultural production, warehousing of agricultural products and trade in bakery industry products, agricultural products and raw materials for agricultural production. In mid-2007, the Company acquired the entire share in Zdenačka farma d.o.o., Veliki Zdenci, for 374 thousand EUR 374 thousand EUR thousand. The subsidiary produces high-quality milk produced by dairy cows of high genetic potential. Pursuant to the decision of the Company's General Assembly dated 16 March 2015, the share capital of Zdenačka farma was increased from EUR 1,794 thousand to EUR 3,198 thousand by issuing a new business share in the amount of EUR 2,124 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's activities include grains warehousing and drying. As of 27 November 2017, the share capital of Prerada Žitarica was increased from EUR 3,691 thousand to EUR 8,470 thousand by issuing a new business share in the amount of EUR 5,401 thousand. On 30 April 2018, the Commercial Court in Zagreb adopted the Decision on the merger, formally ceasing the operations of the company Prerada žitarica. 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 Board or the majority of vote at Zdenka mliječni proizvodi d.o.o. and Žitar d.o.o. On 4 March 2019, the Company sold its shares in the company Žitar d.o.o. The transaction was entered into the court registry on 14 March 2019. Management Board of Granolio d.d. on 31 December 2024 consisted of: Hrvoje Filipović - President (since 23 February 2011), Vladimir Kalčić - Member (since 23 February 2011), and Davor Mitrović - Member (from 28 April 2022). Supervisory Board of Granolio d.d. on 31 December 2024, consisted of: Franjo Filipović – President (since 23 February 2011), Jurij Detiček – member (since 23 February 2011), Tihomir Osmak - member (from 13 June 2019), and Davor Štefan – member (since 16 January 2015) Granolio d.d., Zagreb Notes to the unconsolidated financial statements (continued) for the year ended 31 December 2024. 27 2. ADOPTION OF NEW AND AMENDED INTERNATIONAL FINANCIAL REPORTING STANDARDS (“IFRS”) AND INTERPRETATIONS First application of new amendments to existing standards in force for the current reporting period The following amendments to the existing standards issued by the International Accounting Standards Board (IASB) and adopted by the EU are effective for the period beginning 1 January 2024: • Supplier Finance Arrangements (Amendments to IAS 7 “Statement of Cash Flows” & IFRS 7 “Financial Instruments: Disclosures”); • Lease Liability in a Sale and Leaseback (Amendments to IFRS 16 “Leases”); • Classification of Liabilities as Current or Non-Current (Amendments to IAS 1 “Presentation of Financial Statements”); and • Non-current Liabilities with Covenants (Amendments to IAS 1 “Presentation of Financial Statements”) The adoption of these amendments to existing standards did not lead to significant changes in the Company's financial statements. Standards, amendments to existing standards and interpretations issued by the IASB and adopted in the European Union, but not yet effective The following amendments are effective for the annual reporting period beginning 1 January 2025: • Lack of Exchangeability (Amendment to IAS 21 “The Effects of Changes in Foreign Exchange Rates”); Granolio d.d., Zagreb Notes to the unconsolidated financial statements (continued) for the year ended 31 December 2024. 28 2. ADOPTION OF NEW AND AMENDED INTERNATIONAL FINANCIAL REPORTING STANDARDS (“IFRS”) AND INTERPRETATIONS (CONTINUED) Standards and amendments to the existing standards issued by IASB and not yet adopted by the EU IFRS currently adopted in the European Union do not differ significantly from the regulations adopted by the International Accounting Standards Board (IASB), except for the following new standards and amendments to existing standards, the adoption of which the European Union has not yet decided on (date of entry into force set out below relate to IFRSs issued by the IASB): The following amendments are effective for the annual reporting period beginning 1 January 2026: • Amendments to the Classification and Measurement of Financial Instruments (Amendments to IFRS 9 “Financial Instruments” and IFRS 7 “Financial Instruments: Disclosures”) • Contracts Referencing Nature-dependent Electricity (Amendments to IFRS 9 “Financial Instruments” and IFRS 7 “Financial Instruments: Disclosures”) The following standards are effective for the annual reporting period beginning 1 January 2027: • IFRS 18 Presentation and Disclosure in Financial Statements • IFRS 19 Subsidiaries without Public Accountability: Disclosures. The Company is currently assessing the effect of these new accounting standards and amendments. IFRS 18 Presentation and Disclosure in Financial Statements, which was issued by the IASB in April 2024 supersedes IAS 1 and will result in major consequential amendments to IFRS Accounting Standards including IAS 8 Basis of Preparation of Financial Statements (renamed from Accounting Policies, Changes in Accounting Estimates and Errors). Even though IFRS 18 will not have any effect on the recognition and measurement of items in the separate financial statements, it is expected to have a significant effect on the presentation and disclosure of certain items. These changes include categorisation and sub-totals in the statement of profit or loss, aggregation/disaggregation and labelling of information, and disclosure of management-defined performance measures. The Company does not expect to be eligible to apply IFRS 19. Granolio d.d., Zagreb Notes to the unconsolidated financial statements (continued) for the year ended 31 December 2024. 29 3. SIGNIFICANT ACCOUNTING POLICIES 3.1 Compliance statement These unconsolidated financial statements are prepared in accordance with the Accounting Act and the International Financial Reporting Standards (“the IFRSs”) as adopted by the 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 that are measured at revalued amounts or fair values at the end of each reporting period, as explained in the accounting policies below, and in line with the International Financial Reporting Standards (“the IFRSs”) as adopted by the European Union, and Croatian laws. Historical cost is generally based on the fair value of the consideration given in exchange for assets. The Company maintains its accounting records in the Croatian language, in Euro and in accordance with Croatian laws and the accounting principles and practices observed by enterprises in Croatia. On 6 December 2018, at the hearing for the amended restructuring plan vote at the Commercial Court in Zagreb, the restructuring plan was approved. The Court’s Decision confirming the pre-bankruptcy agreement entered into force on 28 December 2018. The Company expects to continue its operations as a going concern and to settle all liabilities determined in the pre-bankruptcy settlement procedure. The Company has a sufficient level of liquidity to ensure the fulfilment of obligations to creditors and, in accordance with the business plan, estimates that a positive cash flow will be generated from the core business in future periods. Throughout 2024, a stable cash flow and funds were provided to meet due liabilities to suppliers, employees, and the state, which was achieved through careful planning and liquidity management. So far, the Company has regularly repaid its liabilities in accordance with the pre-bankruptcy settlement, and it is expected that it will continue to operate smoothly and repay its liabilities in accordance with the final settlement in the future. The further investment and business plan will depend on the restructuring plan adopted as part of the pre-bankruptcy settlement. The Management Board of the Company continues intensively with activities for achieving capital adequacy as an essential condition for ensuring the long-term survival of the Company. 3.3 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 decisions of the investee but is not control or joint control over those policies. A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control. The results, assets and liabilities of associates or joint ventures are reported in these unconsolidated financial statements at cost, except when the investment, or a portion thereof, is classified as held for sale, in which case it is accounted for in accordance with IFRS 5 “Non-current Assets Held for Sale and Discontinued Operations”. The requirements of IAS 9 are applied to determine whether it is necessary to recognise any impairment loss with respect to the Company’s investment in an associate or a joint venture. When necessary, the entire carrying amount of the investment (including goodwill) is tested for impairment in accordance with IAS 36 “Impairment of Assets” as a single asset by comparing its recoverable 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 carrying amount of the investment. Any reversal of that impairment loss is recognised in accordance with IAS 36 to the extent that the recoverable amount of the investment subsequently increases. Granolio d.d., Zagreb Notes to the unconsolidated financial statements (continued) for the year ended 31 December 2024. 30 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 3.4 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 for the liabilities, relating to the arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control. When a Company 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, revenues and expenses. When a Company entity transacts with a joint operation in which a group entity is a joint operator (such as a purchase of assets), the Company does not recognise its share of the gains and losses until it resells those assets to a third party. 3.5 Interests in subsidiaries Subsidiary is an entity in which the Company has significant influence in making financial and business policy decisions and controlling such policies. The assumption is that control exists when a parent owns, directly or indirectly through a subsidiary, more than half of the voting power of the entity, unless in exceptional cases when can be clearly proven that such ownership is not control. Control also exists when the parent company has half or less than half the voting power of the entity when there is: a) the power over more than half of the voting rights under agreements with other investors b) the power to manage the financial and business policies of the entity based on a statute or agreement c) the power to appoint or dismiss most of the members of the management or equivalent administrative body or d) the power to give a decisive vote at the meetings of the management or the equivalent administrative body. Investments in companies over which the Company has control and significant impact in these financial statements are stated at cost, less any impairment losses, if necessary. Granolio d.d., Zagreb Notes to the unconsolidated financial statements (continued) for the year ended 31 December 2024. 31 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 3.6 Functional and reporting currency The items included in the Company's financial statement are expressed in the currency of the primary economic environment in which the Company operates (functional currency). Considering that the Republic of Croatia introduced the euro as the official currency as of 1 January 2023, according to the Law on the introduction of the euro as the official currency in the Republic of Croatia, the Company prepared financial statements for the year ended 31 December 2023, and the financial statements for the year ended 31 December 2024 in EUR. From 1 January 2023, the euro is also the functional currency of the Company (until 1 January 2023, it was HRK). Although the change in the presentation currency in the financial statements represents a change in accounting policy that requires retroactive application, the Company did not publish the third balance sheet in the financial statements for the year ended 31 December 2023 in accordance with International Accounting Standard 8 (IAS) Accounting Policies, Changes in Accounting Estimates and Errors, given that it determined that the change in the presentation currency has no significant impact on the Company's financial statements, due to the stable HRK/EUR exchange rate over the past few years. The financial statements for the year 2022 have been compiled in HRK as the functional and reporting currency, which was valid until 31 December 2022. 3.7 Using assumptions and estimates 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 assumptions 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 or in the period of revision and future periods if the revision affects both current and future periods. Judgements made by the Management Board in applying IFRS that have a significant impact on the financial statements and areas of judgement involving a risk of material adjustment in the following year are presented in Note 4. Granolio d.d., Zagreb Notes to the unconsolidated financial statements (continued) for the year ended 31 December 2024. 32 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 3.8 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 Company’s operations. Revenues are stated net of value added tax, quantity and sales discounts. The Company recognises revenue when the amount of the revenue can be measured reliably, when future economic benefits will flow into the Company and when the specific criteria for the entire Company’s activities described below are met. (i) Income from the wholesale of products and trade goods 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 goods to the wholesaler, when it no longer 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 risk of loss is 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 deadline has passed; or the Company has objective evidence that all 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 discounts are 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 short- term financial assets. (ii) Income from the retail sale of products and merchandise Retail product and merchandise sales are recognised upon the sale to the customer. Retail sales are generated in cash. The Company does not have specific customer award schemes. (iii) Sale of services 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 be provided. (iv) Financial income Financial income consists of interest earned on investments and foreign exchange gains. Interest income is recognised as it accrues, using the effective interest method. Dividend income is recognised when the right to receive payment has been established. Granolio d.d., Zagreb Notes to the unconsolidated financial statements (continued) for the year ended 31 December 2024 33 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 3.9 Foreign currencies Foreign-currency transactions and balances Transactions in foreign currencies are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currency at the balance sheet date are translated into the functional currency at the foreign exchange rate ruling at the reporting date. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and 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 re- translated. 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. 3.10 Borrowing costs Borrowing costs that are directly attributable to the acquisition or construction of a qualifying asset, which is a time- consuming asset that is required to be ready for its intended use or sale, are charged to the cost of the asset until it is largely ready for intended use or sale. Investment income earned on the temporary investment of earmarked loan funds until the beginning of their spending on a qualifying asset is deducted from borrowing costs whose capitalization is acceptable. All other borrowing costs are included in profit or loss in the period in which they are incurred. 3.11 Employee benefits (i) Pensions and other post-employment benefits In the normal course of business the Company makes payments, through salary deductions, to mandatory pension funds on behalf of its employees, as required by law. All contributions paid to the mandatory pension funds are recognised as salary expense when accrued. The Company is not obliged to provide any other post-employment benefits. (ii) Long-term employee benefits The Company does not recognise liability 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. (iv) Share-based payments The Company makes no share-based payments to its employees. Granolio d.d., Zagreb Notes to the unconsolidated financial statements (continued) for the year ended 31 December 2024 34 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 3.12 Dividend 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 General Assembly.. 3.13 Operating segment reporting A segment is a distinguishable component of the Company that is engaged either in providing related products or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments. Based on the internal reporting structure, the Company monitors the performance of the following segments: - Milling - Wholesale - Other (services, livestock, 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 (the Management Board) in order to allocate resources to the segments and to assess their performance. Details about the operating segments are disclosed in Note 5 to the unconsolidated financial statements. Comparative information has been presented on the principle of comparability. Granolio d.d., Zagreb Notes to the unconsolidated financial statements (continued) for the year ended 31 December 2024 35 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 3.14 Taxation (i) Profit tax Profit tax expense comprises current and deferred taxes. Profit tax expense is recognised in profit or loss to the extent of the tax relating to items within equity when the expense is also recognised through other comprehensive income. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the date of the financial statements, and any adjustment to tax payable in respect of previous years. (ii) Deferred tax assets and liabilities Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: initial recognition of goodwill, initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit, as well as differences which refer to investing into subsidiaries and joint undertakings when it is probable that the relevant situation will not change in the near future. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which temporary difference can be utilised. Deferred tax assets are recognised only to the extent that it is probable that they could be utilised as a tax benefit. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and if they relate to taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or realise them simultaneously. (iii) Tax exposure In determining the amount of current and deferred tax, the Company considers the impact of uncertain tax positions and whether additional taxes and interest may be due. This assessment relies on estimates and assumptions and may involve a series of judgements about future events. New information may become available that causes the Company to change its judgement regarding the adequacy of existing tax liabilities; such changes to tax liabilities will impact tax expense in the period that such a determination is made. (iv) Value added tax (VAT) The Tax Administration 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. Where an amount receivable is impaired, the impairment loss is recognised in the gross amount of the receivable, including VAT. Granolio d.d., Zagreb Notes to the unconsolidated financial statements (continued) for the year ended 31 December 2024 36 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 3.15 Property, plant and equipment Property, plant and equipment are initially stated at cost, which includes the purchase price, including import duties and non-refundable taxes after deduction of trade discounts and rebates, as well as all costs directly attributable to bringing the property to its location and working condition for its intended use. Property, plant and equipment are recognized if it is probable that future economic benefits attributable to the asset will flow to the Company; if the cost of the asset can be reliably determined, and if the individual purchase value of the asset is greater than EUR 665 (in 2023: EUR 464,53). After initial recognition, land and buildings that are used in the production or delivery of goods or services, or for administrative purposes are shown in the statement of financial position in revalued amounts, which represent their fair value on the revaluation date less value correction (accumulated depreciation) and accumulated impairment losses. Revaluation is carried out regularly so that the carrying amounts do not differ materially from the amounts that would be determined using fair value at the end of the reporting period Every increase resulting from land and building revaluation is reported in the statement of comprehensive income, except if it cancels the decrease resulting from the revaluation of the same asset which has been previously recognised in the statement of profit or loss, and in that case the increase is recorded in the statement of profit or loss up to the amount of the previously stated decrease. A decrease in the carrying amount arising on the revaluation of such land and buildings is recognised in profit or loss to the extent that it exceeds the balance, if any, held in the properties revaluation reserve relating to a previous revaluation of that asset. Properties under construction for production, supply or administrative purposes are carried at cost, less any recognised impairment loss. The purchase cost entails the professional services fee cost, and in case of qualifying assets, borrowing costs capitalised pursuant to the Company’s accountancy policy. Fixed tangible assets under construction are classified to the appropriate categories of property, plant and equipment when completed and ready for intended use. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use. Depreciation on revalued buildings is recognised in profit or loss. On the subsequent sale or retirement of a revalued property, the attributable revaluation surplus remaining in the property’s revaluation reserve is transferred directly to 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 following useful lives are used in the calculation of depreciation: 2024 2023 Buildings 40 years 40 years Plants and equipment 10 years 10 years Office equipment 4 years 4 years Telecommunications equipment 2 years 2 years Personal vehicles 2.5 years 2.5 years Delivery vehicles 4 years 4 years 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 loss arising on the disposal or retirement of an 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. Granolio d.d., Zagreb Notes to the unconsolidated financial statements (continued) for the year ended 31 December 2024 37 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 3.16. Investment property Investment property refers to property held for the purpose of lease income or increase in property value or both. After initial recognition, the Company chose for its subsequent measurement accounting policy a purchase cost model and applies its policy to all of its investment property. 3.17. Intangible assets Intangible 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 determined at the fair value unless the exchange lacks commercial substance or the fair value of the asset received or disposed of cannot be determined reliably, in which case the cost is determined as the carrying amount of the asset disposed of. 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 its intended use. The cost is amortised over the useful life of software, which has been estimated at 5 years. Trademarks Acquired trademark rights are capitalised based on the cost and are amortized over their estimated useful life, which has been estimated at 20 years. 3.18 Impairment of property, plant, 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 (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates 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. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease, in line with the applicable Standard stipulating the requirements concerning the relevant asset revaluation. When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. Impairment loss reversal is immediately recognised as income, unless the relevant asset is not stated as a revalued amount, in which case the reversed impairment loss is stated as an increase due to revaluation in line with the applicable Standard stipulating the requirements concerning the relevant asset revaluation. Granolio d.d., Zagreb Notes to the unconsolidated financial statements (continued) for the year ended 31 December 2024 38 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 3.19 Leases All leases are calculated by recognizing the right-of-use asset and the lease liabilities except for: • Low value leases; and • Leases whose lease term ends in a period of 12 months from the date of first application or less. The lease liability is calculated at the present value of the contractual future payments to the lessor over the term of the lease, less the discount rate determined in relation to the rate inherent in the lease, unless it is (as is usually the case) not easy to determine, in which case the Company's incremental borrowing rate at the inception of the lease is used. Variable lease payments are included in the calculation of lease liabilities only if they depend on an index or rate. In this case, the initial calculation of the lease liability assumes that the variable element will remain unchanged for the duration of the lease. Other variable lease payments represent an expense in the period to which they relate. At the date of initial recognition, the carrying amount of the lease liability includes: • amounts expected to be paid by the lessee under residual value guarantees; • the cost of executing the purchase option if it is certain that the lessee will use that option; and • payment of fines for termination of the lease if the lease period reflects that the lessee will take the opportunity to terminate the lease Right-of-use assets are initially measured at the amount of the lease liability, less all lease incentives received and increased by: • all lease payments made on or before the start date of the lease; • all initial direct costs; and • the amount of the provision recognized in the event that the Company contractually bears the costs of dismantling, removing or rebuilding the location of the property. Right-of-use assets are reduced by the accumulated depreciation calculated on a straight-line basis over the term of the lease, or the remaining economic life of the asset, if it is considered to be shorter than the lease term. The useful life of the right-of-use assets is shown as follows: 2024 Vehicles 5 years 5 years Equipment 10 years 10 years After the initial measurement, the lease liability increases to reflect interest on lease liabilities and decreases to reflect lease payments made. The lease liability is subsequently measured when there is a change in future lease payments resulting from a change in the index or rate, or when there is a change in the estimate of the term of any lease. For financial leases, the Company recognizes right-of- use assets and the lease liability. 3.20 Inventories Inventories of raw materials and spare parts are stated at the lower of cost and net realizable value, determined using the weighted average cost method. Net realisable value represents the estimated selling price in the ordinary course of business less all variable selling costs. The cost of work in progress and finished goods comprises raw materials, direct labour, other direct costs and related production overheads (based on normal operating capacity). Trade goods are carried at the lower of purchase cost and selling price (less applicable taxes and margins). Small inventory and tools are expensed when put into use. Granolio d.d., Zagreb Notes to the unconsolidated financial statements (continued) for the year ended 31 December 2024 39 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 3.21 Cash and cash equivalents Cash and cash equivalents consist of balances on accounts with banks and cash in hand. For the purposes of the unconsolidated statement of financial position, bank overdrafts are included in current liabilities. 3.22 Share capital 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 related 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. 3.23. State grants Government grants are not recognized until there is a reasonable belief that the Company will fulfil all the conditions defined in the grant agreement and that the grant will be received. Government grants whose primary condition is that the Company purchases, builds or otherwise acquires fixed assets are recognized as deferred income in the statement of financial position and are recognized systematically and reasonably during the useful life of the asset in the statement of profit and loss. Government grants are recognized as income over the period in accordance with the related costs (which are intended to be reimbursed) on a systematic basis. Government grants received as compensation for already incurred costs or for the purpose of providing direct financial support to the Company without further related costs are recognized in the statement of profit and loss in the period in which they were received. 3.24 Financial instruments Financial assets and financial liabilities are recognised when a Company entity becomes a party to the contractual provisions of the instrument. 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. Granolio d.d., Zagreb Notes to the unconsolidated financial statements (continued) for the year ended 31 December 2024 40 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 3.25 Financial assets Financial assets and financial liabilities are recognised in the statement of financial position of the Company when the Company becomes a party to the contractual provision of the instrument. Financial assets and financial liabilities are initially measured at fair value. Transaction costs which may be directly attributed to the acquisition or issuing the financial assets and financial liabilities (other than financial assets and financial liabilities measured at fair value through profit or loss) are added to or deducted from the fair value of financial assets and financial liabilities at initial recognition, where appropriate. Transaction costs which may be directly attributed to the acquisition of financial assets or financial liabilities at fair value through profit and loss are recognised immediately in profit and loss. All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. All regular purchases or sales represent purchases or sales of financial assets which require delivery in the framework established in regulations or market practice. All recognised financial assets are subsequently entirely measured at depreciated cost, fair value through other comprehensive income or fair value through profit or loss, depending on the business model and characteristics of contracted cash flows of financial assets. Classification of financial assets Debt instruments that meet the following conditions are measured subsequently at amortised cost: • the financial asset is held within a business model whose objective is achieved by collecting contractual cash flows; and • contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. (i) Depreciated cost and effective interest method The effective interest method is a method of calculating the depreciated cost of a debt instrument and of allocating interest income over the relevant period. For financial assets, aside from purchased or incurred credit-impaired financial assets (i.e. assets which were credit-impaired during the initial recognition), the effective interest rate is a rate that accurately discounts the estimated future cash inflow (including all fees and points paid or received, which constitute an integral part of the effective interest rate, transaction costs and other premiums or discounts), excluding the expected credit losses, during the expected life of a debt instrument or, where appropriate, during a shorter period, to gross carrying amounts of the debt instrument at initial recognition. For purchased or incurred credit-impaired financial assets, the effective interest rate adjusted to the loan is calculated by discounting estimated future cash flows, including expected credit losses, to the depreciated cost of the debt instrument at initial measurement. The depreciated cost of financial assets is the amount at which the financial instrument is measured at initial recognition, less of payments of principal and plus accumulated depreciation, using the effective interest rate method for any difference between the opening amount and amount at maturity, adjusted for any loss. Gross carrying amount of financial assets is the depreciated cost of financial assets before adjustments for any loss. Interest income is recognised by applying the effective interest rate for debt instruments, which are subsequently measured at depreciated cost and FVTOCI. For financial assets, other than purchased or incurred credit-impaired financial assets, interest income is calculated by applying the effective interest rate to the gross carrying amount of financial assets, aside for the financial assets which subsequently became credit-impaired. For financial assets which subsequently became credit-impaired, interest income is recognised by applying the effective interest rate to the depreciated cost of financial assets. If, in the following reporting periods, the credit risk for the credit- impaired financial instrument improves in the way that the financial instrument is no longer credit-impaired, the interest income is recognised by applying the effective interest rate to the gross carrying amount of the financial assets. Granolio d.d., Zagreb Notes to the unconsolidated financial statements (continued) for the year ended 31 December 2024 41 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 3.25 Financial assets (continued) (i) Depreciated cost and effective interest method (continued) For the purchased or incurred credit-impaired financial assets, the Company recognises interest income by using the effective interest rate adjusted by the credit risk to the depreciated cost of financial assets at initial recognition. The calculation is not returned to a gross basis, even if the credit risk of the financial assets subsequently improves so that the financial assets are no longer credit impaired. Interest income is recognised in profit or loss. (ii) Impairment of financial assets The Company recognises the provisions for expected credit losses from debt instruments measured at amortized cost and for trade receivables. The amount of expected credit losses is calculated at every reporting date in order to reflect the changes in the credit risk since the initial recognition of an individual financial instrument. The Company always recognises life-long expected credit losses (ECL) for trade receivables based on a selected simplified approach. The expected credit losses on these financial assets are estimated using a provision matrix based on the Company’s historical credit loss experience, adjusted for debtor-specific factors. The Company currently does not adjust the loss rate for future macroeconomic conditions, since it has not performed an analysis of the impact of macroeconomic factors on historical loss rates, including the time value of money, where appropriate. For all other financial instruments, the Company recognises the lifelong ECL in case of a significant increase in credit risk since initial recognition. However, if the credit risk for the financial instrument has not significantly increased since the initial recognition, the Company measures the loss for this financial instrument in the amount equal to a 12-month ECL. Life-long ECL represents expected credit losses resulting from all potential cases of default during the expected lifetime of the financial instrument. By contrast, a 12-month ECL represents a part of the life-long ECL, on account of the probability of a default status in the 12 months following the reporting date. Significant increase in credit risk When assessing whether the credit risk for the financial instrument significantly increased since the initial recognition, the Company compares the risk of default on the reporting date to the risk of default of the financial instrument on the date of initial recognition. During the assessment, the Company considers both quantitative and qualitative information which are reasonable and available, including the historical experience, which can be accessed without unnecessary costs or engagements. In particular, the Company relies on days of default when assessing significant credit risk deterioration. If the debtor is in default more than 360 days, then the Company assumes that there is a significant increase in credit risk. Despite the aforementioned, we assume that the credit risk for the financial instrument has not significantly increased since the initial recognition if we determine that the financial instrument has a low credit risk at the reporting date. We conclude that the financial instrument has a low credit risk if: • The financial instrument has a low risk of default; • The debtor has a strong ability to settle its contractual obligations in the short term; and • Adverse changes in economic and business conditions in the long term may, but do not necessarily have to, decrease the lessee’s ability to meet his/her contractual cash flow obligations. However, the Company does not currently use the simplification of a low credit risk when assessing the significant increase in credit risk. The Company regularly monitors the efficiency of criteria used to determine whether there has been a significant increase in credit risk and reviews them so that the criteria may identify a significant increase in credit risk before any default occurs. Granolio d.d., Zagreb Notes to the unconsolidated financial statements (continued) for the year ended 31 December 2024 42 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 3.25 Financial assets (continued) (iii) Definition of default status The following facts, which represent a case of default for internal credit risk management purposes are considered by the Company as a historical experience which proves that financial assets meeting any of the following criteria are in general not recoverable: • if the debtor breached the financial clauses; or • data developed internally or obtained from external sources point to the fact that it is highly unlikely that the debtor will pay its creditors, including the Company, in full (without considering any collateral held by the Company). Notwithstanding the above analysis, the Company considers that there was a default when the financial assets matured more than 360 days and the liabilities were not paid, unless the Company has reasonable and substantiated information to show a more appropriate delay criterion. (iv) Credit-impaired financial assets Financial assets are credit-impaired when one or more events with an adverse effect on estimated future cash flows and financial assets occurred. Proof of credit impairment of the financial asset includes data available on the following events: • significant financial difficulties of the issuer or debtor; • breach of contract, such as a default (defined above); • when the issuer, due to the debtor’s financial difficulties, grants the debtor a concession, which it would otherwise not consider; • it becomes probable that the debtor will go into bankruptcy or undertake another type of financial restructuring; • the disappearance of an active market for a specific financial asset because of financial difficulties. (v) Write-off policy The Company writes off financial assets when there is information pointing to the fact that the debtor is in serious financial difficulties and that there is no real chances of return, for example when the debtor has gone into liquidation or bankruptcy or when trade receivables are due more than 3 years, whatever happens first. Written-off financial assets can still be subject to enforcement activities within the Company recovery procedures, with regard to the relevant legal advice, where appropriate. As previously described, revenue from the collection of financial assets is recognised in profit or loss. Granolio d.d., Zagreb Notes to the unconsolidated financial statements (continued) for the year ended 31 December 2024 43 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 3.25 Financial assets (continued) (vi) Measurement and recognition of expected credit losses Measurement of expected credit losses is the function of Probability of Default (PD), Loss Given Default (LGD), i.e. size of loss in case of default, and Exposure at Default (EAD). Assessment of Probability of Default and Loss Given Default is based on historical data and information provided in previous paragraphs. In terms of exposure in the moment of default, for the financial assets it represents a gross carrying amount of the assets at the reporting date. As for the exposure at the time of default, for financial assets it represents the gross carrying amount of the asset at the reporting date. When assessing the PD and LGD parameters, the Company relies on external investment rating agencies’ publications. For the financial assets, the expected credit loss is assessed as the difference between all contractual cash flows maturing in line with the contract and all expected cash flows, discounted at the original effective interest rate. If the Company measured provisions for expected loan losses for financial instruments in the amount equal to life-long ECL in the previous reporting period, but at the current reporting date it determined that the life-long ECL conditions are no longer met, the Company measures the loss in the amount equal to a 12-month ECL at the current reporting date, except for the assets for which a simplified approach was used (trade receivables). The Company recognises impairment gains and losses in the statement of profit and loss for all financial instruments with the appropriate adjustment of the carrying amount through the loss provisions account. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group 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 rewards of ownership of a transferred financial asset, the Group continues to recognize the financial asset and also recognizes a collateralised borrowing for the asset received. In case of derecognition of financial asset recognition measured at amortized cost, the difference between the asset's carrying amount and the amount of the consideration received, and receivable is recognised in profit or loss. furthermore, in the event that recognition of debt investment measured at FVTOCI ceases, cumulative profit or loss previously accumulated in the investment revaluation reserve is reclassified to profit or loss, except in case of equity instruments for which the FVTOCI option has been selected. (vii) Derecognition of financial assets The Company derecognises a financial asset only 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 to another entity. 0 Granolio d.d., Zagreb Notes to the unconsolidated financial statements (continued) for the year ended 31 December 2024 44 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 3.25 Financial assets (continued) Loans and receivables The Company always reports the provisions for losses of trade receivables in the amount equal to the life-long ECL. The expected credit losses on trade receivables are estimated using a provision matrix by reference to past default experience of the debtor and an analysis of the debtor’s current financial position. The Company recognised a loss in the amount of 100% of all receivables over 360 days past due as past experience shows that the relevant receivables can usually not be recovered. There were no changes in the assessment techniques or material assumptions during the current reporting period. The Company writes off trade receivables when there are data pointing to the fact that the debtor is in serious financial difficulties and that there is no real chances of return, for example when the debtor has gone into liquidation or bankruptcy or when trade receivables are due more than 2 years, whatever happens first. None of the trade receivables are subject to enforcement activities. The following table details the risk profile of trade receivables based on the Company’s provision matrix. As the Company’s historical credit loss experience does not show significantly different loss patterns for different customer segments, the provisions for loss allowance based on past due status is not further distinguished between the Company’s different customer bases. 3.26 Financial liabilities and equity instruments All financial liabilities are measured subsequently at amortized cost by using the effective interest rate method or at fair value through profit or loss. The Company measures all financial liabilities at amortized cost. However, for financial liabilities which arise when the transfer of financial assets does not meet the derecognition criteria or when the continued participation approach is applied, and for contracts on financial guarantees issued by the Company, subsequent measurement takes place in line with specific accounting policies provided below. Financial liabilities subsequently measured at amortised cost Financial liabilities which are not (i) contingent consideration recognised by an acquirer in a business combination; (ii) held for trading; (iii) measured at fair value through profit or loss; are subsequently measured at amortized cost, using the effective interest rate method. The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating interest cost over the relevant period. The effective interest rate is a rate that accurately discounts the estimated future cash inflow (including all fees and points paid or received, which constitute an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the amortized cost of financial liability Classification as debt or equity Debt and equity instruments are classified as financial liabilities or as equity pursuant to the essence of the agreement. Financial liabilities Other financial liabilities, including borrowings and loans, as well as bonds, are initially measured at fair value less transaction costs. Other financial liabilities are later measured at amortized cost by applying the effective interest rate method, and the interest expenses are recognised based on the effective yield. The effective interest rate method represents a method used for calculating the amortized cost of the financial liability and distributing the interest expenses throughout the relevant period. The effective interest rate is the rate pursuant to which the estimated future cash flows are discounted during the expected lifetime of the financial liability or, where applicable, during a shorter period. Derecognition of financial liabilities The Company derecognises financial liabilities when, and only when, the Company's liabilities are paid, cancelled or expired. Granolio d.d., Zagreb Notes to the unconsolidated financial statements (continued) for the year ended 31 December 2024 45 4. KEY ACCOUNTING ASSUMPTIONS AND ESTIMATES In the application of the Company's accounting policies, which are described in Note 3, the Company’s Management Board is required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. Critical judgements in the application of accounting policies The following are the critical judgements, apart from those involving estimations, that the Management Board has made in the process of applying the Company's accounting policies and that have the most significant effect on the amounts recognised in the unconsolidated financial statements. (i) . Revenue recognition In making their judgement, the Management Board considered the individual criteria for the recognition of revenue from the sale of goods set out in IFRS 15 “Revenue from Contracts with Customers”. Specifically, whether the Company has transferred to the customer a significant portion of the risks and rewards associated with ownership of the products and goods and whether the Company has recognized revenue from services in accordance with the stage of completion based on the proportion of services actually performed in relation to the total services to be performed. (ii) Consequences of certain legal disputes There are a number of legal actions which have arisen from the regular course of operations of individual companies within the Company. The Management Board makes estimates of probable outcomes of these legal actions and recognises provisions for the Company’s liabilities that may arise from these legal actions on a consistent basis. (iii) Recoverable amount of trade and other receivables 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. Current receivables without the interest rate are measured at the originally invoiced amounts if the discounting effect is not material. (iv) Useful life of property, plant and equipment As described in Note 3.15 above, the Company reviews the estimated useful lives of property, plant and equipment at the end of each reporting period. Granolio d.d., Zagreb Notes to the unconsolidated financial statements (continued) for the year ended 31 December 2024 46 5. SALES REVENUE in EUR ‘000 2024 2023 Sales revenue – domestic 47,659 45,245 Sales revenue – foreign 10,226 6,297 Revenue from services 821 975 58,706 52,517 The reporting segments form a part of the internal financial reporting. the internal reports are reviewed regularly by the Company's Management Board, as the chief decision-maker, which uses them as a basis for assessing the performance of the segments and making operating decisions. The Company monitors its performance through the following operating segments: - Milling - Wholesale - Other (services, livestock) 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. in EUR ‘000 2024 2023 Milling 45.450 43.182 Wholesale 12.429 8.627 Other 827 708 58.706 52.517 Geographical analysis of sales revenue in EUR ‘000 2024 2023 Croatia 48,480 46,219 Serbia 3,515 717 Italy 2,490 1,298 Slovenia 1,204 1,860 Bosnia and Herzegovina 1,994 1,404 Hungary 579 1,018 Kosovo 420 - Austria 20 - Germany 4 - 58,706 52,517 Granolio d.d., Zagreb Notes to the unconsolidated financial statements (continued) for the year ended 31 December 2024 47 6. OTHER OPERATING INCOME in EUR ‘000 2024 2023 Inventory surpluses 307 368 Income from subsidies 183 649 Subsequent approvals from suppliers 18 17 Subsequently determined income 2,388 - Other operating income 193 514 3,089 1,548 Other operating income consists of income from rents, claims collection, income from the sale of fixed assets, subsequent approvals of suppliers and others. Income from subsidies refer to the measure of the Government of the Republic of Croatia related to subsidizing the cost of electricity in the amount of EUR 100 thousand for 2024 (2023: EUR 252 thousand) and subsidies from the Agency for Payments in Agriculture and Fisheries in the amount of EUR 83 thousand. 7. MATERIAL EXPENSES The structure of material costs is as follows: in EUR ‘000 n EUR ‘000 2024 2023 Raw materials and supplies 33,397 30,802 Energy consumed 1,385 2,062 Waste, breakage and damage to inventory 388 1,250 Small inventory expenses 47 36 Cost of inventory sold - - Other material expenses 15 26 Cost of raw materials and supplies 35,232 34,175 Cost of goods sold 11,345 8,740 Telephone, mail and transport services 2,277 1,813 Maintenance and security services 492 419 Intellectual services 352 388 Leasing services 882 377 Promotional, sponsorship services 363 179 Quality control services 227 162 Sales expenses (freight forwarders, goods handling, etc.) 215 - Other external expenses 196 346 Other external expenses 5,004 3,684 51,581 46,600 The cost of scrap, waste, breakage and damage relates mainly to the standard scrap in production of EUR 388 thousand (2023: EUR 1,250 thousand). The total auditors' fees for 2024 amount to EUR 18 thousand (2023: EUR 16 thousand). Granolio d.d., Zagreb Notes to the unconsolidated financial statements (continued) for the year ended 31 December 2024 48 8. EMPLOYEE EXPENSES in EUR ‘000 in EUR ‘000 2024 2023 Net salaries 2,768 2,134 Taxes and contributions from salaries 985 767 Contributions on salaries 540 412 4,292 3,313 As of 31 December 2024, the Company had 188 employees (31 December 2023: 163). 9. OTHER EXPENSES in EUR ‘000 2024 2023 Reimbursement of employee expenses 221 166 Insurance premiums 101 92 Contributions, membership fees and other benefits 62 61 Banking services and payment transaction costs 95 31 Taxes that do not depend on the result 21 21 Official travel expenses 21 9 Other expenses 72 76 593 456 Reimbursement of employee expenses mostly relates to compensation for travel expenses to and from work of EUR 96 thousand (2023: EUR 92 thousand) and Christmas bonuses, severance pay and other benefits in the amount of EUR 125 thousand (2023: EUR 74 thousand). Granolio d.d., Zagreb Notes to the unconsolidated financial statements (continued) for the year ended 31 December 2024 49 10. OTHER OPERATING EXPENSES in EUR ‘000 2024 2023 Entertainment expenses 166 108 Donations and sponsorships 36 36 Loss on sale of intangible assets 2 31 Fines, penalties, compensation for damages 389 28 Waste, breakage and damage to goods 23 17 Subsequently approved cassa sconto 19 13 Other operating expenses 2 39 637 272 11. FINANCIAL INCOME AND EXPENSES Financial income in EUR ‘000 2024 2023 Dividend income 500 800 Penalty interest 414 37 Interest on loans 24 20 Profits from stock market transactions 57 - 995 857 Income from shares within the Group refers to income from dividends of the company Zdenka - mliječni proizvodi d.o.o. in the amount of EUR 500 thousand for 2024. Financial expenses in EUR ‘000 2024 2023 Interest on loans and borrowings 1,284 602 Penalty interest 18 25 Discount interest on bills of exchange - - Other financial expenses 6 6 1,308 633 Granolio d.d., Zagreb Notes to the unconsolidated financial statements (continued) for the year ended 31 December 2024 50 12. PROFIT TAX Profit tax comprises: in EUR ‘000 2024 2023 Current profit tax 600 561 Deferred tax liability (87) (87) Total profit tax liability 513 474 Effective tax rate reconciliation A reconciliation of tax expense per the statement of comprehensive income and taxation at the statutory rate is detailed in the table below:: in EUR ‘000 2024 2023 Profit before taxation 3.333 2.444 Profit tax at a rate of 18% 600 440 Effect of non-taxable income (280) (144) Effect of non-deductible expenses 281 265 -Profit tax 600 561 Effective tax rate 18% 23% Granolio d.d., Zagreb Notes to the unconsolidated financial statements (continued) for the year ended 31 December 2024 51 12. PROFIT TAX (CONTINUED) Unused tax losses In accordance with tax regulations, as of 31 December 2024, the Company has tax losses carried forward in the amount of zero EUR (as of 31 December 2023, zero EUR). Deferred tax assets have not been recognized in the Company's books due to the uncertainty of realizing sufficient future tax gains that would be reduced by tax losses carried forward. Deferred tax liabilities arise from the following in EUR ‘000 Opening Through profit Merger of Closing 2024 balance or loss subsidiary balance Revaluation depreciation 1,243 (87) - 1,156 Deferred tax liability 1,243 (87) - 1,156 in EUR ‘000 Opening Through profit Merger of Closing 2023 balance or loss subsidiary balance Revaluation depreciation 1,331 (87) - 1,243 Deferred tax liability 1,331 (87) - 1,243 Movement of deferred tax liability: in EUR ‘000 31 December 31 December 2024 2023 Balance as of 1 January 1,243 1,331 Decrease (87) (87) 1,156 1,243 In accordance with the regulations of the Republic of Croatia, the Tax Administration may at any time inspect the books and records of companies in Croatia for a period of three years after the end of the year in which the tax liability was declared and may impose additional tax levies and fines. The Company's Management Board is not aware of the circumstances that could lead to potential significant liabilities in this regard. Granolio d.d., Zagreb Notes to the unconsolidated financial statements (continued) for the year ended 31 December 2024 52 13. INTANGIBLE ASSETS During 2024, by purchasing a milling facility, the company acquired the trademark "Tena". Movement of intangible assets in 2024 in EUR ‘000 in EUR ‘000 Trademarks Customer Softlist ware Other intangible assets TOTAL Purchase value Balance as of 1 January 2024 - 1,327 401 - 1,729 Increase 930 - - 50 980 Balance as of 31 December 2024 930 1,327 401 50 2,709 Impairment Balance as of 1 January 2024 - 1,327 370 - 1,697 Depreciation - - 14 - 14 Balance as of 31 December 2024 1,327 384 - 1,711 Present value as of 1 January 2024 - - 32 - 32 Present value as of 31 December 2024 930 - 17 50 998 Movement of intangible assets in 2023 in EUR ‘000 Customer list Software TOTAL Purchase value Balance as of 1 January 2023 1,327 401 1,729 Balance as of 31 December 2023 1,327 401 1,729 Impairment Balance as of 1 January 2023 1,327 356 1,683 Depreciation - 14 14 Balance as of 31 December 2023 1,327 370 1,697 Present value as of 1 January 2023 - 46 46 Present value as of 31 December 2023 - 32 32 Granolio d.d., Zagreb Notes to the unconsolidated financial statements (continued) for the year ended 31 December 2024 53 14. RIGHT-OF USE ASSETS AND LEASE LIABILITIES (a) Right-of-use assets in EUR ‘000 Vehicles Equipment TOTAL Balance as of 1 January 2023 - 112 112 Increase - - - Depreciation - (41) (41) Balance as of 31 December 2023 - 71 71 Increase 59 - 59 Depreciation - (41) (41) Balance as of 31 December 2024 59 30 89 (b) Lease liabilities in EUR ‘000 Vehicles Equipment TOTAL Balance as of 1 January 2023 - 86 86 Lease payment - (30) (30) Interest expense - (3) (3) Balance as of 31 December 2023 - 53 53 Increase during the year 59 - 59 Lease payment - (34) (34) Interest expense - (1) (1) Balance as of 31 December 2024 59 18 77 (c) Maturity of liabilities in EUR ‘000 31 December 2024 31 December 2023 Lease liability 77 53 (Current maturity) (30) (35) Long-term lease liability 47 18 Maturity of lease liabilities is as follows: in EUR ‘000 31 December 2024 balance 2025 2026 2027 2028 Operating lease 77 30 11 7 28 Interest on operating lease ranges from 4% to 5%. Granolio d.d., Zagreb Notes to the unconsolidated financial statements (continued) for the year ended 31 December 2024 54 15. PROPERTY, PLANT AND EQUIPMENT Movements in property, plant and equipment in 2024: in EUR ‘000 ‘000 Land Buildings Plant, equipment, and tools Other tangible assets Investment property Property under construction Advances for tangible assets TOTAL Purchase value Balance as of 1 January 2024 1,219 24,472 14,624 26 613 1,240 186 42,380 Increases 55 5,784 2,626 6 157 3,950 - 12,578 Transfers 44 142 - - - - (186) - Sales and write-offs - - (16) (3) - - - (19) Balance as of 31 December 2024 1,318 30,398 17,234 29 770 5,190 - 54,939 Impairment Balance as of 1 January 2024 - 11,393 12,280 16 - - - 23,689 Revaluation depreciation - 291 195 1 - - - 486 Depreciation - 304 232 - - - - 536 Sales and write-offs - (14) (3) - - - (17) Balance as of 31 December 2024 - 11,987 12,693 14 - - - 24,694 Present value as of 1 January 2024 1,219 13,079 2,344 10 613 1,239 186 18,690 Present value as of 31 December 2024 1,318 18,411 4,541 15 770 5,190 - 30,245 Tangible assets worth EUR 27,269 thousand (2023: EUR 12,040 thousand) are pledged as collateral for the Company's loan liabilities (Note 24 and Note 23). Granolio d.d., Zagreb Notes to the unconsolidated financial statements (continued) for the year ended 31 December 2024 55 15. PROPERTY, PLANT AND EQUIPMENT (CONTINUED) Movements in property, plant and equipment in 2023: in EUR ‘000 Land Buildings Plant, equipment, and tools Other tangible assets Investment property Property under construction Advances for tangible assets TOTAL Purchase value Balance 1 January 2023 1,219 24,420 12,931 26 613 1,248 - 40,457 Increase - 52 1,833 - - 1 186 2,071 Transfer - - 9 - - (9) - - Sale and disposal - - (149) - - - - (149) Balance 31 December 2023 1,219 24,472 14,624 26 613 1,240 186 42,380 Value adjustment Balance 1 January 2023 - 10,802 11,996 16 - - - 22,814 Revaluation depreciation - 291 195 - - - - 486 Depreciation - 300 207 - - - - 507 Sale and disposal - (118) - - - - (118) Balance 31 December 2023 - 11,393 12,280 16 - - - 23,689 Present value as of 1 January 2023 1,219 13,618 935 10 613 1,248 - 17,642 Present value as of 31 December 2023 1,219 13,079 2,344 10 613 1,240 185 18,690 Tangible assets worth EUR 12,040 thousand in 2023 were pledged as collateral for the Company's loan liabilities (Note 23). Granolio d.d., Zagreb Notes to the unconsolidated financial statements (continued) for the year ended 31 December 2024 56 16. FIXED FINANCIAL ASSETS (a) Investments in subsidiaries in EUR ‘000 31 December 2024 31 December 2023 Zdenka mliječni proizvodi d.o.o., Veliki Zdenci 5,676 5,676 Zdenačka farma d.o.o., Veliki Zdenci 3,671 3,671 9,347 9,347 Shares in Zdenka – mliječni proizvodi d.o.o. in the amount of EUR 5,676 thousand (31 December 2023: EUR 5,676 thousand) are pledged as collateral for the Company's loan liabilities (Note 23 and Note 24). Interest in ownership structure 31 December 2024 31 December 2023 Zdenačka farma d.o.o., Veliki Zdenci 100.00% 100.00% Zdenka mliječni proizvodi d.o.o., Veliki Zdenci 50.00% 50.00% Žitozajednica d.o.o., Zagreb 1.28% 1.28% (b) Long-term receivables in EUR ‘000 31 December 2024 31 December 2023 Receivables under securities 375 225 375 225 Voting rights are equal to the ownership rights. (c) Long-term loans, deposits and similar granted in EUR ‘000 31 December 2024 31 December 2023 Loans to natural persons 7 21 Movements in non-current loans for the year are provided in Note 19. 17. INVENTORIES in EUR ‘000 31 December 2024 31 December 2023 Raw materials and supplies 6,827 1,046 Trade goods 1,348 1,052 Finished products 305 278 8,480 2,376 Granolio d.d., Zagreb Notes to the unconsolidated financial statements (continued) for the year ended 31 December 2024 57 18. RECEIVABLES FROM CUSTOMERS, STATE AND OTHER INSTITUTIONS AND OTHER RECEIVABLES a) Receivables from customers in EUR ‘000 31 December 2024 31 December 2023 Domestic sales 10.973 10,157 Subcontractor receivables 679 733 Foreign sales 759 640 Expected credit losses (2.338) (3,738) 10,073 7,793 Subcontractor receivables refer to commodity loans for intermediate products required for sowing given to farmers who simultaneously supply raw materials for production and trade goods Expected credit losses from customer receivables R ‘000 2024 2023 Balance as of 1 January 3,738 4,263 Impaired receivables write-off (1,404) (266) Reversal of impaired receivables -) (258) Balance as of 31 December 2,3381 3,738 The ageing analysis of outstanding receivables from customers where no impairment has been made is shown in the following table: in EUR ‘000 31 December 2024 31 December 2023 Not yet due 7,625 5,378 0-90 days past due 2,046 2,060 91-180 days past due 169 259 181-360 days past due 59 62 > 360 days past due 174 34 10,073 7,793 Granolio d.d., Zagreb Notes to the unconsolidated financial statements (continued) for the year ended 31 December 2024 58 18. RECEIVABLES FROM CUSTOMERS, STATE AND OTHER INSTITUTIONS AND OTHER RECEIVABLES (CONTINUED) b) Receivables from state and other institutions in EUR ‘000 31 December 2024 31 December 2023 VAT receivables 1,736 - Profit tax advance payments 8 168 Other receivables from the State and other institutions 19 21 1,763 189 c) Other receivables in EUR ‘000 31 December 2024 31 December 2023 Prepayments made 1,804 266 Interest receivables 132 131 Other receivables 14 14 1,951 411 Granolio d.d., Zagreb Notes to the unconsolidated financial statements (continued) for the year ended 31 December 2024 59 19. CURRENT FINANCIAL ASSETS a) Investment in securities in EUR ‘000 31 December 2024 31 December 2023 Investments in bills of exchange 20 20 20 20 b) Loans, deposits and similar granted in EUR ‘000 31 December 2024 31 December 2023 Loans to legal entities 1,417 1,117 Short-term loans to natural persons 16 16 1,433 1,133 Granolio d.d., Zagreb Notes to the unconsolidated financial statements (continued) for the year ended 31 December 2024 60 19. CURRENT FINANCIAL ASSETS (CONTINUED) Movements of given loans and deposits in 2024 in EUR ‘000 Transfer from non- 1 January 2024 Increase in loans given Collection of given loans/deposits current to current loans and vice 31 December 2024 versa Given long-term loans Given loans to natural persons 21 - - (14) 7 Total long-term loans 21 - - (14) 7 Short-term loans Given loans to natural persons 16 3 (17) 14 17 Given loans to related parties 1,096 1,660 (1,650) - 1,106 Given loans to companies 1,117 300 - - 1,417 Total short-term loans 2,229 1,963 (1,667) 14 2,540 TOTAL 2,250 1,963 (1,667) - 2,547 Movements of given loans and deposits in 2023 in EUR ‘000 Transfer from non- 1 January 2023 Increase in loans given Collection of given loans/deposits current to current loans and vice 31 December 2023 versa Given long-term loans Given loans to natural persons 15 22 - (16) 21 Total long-term loans 15 22 - (16) 21 Short-term loans Given loans to natural persons 4 8 (12) 16 16 Given loans to related parties 822 1,310 (1,036) - 1,096 Given loans to companies 1,117 - - - 1,117 Total short-term loans 1,943 1,318 (1,048) 16 2,229 TOTAL 1,958 1,340 (1,048) - 2,250 Granolio d.d., Zagreb Notes to the unconsolidated financial statements (continued) for the year ended 31 December 2024 61 20. CASH AND CASH EQUIVALENTS in EUR ‘000 31 December 2024 31 December 2023 Bank accounts 276 955 Bank accounts – foreign currency - - 276 955 21. PREPAID EXPENSES AND ACCRUED INCOME 31 December 31 December 2024 2023 Prepaid expenses 66 83 66 83 Movements in prepaid expenses during the year were as follows: in EUR ‘000 2024 2023 Balance as of 1 January 83 51 Increase in prepaid expenses 1,147 612 Decrease in prepaid expenses (1,164) (580) Balance as of 31 December 66 83 Granolio d.d., Zagreb Notes to the unconsolidated financial statements (continued) for the year ended 31 December 2024 62 22. CAPITAL AND RESERVES 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. By decision of the Assembly of the Company in 2012 Granolio d.o.o. was transformed into a joint stock company by issuing ordinary shares. The share capital of the Company in the amount of EUR 664 thousand has been divided into 500,000 ordinary shares of the "A" series, each with a nominal amount of EUR 1.33. The new legal form of the Group was registered at the Commercial Court in Zagreb on 21 February 2012. Pursuant to the decision of the Assembly, the share capital of the Company was increased from EUR 664 thousand to EUR 1,593 thousand by transferring retained earnings in the amount of EUR 929 thousand. The share capital was increased through an issue of ordinary shares with a nominal value of EUR 1.33 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 Assembly dated 2 September 2014, the share capital was increased by an additional contribution of EUR 931,240.30 from EUR 1,593 thousand to EUR 2,523,914.00. 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 amount of EUR 1.33 per share at a single final issue price per share of EUR 17.79. 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 2017, the Company's subscribed capital, as registered in the court registry, amounts to EUR 2,523,914.00. The total number of shares is 1,901,643, and the nominal value per share amounts to EUR 1.33. The result of the sale of shares through the public offering is also capital gain amounting to EUR 11,547 thousand, which in the period from 1 January 2014 to 31 December 2015 had been decreased by recapitalization costs incurred in that period of total value of EUR 374 thousand Granolio d.d., Zagreb Notes to the unconsolidated financial statements (continued) for the year ended 31 December 2024 63 22. CAPITAL AND RESERVES (CONTINUED) The ownership structure of the share capital on 31 December 2024 is presented below, with the largest 10 shareholders holding 95.89% of the shares at that date:: 31 December 2024 31 December 2024 31 December 2023 Number of shares in thousands % of ownership Number of shares in thousands % of ownership Filipović Hrvoje 1,105 58.11% 1,105 58.11% Interkapital vrijednosni papiri d.o.o. 379 19.90% 379 19.90% OTP banka d.d. 149 7.83% 149 7.83% C.I.M Banque 105 5.52% 105 5.52% Auctus j.d.o.o. 38 2.00% 38 2.00% Agram banka d.d. 21 1.11% 26 1.11% OTP banka d.d./1MO 14 0.74% 14 0.74% OTP banka d.d./ SZAIF d.d. - - 6 0.30% Katranček Marko 4 0.19% 4 0.19% Mitrović Davor 4 0.19% 4 0.19% Lončarić Davor 3 0.17% 3 0.17% Other 80 4.24% 69 3.96% 1,902 100.00% 1,902 100.00% 31 December 2023 Granolio d.d., Zagreb Notes to the unconsolidated financial statements (continued) for the year ended 31 December 2024 64 23. LIABILITIES TO BANKS AND OTHER FINANCIAL INSTITUTIONS in EUR ‘000 31 December 2024 31 December 2023 Non-current liabilities Bank loans 16,354 6,133 16,354 6,133 Current liabilities Bank loans 1,261 1,254 1,261 1,254 17,615 7,387 A brief overview of loan conditions The increase in long-term liabilities relates to the debt due to the acquisition of additional milling operations, EUR 2.6 million of long-term liabilities under bank loans relate to loans obtained before the opening of pre-bankruptcy proceedings. The repayment dynamics are shown below in the Note (23) through an overview of the maturity of liabilities. The value of long-term assets encumbered by mortgages for bank loans as of 31 December 2024 amounts to EUR 25,913 thousand. Granolio d.d., Zagreb Notes to the unconsolidated financial statements (continued) for the year ended 31 December 2024 65 23. LIABILITIES TO BANKS AND OTHER FINANCIAL INSTITUTIONS (CONTINUED) Movement in liabilities to banks and other financial institutions for 2024 Increase in loan liabilities Payment of loan principal Transfer from non- current to current and vice versa Opening balance 1 January 2024 Increase in loan liabilities Payment of loan principal Transfer from non-current to current and vice versa Closing balance 31 December 2024 Long-term loans Long-term bank loans 6,133 11,475 - (1,254) 16,354 Short-term loans Short-term bank loans 1,254 3,906 (5,153) 1,254 1,261 TOTAL 7,387 15,381 (5,153) - 17,615 Movement in liabilities to banks and other financial institutions for 2023 Increase in loan liabilities IncOpening balance 1 January 2023 rease in loan liabilities Payment of loan principal Transfer from non-current to current and vice versa Closing balance 31 December 2023 Long-term loans Long-term bank loans 7,386 - - (1,254) 6,133 Short-term loans Short-term bank loans 1,134 3,298 (4,432) 1,254 1,254 TOTAL 8,520 3,298 (4,432) - 7,387 Payment of loan principal Transfer from non- current to current and vice versa Granolio d.d., Zagreb Notes to the unconsolidated financial statements (continued) for the year ended 31 December 2024 66 23. LIABILITIES TO BANKS AND OTHER FINANCIAL INSTITUTIONS (CONTINUED) The maturity of bank loans is shown as follows: in EUR ‘000 Balance 31 December 2024 2025 2026 2027 2028 From 2029 Liabilities to banks 17,615 1,261 1,254 1,874 2,197 11,029 17,615 1,261 1,254 1,874 2,197 11,029 24. LOAN LIABILITIES Opening balance Opening balance 1 January 2024 Increase in loan liabilities Repayment of loan principle Transfer from current to non-current and vice versa Closing balance 31 December 2024 Long-term liabilities Long-term liabilities for loans of natural persons 265 - - 265 531 Total long - term loans 265 - - 265 531 Short-term liabilities Short-term liabilities for corporate loans 1,394 4,376 (1,301) - 4,469 Short-term liabilities for loans of natural persons 1,015 - (750) (265) - Total short - term loans 2,409 4,376 (2,051) (265) 4,469 TOTAL 2,674 4,376 (2,051) - 5,000 Increase in loan liabilities Repayment of loan principle Transfer from current to non- current and vice versa Closing balance 31 December 2024 The value of fixed assets encumbered by mortgages for loans from non-financial entities as of 31 December 2024 amounted to EUR 1,356 thousand (31 December 2023: EUR 1,286 thousand). Long-term liability for loans from individuals matures by the end of 2027. Granolio d.d., Zagreb Notes to the unconsolidated financial statements (continued) for the year ended 31 December 2024 67 24. LOAN LIABILITIES (CONTINUED) Opening balance balance 1 January 2023 Increase in loan liabilities Repayment of loan principle Transfer from current to non-current and vice versa Closing balance 31 December 2023. Long-term liabilities Long-term liabilities for loans of natural persons 265 - - 265 Total long - term loans 265 - - - 265 Short-term liabilities Short-term liabilities for corporate loans 1,394 - - - 1,394 Short-term liabilities for loans of natural persons 265 750 - - 1,015 Total short - term loans 1,659 750 - - 2,409 Long-term liabilities 1,924 750 - - 2,674 Increase in loan liabilities Repayment of loan principle Transfer from current to non- current and vice versa Closing balance 31 December 2023. The value of fixed assets encumbered by mortgages for loans from non-financial entities as of 31 December 2023 amounted to EUR 1,286 thousand (31 December 2022: EUR 1,427 thousand). The mortgage is based on the assets under a new loan agreement concluded during 2021. Long-term liability for loans from individuals matures by the end of 2025. Granolio d.d., Zagreb Notes to the unconsolidated financial statements (continued) for the year ended 31 December 2024 68 25. LIABILITIES FOR SECURITIES in EUR ‘000 31 December 2024 31 December 2023 Long-term liabilities under securities 333 499 Short term liabilities under securities 166 166 499 665 Liabilities for securities relate to liabilities for bills of exchange to CIM Banka companies EUR 499 thousand (31 December 2023: EUR 665 thousand). Movement of liabilities from securities in 2024: Opening balance Opening balance Increase in liabilities Transfer from long- Closing balance 31 1 January 2024 from securities Repayment term to short-term December 2024 Long-term liabilities Liabilities under securities 499 - - (166) 333 Short-term liabilities Liabilities under securities 166 - (166) 166 166 TOTAL 665 - (166) - 499 Increase in liabilities from securities Repayment Transfer from long- term to short-term Closing balance 31 December 2024 Granolio d.d., Zagreb Notes to the unconsolidated financial statements (continued) for the year ended 31 December 2024 69 25. LIABILITIES FOR SECURITIES (CONTINUED) Movement of liabilities from securities in 2023: Opening balance Opening balance Increase in liabilities Transfer from long- Closing balance 31 1 January 2023 from securities Repayment term to short-term December 2023 Long-term liabilities Liabilities under securities 665 - - (166) 499 Short-term liabilities Liabilities under securities 246 - (246) 166 166 TOTAL 911 - (246) - 665 Increase in liabilities from securities Repayment Transfer from long- term to short-term Closing balance 31 December 2023 The maturity of the securities is shown as follows: in EUR ‘000 Balance 31 December 2024 2025 2026 2027 2028 From 2029 Long-term liabilities under securities 499 166 166 166 - - 499 166 166 166 - - Granolio d.d., Zagreb Notes to the unconsolidated financial statements (continued) for the year ended 31 December 2024 70 26. SHORT-TERM LIABILITIES (a) Liabilities for received advances 31 December 2024 31 December 2023 Liabilities for received advances 1,002 1,096 Advances received on 31 December 2024 refer to advances related to field crops. (b) Liabilities to suppliers in EUR ‘000 31 December 2024 31 December 2023 Suppliers in the country 15.481 6.049 Suppliers abroad 792 334 16.273 6.383 Ageing structure of trade payables on 31 December 2024: in EUR ‘000 31 December 2024 31 December 2023 Not yet due 11,419 4,631 0 - 90 days 4,542 1,494 91 - 180 days 237 159 181 - 360 days 70 25 > 360 days 23 74 16,291 6,383 (c) Liabilities for taxes, contributions and similar benefits in EUR ‘000 31 December 2024 31 December 2023 Taxes and contributions from and on salaries 146 96 VAT liabilities - 447 Other liabilities for taxes and contributions 44 33 190 576 Granolio d.d., Zagreb Notes to the unconsolidated financial statements (continued) for the year ended 31 December 2024 71 26. SHORT-TERM LIABILITIES (CONTINUED) (d) Accrued expenses and deferred income 31 December 2024 31 December 2023 Accrued expenses 20 Deferred income 683 766 683 786 Deferred income refers to grants in 2024 related to the construction of solar photo panels. (e) Other short-term liabilities in EUR ‘000 31 December 2024 31 December 2023 Liabilities to employees 276 197 Liabilities for interests to financial institutions 487 48 763 245 27. CONTINGENT LIABILITIES As of 31 December 2024, the Company has liabilities under lease agreements totalling EUR 148 thousand that do not meet the recognition criteria in accordance with IFRS 16 and have not yet been realized or reported in the statement of financial position. The contracted lease payment for the premises is presented as follows: in EUR ‘000 in EUR ‘000 31 December From 2024 2025 2026 2027 2028 2029 Leases 148 148 - - - - 148 148 - - - - Granolio d.d., Zagreb Notes to the unconsolidated financial statements (continued) for the year ended 31 December 2024 72 28. RELATED PARTY TRANSACTIONS in EUR ‘000 31 December 2024 Assets Liabilities Trade and other receivables Loans and deposits granted Loans received Trade and other payables Zdenačka farma d.o.o., Veliki Zdenci 530 113 - - Zdenka- mliječni proizvodi d.o.o., Veliki Zdenci - - - 21 Stan arka d.o.o., Zagreb - 31 - - Pet na treću d.o.o. 490 60 - 107 SP ONE d.o.o. - 138 - - Key management 159 765 - - 1,179 1,107 - 128 in EUR ‘000 in EUR ‘000 31 December 2023 Assets Liabilities Loans and deposits granted Loans received Loans received Trade and other payables Zdenačka farma d.o.o., Veliki Zdenci 554 241 - - Zdenka- mliječni proizvodi d.o.o., Veliki Zdenci 1 - - 11 Stan arka d.o.o., Zagreb - 31 - - Pet na treću d.o.o. 489 60 - 32 SP ONE d.o.o. - - - 1,099 Key management 144 765 - - 1,188 1,097 - 1,142 Income and expenses for the years 2024 and 2023, resulting from transactions with related parties, are as follows: in EUR ‘000 2024 2023 Income Expenses Income Expenses Zdenačka farma d.o.o., Veliki Zdenci 859 126 883 126 Zdenka- mliječni proizvodi d.o.o., Veliki Zdenci 6 18 806 1 SP ONE d.o.o. - - - - Pet na treću d.o.o. 2 412 1 290 Key management 16 - 16 - 883 556 1,706 417 The Company's key management consists of members of the Management Board and Supervisory Board of Granolio d.d. Remuneration paid to key management during 2024 amounted to EUR 349 thousand (in 2023: EUR 270 thousand). During 2024, EUR 24 thousand were paid to the members of the Supervisory Board in the form of remuneration (in 2023: EUR 37 thousand). Granolio d.d., Zagreb Notes to the unconsolidated financial statements (continued) for the year ended 31 December 2024 73 29. EARNING PER SHARE in EUR ‘000 31 December 31 December 2023 2022 Profit 2,820 1,970 Profit attributable to the shareholders 2,820 1,970 Weighted average number of ordinary shares used in the calculation of the basic earnings per share 1,901,643 1,901,643 Earnings per share (in EUR and cent) 1.48 1.04 30. RISK MANAGEMENT 30.1. 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 EUR ‘000 31 December 2024 31 December 2023 Debt (long-term and short-term loans and liabilities for securities) 18,113 8,052 Lease liabilities (non-current and current) 76 55 Loan liabilities (non-current and current) 5,000 2,674 Cash and cash equivalents (276) (955) Net debt 22,913 9,826 Equity 24,025 21,209 Debt to equity ratio 0.95 0.46 Debt is defined as long-term and short-term loans, liabilities under securities and lease and loan liabilities. 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. Granolio d.d., Zagreb Notes to the unconsolidated financial statements (continued) for the year ended 31 December 2024 74 30. RISK MANAGEMENT (CONTINUED) 30.1. Financial risks (continued) Categories of financial instruments in EUR ‘000 31 December 2024 31 December 2023 Financial assets Cash 276 955 Loans and receivables 15,835 11,745 Financial liabilities at amortised cost Liabilities under loans and securities 18,113 8,052 Trade payables 16,381 7,525 Loan liabilities 5,000 2,674 Lease liabilities 76 53 Other liabilities 1,765 2,126 Financial risk management objectives The Company is partially financed through loans. As a result, the Company is subject to the influence of interest rate changes. The Company is also exposed to credit risk which arises from the sales it has made with deferred payment. The Company seeks to reduce the effects of these risks to the lowest possible level. Price 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 of the services based on market prices. The purchase function is centralised, which provides the Company an image of a respectable customer with a good starting negotiating position. Granolio d.d., Zagreb Notes to the unconsolidated financial statements (continued) for the year ended 31 December 2024 75 30. RISK MANAGEMENT (CONTINUED) 30.1. 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. As a result, the Company's presents mainly to the extent it reflects potential issues in the retail industry. The Company seeks to minimise 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 subcontractors in the production of grains and oleaginous plants, as it extends credit to them for required seeds and intermediary products during the sowing season. The subcontractors 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 happens that, in practice, some cooperative farmers 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 collateral, such as personal 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 subcontractor 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 subcontractors at a certain interest rate, a settlement arrangement involving the next season's harvest or settlement in another crop not affected by poor weather conditions (e.g. rain during wheat harvest may reduce the wheat quality, but at the same time improve the quality of crops harvested in the autumn). It is common for subcontractors to sow several different types of crops/plants to reduce the risk of poor weather conditions adversely affecting a particular crop/plant, but also as a safeguard against unfavourable movements in the prices of a particular crop, i.e. to disperse the risk. 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 bear interest at variable rates. The sensitivity analysis below is based on the risk of changes in interest rates at the date of 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 0 on 31 December 2024 (2023: HRK 0). Granolio d.d., Zagreb Notes to the unconsolidated financial statements (continued) for the year ended 31 December 2024 76 30. RISK MANAGEMENT (CONTINUED) 30.1. Financial risks (continued) Liquidity risk There is a risk that the Company will not be able to fulfil all its obligations in accordance with their maturity, which may be caused by inadequate collection of receivables from customers, an unfavourable time structure of debt maturity or the inability to secure credit financing from financial institutions. To reduce the liquidity, the Company continuously implements measures of active collection of receivables from customers and monitoring of their liquidity status, tries to optimize the debt maturity structure and secure free lines of credit with credit institutions so that it can continue servicing its obligations even in unforeseen situations. However, the Company cannot provide any guarantees that liquidity risk management will be effective, and that any liquidity risk will not significantly affect the Company's operations and financial condition 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 non-discounted 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 averageeffective interest rate % Up to 1 month 1 to 3 months 3 months to 1 year 1 to 5 years Over 5 years Total 31 Dec 2024 Non- interest- bearing 5.409 4.279 8.477 - - 18.165 Interest bearing 125 252 5.529 8.036 9.299 23.241 5.534 4.531 14.006 8.036 9.299 41.406 31 Dec 2023 Non- interest- bearing 3,711 2,063 4,061 - - 9,835 Interest bearing 188 1,069 2,424 5,967 1,119 10,767 3,899 3,132 6,485 5,967 1,119 20,602 Granolio d.d., Zagreb Notes to the unconsolidated financial statements (continued) for the year ended 31 December 2024 77 30. RISK MANAGEMENT (CONTINUED) 30.1. Financial risks (continued) Liquidity risk (continued) The following table details the Company’s remaining contractual maturity for its non-derivative financial assets. The table has been drawn up based on the undiscounted contractual maturities of the financial assets including interest that will be earned on those assets. The inclusion of information on non-derivative financial assets is necessary to understand the Company's liquidity risk management as the liquidity is managed on a net asset and liability basis. Weighted averageeffective interest rate % Up to 1 month 1 to 3 months 3 months to 1 year 1 to 5 years Over 5 years Total 31 Dec 2024 Non-interest- bearing 3.882 981 7.738 489 - 13.090 Interest bearing 147 132 546 1.914 5 2.745 4.029 1.113 8.284 2.403 5 15.835 31 Dec 2023 Non-interest- bearing 3,653 3,207 2,015 489 - 9,364 Interest bearing 243 3 1,259 871 5 2,381 3,896 3,210 3,274 1,361 5 11,745 Granolio d.d., Zagreb Notes to the unconsolidated financial statements (continued) for the year ended 31 December 2024 78 30. RISK MANAGEMENT (CONTINUED) 30.1. Financial risks (continued) Fair value measurement Fair value is the amount for which an asset could be exchanged or a liability settled between informed and willing parties under normal market conditions. The Management's position is that the fair value of cash and cash equivalents, placements with banks and other receivables, does not differ significantly from their carrying value due to the short-term nature of these financial instruments. Most interest-bearing loans have a variable interest rate which is also the market rate, so there is not a significant difference between their carrying and fair value. The Company measures fair value using a division that reflects the importance of the inputs used in making the measurement: Level 1: quoted prices in active markets for assets and liabilities; Level 2: application of valuation techniques, comparison of the fair value of another instrument that is substantially the same, discounted cash flows or other valuation techniques; Level 3: application of valuation techniques where data affecting the determined fair value of financial instruments are not based on observable market data. Granolio d.d., Zagreb Notes to the unconsolidated financial statements (continued) for the year ended 31 December 2024 79 30. RISK MANAGEMENT (CONTINUED) 30.2. Industry risks 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 expand the existing line of products and further 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, construction of roads or closing of main transport routes, flooding, storms, or other extreme weather conditions. Although the Company has arranged an insurance coverage for its facilities, the insurance coverage is inherently limited by caps on insured sums and may not be sufficient to cover all the costs. In addition, the Company may be exposed to costs not covered by insurance. 30.3. Regular operational risks 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 a time, sufficient quantities of wheat at the current market price. Croatia's accession to the European Union has lifted all administrative barriers to input commodity purchases from the territory of the European 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 being 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. Granolio d.d., Zagreb Notes to the unconsolidated financial statements (continued) for the year ended 31 December 2024 80 30. RISK MANAGEMENT (CONTINUED) 30.3. Regular operational risks (continued) The flour market strives for increasing concentration, i.e. reducing the total number of flour producers (by enlarging or shutting down small mills) to achieve economies of scale to lower production costs per unit of product and thus strengthen the competitive position in the market. To this end, in May 2014, the Company acquired the milling business of the companies Belje d.d. Darda and PIK Vinkovci d.d. from the Agrokor concern. With Croatia's accession to the European Union, the Company is no longer faced only with domestic competition, which is why the need to strengthen competitiveness is even more pronounced. Key supplier and key customer concentration risk 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 in ownership The majority shareholder of the Company is Mr Hrvoje Filipović, who holds an ownership interest of 58.11%. 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 to him as a Company shareholder. The majority share in the Company enables Mr Filipović to exercise his influence in all decisions made in a General Shareholders' Assembly. 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. 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 extend the payment periods on 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 capital successfully, no assurance can be given that this will continue in the future, and the Company's performance and financial position may become affected. 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 conditions, unforeseeable demand and problems occurring in the production and distribution, along with potential diseases and pests, as well as weather conditions at the time of harvest may have a negative impact on the wheat prices. Regardless of the Company's ability to satisfy the wheat demand on the domestic market, movements in wheat prices on the domestic market are affected by 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 is required for the flour price to become aligned with the wheat price fluctuations, as a result of which there is a short time frame 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 wheat prices will be fully offset 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. Granolio 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. Granolio d.d., Zagreb Notes to the unconsolidated financial statements (continued) for the year ended 31 December 2024 81 30. RISK MANAGEMENT (CONTINUED) 30.3. Regular operational risks (continued) 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 downtime or failure resulting from malicious codes, hacking attacks, hardware or software issues or otherwise could have a significant impact on the Company's operations and financial position. 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, which may render the Company non-compliant with the market competition rules. The Croatian legislation governing market competition, which is aligned with the EU 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 technological progress to the disadvantage of customers, or imposing any unequal conditions for the same type of deals with other enterprises that may bring them in a disadvantaged competitive position, or additional obligations to counterparties as a prerequisite 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 ever be initiated. Any infringement of the competition rules is subject to significant administrative sanctions. For instance, a fine of up to 10% of the total annual revenue generated in the most recent year for which final financial statements are available may be imposed for entering into non-permissible deals or abuse of the dominant position. Therefore, any administrative sanction could have an adverse impact on the financial position and performance of the Company. To mitigate this 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 followed. 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 or 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, so 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 condition. Granolio d.d., Zagreb Notes to the unconsolidated financial statements (continued) for the year ended 31 December 2024 82 30. RISK MANAGEMENT (CONTINUED) 30.3. Regular operational risks (continued) 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, machinery faults, property damage, as well as crop insurance. Still, not all contingent liabilities and losses can be covered 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 Company's operations and financial condition. 30.4. 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 market on which the Company generates almost 87% of its total revenue (data for 2020), followed by the markets of Serbia, Italy, Bosnia and Herzegovina, Slovenia, Hungary and Romania. 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 countries will take several more years and additional investments. The Company cannot warrant that Croatia will fully implement the intended reforms or that the political environment will favour their implementation. In addition, the Company cannot warrant that the Government in power will not introduce new regulations, fiscal or monetary policies, including taxation, environmental and public 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 succeed in exercising or 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 disadvantaged economic 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 more difficult, and its borrowing costs could increase, which 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 its 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. Granolio d.d., Zagreb Notes to the unconsolidated financial statements (continued) for the year ended 31 December 2024 83 30. RISK MANAGEMENT (CONTINUED) 30.4. General risks (continued) Risk of changes in legal framework As a food producer, the Company is exposed to strict regulatory requirements applicable to human foods, product safety, occupational 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 generates waste, emission of hazardous agents into the atmosphere and waters, which is why the Company has the obligation to 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 being 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-compliance or the resulting negative publicity, or to adapt to amended regulations, as well as that the resulting impact on its operations and financial condition would not be significant. For instance, the Company is the current owner or lessee of a number of properties and facilities, including production plants and distribution centres 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. Granolio d.d., Zagreb Notes to the unconsolidated financial statements (continued) for the year ended 31 December 2024 31. CONTINGENT LIABILITIES Balance in EUR Approved amount on 31 December 2024 Maturity Zdenka- mlijeéni proizvodi d.0.0 loan 4 4,617,681 € 2,380,665 € 30.9.2032 Total Legal disputes 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 provision for legal disputes has been recognised. 32. EVENTS AFTER THE BALANCE SHEET DATE The Company continues to repay its obligations according to the pre-bankruptcy settiement and regular repayments from operations. 33. APPROVAL OF FINANCIAL STATEMENTS These financial statements were approved by the Management Board and authorized for issue on 30 April 2025 Signed on behalf of and for the Management Board: Hrvoje Filipovic dipl.oec. Daver Mitrovi¢ dipl.oec. President of the Nlanagement Board Member of QI Management Board o il Member ohthe Management Board

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