Annual Report (ESEF) • Apr 14, 2023
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Download Source FileINTRODUCTION ................................................................................................................................................. 3
Statement by the President of the Management Board ................................................................................................. 3
Krka Group financial highlights ...................................................................................................................................... 7
Krka’s sustainable development indicators .................................................................................................................... 8
At a glance................................................................................................................................................................... 10
2022 highlights ............................................................................................................................................................ 14
Subsequent event ........................................................................................................................................................ 16
Business report ............................................................................................................................................... 17
Corporate governance statement ................................................................................................................................ 17
Non-financial statement ............................................................................................................................................... 38
Krka Group development strategy ............................................................................................................................... 50
Macroeconomic forecast for 2023 ............................................................................................................................... 55
Risk management ........................................................................................................................................................ 59
Investor and share information .................................................................................................................................... 79
Performance analysis .................................................................................................................................................. 82
Marketing and sales .................................................................................................................................................... 88
Product and service groups ....................................................................................................................................... 101
Research and development ....................................................................................................................................... 121
Production and supply chain ..................................................................................................................................... 127
Investments ............................................................................................................................................................... 130
Quality ....................................................................................................................................................................... 133
Materiality assessment process ................................................................................................................................ 139
About the report ......................................................................................................................................................... 140
Employees ................................................................................................................................................................. 144
Patients and other customers .................................................................................................................................... 152
Corporate social responsibility ................................................................................................................................... 154
Natural environment .................................................................................................................................................. 158
GRI content index ...................................................................................................................................................... 174
Introduction to Financial Statements ......................................................................................................................... 183
Statement of Compliance .......................................................................................................................................... 184
Consolidated Financial Statements of the Krka Group .............................................................................................. 185
Financial Statement of Krka, d.d., Novo mesto ......................................................................................................... 250
In accordance with Commission Delegated Regulation (EU) 2019/815 and Paragraph 1 of Article 134 of the Market in Financial Instruments Act (ZTFI-1), the official and original version of the report is the one created in the European Single Electronic Format (ESEF), prepared in the Slovenian language and published via SEOnet, the official electronic dissemination information system of the Ljubljana Stock Exchange. This version of the annual report is translation. 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 of the report takes precedence over this translation.
Dear shareholders, business partners and employees,
The Krka Group achieved good results in 2022 despite constant changes and swift reversals on the global market. We are pleased that this dynamic year for Krka, the pharmaceutical industry and the economy in general was a year of growth and progress. We overcame various business setbacks owing to our robust business model and constant adjustments in multiple operating areas.
We are one of the leading providers of generic pharmaceuticals in many large markets and the leading one in several therapeutic categories.
Region East Europe remained our leading sales region in 2022. Regional sales totalled €623.4 million, up 14% on 2021. We recorded growth in all regional markets, except in Ukraine. In absolute terms, sales growth was the highest in the Russian Federation and Uzbekistan, and in relative terms, in Turkmenistan. Sales totalling €387 million, up 16% on 2021, placed us third among foreign providers of generic pharmaceuticals in the Russian Federation. Product sales in Ukraine, another of our key markets, amounted to €95.2 million, accounting for 99% of total sales in 2021. We ranked second among foreign providers of generic medicines in the pharmacy segment in Ukraine.
Region Central Europe generated product sales totalling €364.2 million, up 4%. We recorded sales growth in all regional markets except in Hungary. The Czech Republic delivered the strongest sales growth. In Poland, the largest regional market and one of our key markets, product sales reached €168.2 million, up 1% on 2021, ranking us third among foreign providers of generic medicines. In the Czech Republic, another of our key markets, year-on-year sales increased 16% to €55.8 million. We ranked fourth among foreign providers of generic medicines in the country. Hungary, another of our key markets, generated sales totalling €47.1 million, down 6% on 2021, ranking us second among primarily foreign providers of generic medicines. Sales in Slovakia grew to €40.5 million, ranking us fourth among all providers of generic medicines in the country.
Region West Europe, collectively regarded as one of our key markets, recorded product sales of €327.3 million in 2022, a 7% year-on-year increase. Germany, Scandinavia, France, and Italy led in terms of sales. We are among the leading providers of sartans and an important supplier of generic medicines from many other therapeutic categories in the markets of Region West Europe. Our sales in Germany totalled €88.6 million, a 10% year-on-year increase, ranking us eighth among foreign providers of generic medicines in the pharmacy segment.
Region South-East Europe generated product sales of €224.5 million, a year-on-year increase of more than 7%. We recorded sales growth in all regional markets and the highest absolute growth in Croatia, Romania, and Serbia. We ranked sixth among foreign providers of generic medicines in Romania, one of our key markets. Product sales totalled €63.2 million, an 8% year-on-year increase. We ranked third among foreign providers of generic medicines in Croatia, where sales amounted to €41 million, up 14% on 2021.
Region Overseas Markets generated sales of €66.1 million, a 23% year-on-year rise. We have been increasing sales through our Chinese subsidiary Ningbo Krka Menovo, where our product sales reached €12.8 million, more than doubling the 2021 sales figure. We also recorded growth in the markets of the Middle East, Far East, Africa, and Central America. Product and service sales in Slovenia, our domestic and another key market, amounted to €103 million. Product sales were valued at €60.5 million, up 7% on 2021. Health resorts and tourist services generated €42.6 million, up 17% on the year before, significantly contributing to 11%-sales growth in the domestic market.
Companies encountered many complex situations in sales and purchase markets in 2022. The labour market situation was equally demanding. We surmounted all difficulties owing to our robust business model and constant adjustments in various operating areas. We generated record net profit totalling €363.7 million, up 18% on 2021. ROE reached 17.9%. We intend to further strengthen and optimise our vertically integrated business model, which once again proved to be our greatest competitive advantage. It allows us to manage most business processes ourselves, from development, API and finished product manufacture to marketing and sales. We can quickly respond to market demand while providing high product quality, safety, and efficacy standards.
We obtained marketing authorisations for 11 new products in 2022: nine prescription pharmaceuticals and two non-prescription products. We place a considerable emphasis on managing the life cycle of products best established among users of our medicines. We constantly monitor the quality of our medicines, launch them on new markets, and add new strengths, pharmaceutical forms, and fixed-dose combinations. We upgrade them in line with the latest scientific findings and guidelines and align them with regulatory and market requirements. Last year, we received approvals for more than 28,000 regulatory variations.
In 2022, we filed 14 patent applications for new technological solutions evaluated as inventions at the global ranking level. Based on priority applications from 2021, we submitted nine international patent applications. We were granted three patents in different countries. Over 200 patents protect Krka’s technological solutions.
We intend to continue focusing on medicines for treating the most common contemporary chronic diseases. Cardiovascular agents currently account for more than 50% of our prescription pharmaceuticals, followed by central nervous system agents and gastrointestinal tract medicines. We also focus on other medicines, primarily on antidiabetic and oncology agents, medicines for pain relief, etc. We also plan to add new products to our non-prescription and animal health portfolios.
We are aware that long-term growth primarily depends on managing the life cycle of products and the continuous increase of supply, so we intend to supplement our portfolio with in-house innovative R&D solutions in the future. We allocate 10% of our annual revenue to research and development. We have more than 170 products in the pipeline.
Last year, we further optimised technological processes and introduced many alternative sources of materials. This enabled uninterrupted production and ensured long-term product volume growth, further reducing risks posed by the situation in purchasing markets.
The value of investments increased on 2021 and 2020, amounting to €106 million. We closed out two essential investments. We installed additional highly automated and robotised packaging lines in our largest solid dosage production plant, Notol 2 (Novo mesto, Slovenia), equipping it completely. This investment was worth €39.2 million. We have invested €259 million in the Notol 2 plant to date. We completed several investments to upgrade research, development and analysis capacities in our development-and-control laboratories. They totalled €8.3 million.
Other planned major investments include the chemical synthesis plant Sinteza 2 and laboratories for chemical analyses Kemijsko-analitski center – two facilities for API development and production in Krško, Slovenia, that will significantly increase API development and production capacities. The total investment value is estimated at €163 million.
Krka shares remained the most actively traded security on the Ljubljana Stock Exchange in 2022, with an average daily trading volume of €0.76 million. The share also reached one of the highest dividend yields in the industry. The shareholders received €5.63 gross dividend per share, up 12.6% on the previous year. Gross dividend yield was 6.1%. We allocate at least 50% of the net profit of the majority holders for dividends each year. The Krka Group’s financial requirements for investments and potential acquisitions are also taken into account.
To share our successful business story with investors, we participated in 16 investment conferences with investors from over 15 countries and held conference calls with over 100 shareholders.
We know we can deliver on the set strategy only through effective organisation combined with dedicated work in all business segments and our prowess. Of all Krka employees, 51% hold at least a university degree. We constantly educate and motivate our employees. We were awarded the silver TOP Education Management certificate in 2022, placing us among the Slovenian companies that invest the most in employee education and development. Krka received the 2022 MEGA Acceleration (MEGA pospešek 2022) award, the highest recognition for remarkable achievements in intergenerational activities, cooperation and integration at the workplace.
We are a varied but tightly-knit team. Our employees come from 49 countries. Employees on open-ended contracts account for 88.1%, and women occupy 50.8% of all managerial posts.
Sustainability has been the foundation for our stable growth for decades, outmatching the exclusively environmental responsibility. Our social impact is significant and encompasses integrated quality management and ensuring high-quality, safe, effective, and affordable medicines. To enhance sustainable development, we put a lot of effort into talent attraction and retention, follow good management and governance practices, mitigate our impact on the environment and climate change, and ensure compliance, integrity, and transparency of business operations.
We recently upgraded Krka Group ESG governance to further improve the management of our material sustainability areas, reduce sustainability-related risk, and increase the positive impacts of sustainable development. We formally introduced sustainable development guidelines and strategic goals in November 2022, when the Management and Supervisory Boards adopted two documents: the ESG Policy of the Krka Group; and the ESG Strategy of the Krka Group, that set down all measurable goals we plan to deliver on by 2026. This will help us achieve stable long-term business results and increase our competitive advantage.
We fully embrace our responsibility of providing our medicines to more than 50 million patients, primarily those with chronic diseases. One of our strategic goals is to increase the number of patients treated with our cardiovascular agents and hence directly help attain one of the goals from the United Nations 2030 Agenda: to reduce deaths caused by noncommunicable diseases by one-third by 2030.
We included many additional disclosures in this regard in this annual report. We intend to obtain an independent ESG rating by the end of 2023.
Despite many market changes, the situation has been favourable, and our products have been in reasonably high demand. We have one of the most robust marketing and sales networks of all pharmaceutical companies in countries, where our presence is long standing. We manage sales in most western European markets through our network. We successfully navigate challenges related to the situation in Ukraine and the Russian Federation, meaning our activities run relatively smoothly. We also benefit from our 60-year business experience in those countries.
Governments and healthcare institutions in many countries worldwide are cutting back on healthcare spending and encouraging the use of generic medicines. The demand for generic medicines is rising, and certain markets are only beginning to emerge.
The Krka Group is an innovative generic company whose long-term orientation is to continue supplying high-quality medicines to improve the quality of life for patients from all corners of the world. We have many reasons to be confident, as our competitive advantage lies in: innovative generic medicines; ranking among global best-sellers; a flexible and resilient business model; highly qualified and motivated employees; digitalisation and innovative approaches to all business segments; being sustainability-centric; and the ease and speed at which we adapt to changes.
I am convinced that they guarantee the Krka Group’s fitness, increase owners’ assets, and provide new professional challenges for employees while meeting the expectations of the wider community.
Jože Colarič
President of the Management Board and CEO
| € thousand | 2022 | 2021 | 2020 | 2019 | 2018 |
|---|---|---|---|---|---|
| Revenue | 1,717,453 | 1,565,802 | 1,534,941 | 1,493,409 | 1,331,858 |
| – Of that revenue from contracts with customers (products and services) | 1,708,542 | 1,560,288 | 1,529,959 | 1,489,080 | 1,326,747 |
| Earnings before interest, tax, depreciation and amortisation (EBITDA) | 488,895 | 463,625 | 502,432 | 385,437 | 343,280 |
| Operating profit (EBIT) | 381,211 | 354,788 | 390,744 | 274,195 | 232,686 |
| Profit before tax (EBT) | 433,073 | 362,417 | 338,992 | 284,368 | 202,573 |
| Net profit | 363,662 | 308,150 | 288,949 | 244,272 | 174,008 |
| Non-current assets (year-end) | 1,125,025 | 1,075,052 | 990,998 | 1,041,833 |
| Year | Amount |
|---|---|
| 2022 | 1,562,475 |
| 2021 | 1,461,936 |
| 2020 | 1,244,544 |
| 2019 | 1,142,785 |
| 2018 | 974,258 |
| Year | Amount |
|---|---|
| 2022 | 2,138,509 |
| 2021 | 1,919,085 |
| 2020 | 1,751,812 |
| 2019 | 1,667,516 |
| 2018 | 1,540,270 |
| Year | Amount |
|---|---|
| 2022 | 132,130 |
| 2021 | 162,674 |
| 2020 | 172,796 |
| 2019 | 160,905 |
| 2018 | 123,058 |
| Year | Amount |
|---|---|
| 2022 | 416,861 |
| 2021 | 455,229 |
| 2020 | 310,934 |
| 2019 | 356,197 |
| 2018 | 321,741 |
| Year | Amount |
|---|---|
| 2022 | 162,580 |
| 2021 | 154,559 |
| 2020 | 153,447 |
| 2019 | 152,421 |
| 2018 | 130,700 |
| Year | Amount |
|---|---|
| 2022 | 105,974 |
| 2021 | 66,386 |
| 2020 | 76,613 |
| 2019 | 112,568 |
| 2018 | 96,293 |
| Year | EBITDA Margin | EBIT Margin | EBT Margin | Net Profit Margin (ROS) |
|---|---|---|---|---|
| 2022 | 28.5% | 22.2% | 25.2% | 21.2% |
| 2021 | 29.6% | 22.7% | 23.1% | 19.7% |
| 2020 | 32.7% | 25.5% | 22.1% | 18.8% |
| 2019 | 25.8% | 18.4% | 19.0% | 16.4% |
| 2018 | 25.8% | 17.5% | 15.2% |
| 3 | 17.9% | 16.8% | 16.9% | 15.2% | 11.5% |
|---|---|---|---|---|---|
| 4 | 13.9% | 12.9% | 13.1% | 11.7% | 8.9% |
|---|---|---|---|---|---|
| 0.257 | 0.322 | 0.276 | 0.310 | 0.289 |
|---|---|---|---|---|
| 9.5% | 9.9% | 10.0% | 10.2% | 9.8% |
|---|---|---|---|---|
| Year-end | 2022 | 2021 | 2020 | 2019 | 2018 |
|---|---|---|---|---|---|
| 11,598 | 11,511 | 11,677 | 11,696 | 11,390 | |
| Average | 11,569 | 11,581 | 11,631 | 11,484 | 11,129 |
| Total number of shares issued | 2022 | 2021 | 2020 | 2019 | 2018 | |
|---|---|---|---|---|---|---|
| 32,793,448 | 32,793,448 | 32,793,448 | 32,793,448 | 32,793,448 | ||
| Earnings per share (EPS) in € | 5 | 11.69 | 9.92 | 9.27 | 7.73 | 5.46 |
| Gross dividend per share in € | 5.63 |
| 92.00 | 118.00 | 91.40 | 73.20 | 57.80 |
|---|---|---|---|---|
| 7.87 | 11.90 | 9.86 | 9.47 | 10.59 |
|---|---|---|---|---|
| 6 | 65.21 | 58.52 | 53.42 | 50.85 | 46.97 |
|---|---|---|---|---|---|
| 1.41 | 2.02 | 1.71 | 1.44 | 1.23 |
|---|---|---|---|---|
| 3,016,997 | 3,869,627 | 2,997,321 | 2,400,480 | 1,895,461 |
|---|---|---|---|---|
| Unit of measure | 2022 | 2021 | 2020 | 2019 | 2018 | |
|---|---|---|---|---|---|---|
| ENVIRONMENTAL DATA | Water consumption (total) | m3 | 1,461,617 |
| Drinking water | 1,461,024 | 1,623,046 | 1,399,303 | 1,341,333 | |
|---|---|---|---|---|---|
| River water | 676,482 | 643,965 | 684,950 | 613,919 | 655,837 |
| Energy (total) | 1,010,667 | 953,366 | 969,833 | 956,577 | 961,319 |
|---|---|---|---|---|---|
| Electric power | 361,190 | 330,453 | 344,957 | 356,610 | 344,983 |
| Natural gas | 584,480 | 601,041 | 604,287 | 580,048 | 595,739 |
| Liquid petroleum gas | 0 | 17,750 | 20,564 | 19,409 | 20,214 |
| Fuel oil (extra light) | 64,997 | 4,122 | 26 | 510 | 383 |
| Generated electric power – alternative sources (total) | 29,315 | 53,337 | 48,294 | 39,482 | 46,909 |
| Solar power plant |
| GJ | 275 | 266 | 280 | 252 | 223 | |||
|---|---|---|---|---|---|---|---|---|
| Energy intensity | Specific use of energy | 3 | MJ/€ | 1.52 | 1.62 | 1.62 | 1.66 | 1.88 |
| Specific use of energy | 3 | TJ/billion units | 77.4 | 78.1 | 78.1 | 82.6 | 86.6 | |
| Wastewater (total) | 4 | m3 | 1,305,619 | 1,266,494 | 1,388,829 | 1,225,003 | 1,150,578 | |
| Cooling water | m3 | 424,261 | 407,807 | 517,090 | 392,490 | 298,137 | ||
| Industrial wastewater | m3 | 881,358 | 858,687 | 871,739 | 832,513 | 852,441 | ||
| – Suspended solids load | t | 7.0 | 11.8 | 10.3 | 23.9 | 16.1 | ||
| – Biochemical oxygen demand | t | 3.6 | 3.1 |
| Chemical oxygen demand | t | 48.0 | 41.4 | 42.1 | 57.5 | 38.4 |
|---|---|---|---|---|---|---|
| Nitrogen | t | 6.2 | 5.1 | 2.9 | 4.9 | 4.8 |
| Phosphorus | t | 0.7 | 0.7 | 0.6 | 0.7 | 0.6 |
| ELU | 1,584 | 1,371 | 1,241 | 1,737 | 1,286 |
|---|---|---|---|---|---|
| t | 11,932 | 11,369 | 12,512 | 11,091 | 10,312 |
|---|---|---|---|---|---|
| t | 6,786 | 6,480 | 7,329 | 6,047 | 5,491 |
|---|---|---|---|---|---|
| t | 871 | 808 | 889 | 789 | 670 |
|---|---|---|---|---|---|
| t | 5,915 | 5,672 | 6,440 | 5,258 | 4,821 |
|---|---|---|---|---|---|
| t | 5,146 | 4,889 | 5,183 | 5,044 |
|---|---|---|---|---|
| Year | Amount (t) |
|---|---|
| 2018 | 4,821 |
| Year | Amount (t) |
|---|---|
| 2018 | 502 |
| 2019 | 495 |
| 2020 | 427 |
| 2021 | 489 |
| 2022 | 371 |
| Year | Amount (t) |
|---|---|
| 2018 | 1,447 |
| 2019 | 1,231 |
| 2020 | 1,618 |
| 2021 | 1,308 |
| 2022 | 1,187 |
| Year | Amount (t) |
|---|---|
| 2018 | 2,532 |
| 2019 | 2,381 |
| 2020 | 2,327 |
| 2021 | 2,422 |
| 2022 | 2,422 |
| Year | Amount (t) |
|---|---|
| 2018 | 1,303 |
| 2019 | 1,243 |
| 2020 | 1,273 |
| 2021 | 1,221 |
| 2022 | 1,191 |
| Year | Amount (t) |
|---|---|
| 2018 | 513 |
| 2019 | 421 |
| 2020 | 380 |
| 2021 | 401 |
| 2022 | 432 |
| Year | Amount (t) |
|---|---|
| 2018 | 113 |
| 2019 | 110 |
| 2020 | 135 |
| 2021 | 136 |
| 2022 | 125 |
| Year | Amount (t) |
|---|---|
| 2018 | 188 |
| 2019 | 186 |
| 2020 | 150 |
| 2021 | 239 |
| 2022 | 201 |
| Year | Amount (t) |
|---|---|
| 2018 | 398 |
| 2019 | 421 |
| 2020 | 389 |
| 2021 | 425 |
| 2022 | 473 |
| Year | Amount (t) |
|---|---|
| Unit of measure | 2022 | 2021 | 2020 | 2019 | 2018 |
|---|---|---|---|---|---|
| Energy related CO2 – direct | 33,475 | 35,046 | 34,709 | 33,332 | 34,242 |
| Energy related CO2 – indirect | 0 | 0 | 45,707 | 47,251 | 45,710 |
| Energy related SO2 | 3.7 | 1 | 1 | 1 | 1 |
| Energy related NOx | 35.9 | 28.0 | 27.9 | 26.8 | 27.6 |
| Ozone-depleting substances and fluorinated greenhouse gases |
| 0 | 0 | 0 | 0 | 3 |
|---|---|---|---|---|
| € thousand | 2019 | 2020 | 2021 | 2022 | 2023 |
|---|---|---|---|---|---|
| Environmental protection costs | 11,968 | 11,599 | 10,056 | 7,672 | 6,738 |
| Investments in environmental programmes | 7,701 | 6,258 | 6,357 | 5,517 | 5,107 |
| 4,267 | 5,301 | 3,699 | 2,155 | 1,631 |
| Year | Number of Employees |
|---|---|
| Slovenia | 6,320 |
| 6,228 | |
| 6,191 | |
| 5,907 | |
| 5,496 | |
| Representative offices abroad | 5,763 |
| 5,690 | |
| 5,679 | |
| 5,386 | |
| 4,995 |
| Metric | Value |
|---|---|
| Number of accidents | 32 |
| 22 | |
| 21 | |
| 27 | |
| 19 | |
| Lost time injury frequency rate (LTIFR) | 3.3 |
| 2.4 | |
| 2.3 |
%
| 5.0 | 5.0 | 4.9 | 5.3 | 5.4 |
|---|---|---|---|---|
hour/employee
| 44 | 27 | 32 | 41 | 42 |
|---|---|---|---|---|
€/employee
| 754 | 603 | 667 | 897 | 881 |
|---|---|---|---|---|
The Krka Group consists of the controlling company, Krka, d. d., Novo mesto, a subsidiary in Slovenia, Terme Krka, d. o. o., Novo mesto, and 31 subsidiaries outside Slovenia.
The Krka Group develops, produces, markets, and sells human health products (prescription pharmaceuticals and non-prescription products), animal health products, and health resort and tourist services.
Production takes place at the controlling company in Slovenia and at Krka subsidiaries in the Russian Federation, Poland, Croatia, and Germany. In addition to production, these subsidiaries, apart from Krka-Rus in the Russian Federation, deal with marketing and sales. In China, production takes place in leased production facilities. Other subsidiaries outside Slovenia market and/or sell Krka products, but do not have production capacities.
Terme Krka, d. o. o., Novo mesto provides health resort and tourist services and operates through the following branches: Terme Dolenjske Toplice, Terme Šmarješke Toplice, Hoteli Otočec, and Talaso Strunjan. Terme Krka is also the majority owner of Golf Grad Otočec, d. o. o.
In 2022, we established a wholly-owned subsidiary in the United Arab Emirates, Krka GCC L.L.C.
Krka, d. d., Novo mesto
Registered office: Šmarješka cesta 6, 8501 Novo mesto, Slovenia
Telephone: +386 (7) 331 21 11
Fax: +386 (7) 332 15 37
Website
www.krka.si
Manufacture of pharmaceutical preparations
21,200
1954
1/00097/00, District Court of Novo mesto
82646716
SI82646716
5043611000
€54,732,264.71
32,793,448 ordinary registered no-par value shares
Abbreviated company names are used in the remainder of this document.
KRKA-RUS LLC
KRKA FARMA LLC
KRKA - POLSKA, Sp. z o.o.
KRKA Magyarország Kft.
TERME KRKA, d. o. o., Novo mesto
KRKA FARMACÉUTICA, S.L.
Krka Sverige AB
KRKA PHARMA DUBLIN LIMITED
KRKA Farmacêutica, Unipessoal Lda.
TAD Pharma GmbH
KRKA Pharma GmbH, Wien
KRKA Slovensko, s.r.o.
KRKA ČR, s. r. o.
KRKA-FARMA d.o.o.
The event after the end of the period had no impact on the 2022 financial statements.
From 1 January 2023 to 20 March 2023, we acquired 25,852 of treasury shares. At the end of this period, Krka held 1,811,701 treasury shares (5.525% of total shares).
Krka employs a two-tier corporate governance system. The Management Board runs the Company and is controlled by the Supervisory Board. Corporate governance is based on the legislation of the Republic of Slovenia, Slovenian and international good practice, the publicly available Corporate Governance Policy of the Company and its internal rules.
Under the Slovenian Companies Act (ZGD-1), the Company’s highest body is the Annual General Meeting (AGM). It is where shareholders directly participate in the Company’s governance and where all fundamental and statutory decisions are taken. Each share, except for treasury shares, represents one vote at the AGM. Krka has one share class only: ordinary no-par value shares.
The Management Board calls the regular AGM once a year, at least 30 days before the due date. Upon request, all materials for each AGM can be viewed at the Company’s registered office from the day of the notice.
All shareholders entered in the shareholder register as at the record date, which is published in the notice, have the right to attend and vote at the AGM. The same applies to their representatives and proxies.
At the AGM, the Management Board provides shareholders with all information required to assess the agenda, taking into account all legal or other information disclosure restrictions.
In the 2022 AGM notice, per Item 8.2 of the Corporate Governance Code for Listed Companies in force, the Company requested all major shareholders to publicly disclose their investment policies in respect of their shareholdings in the Company, in particular their voting policy, the type and frequency of their engagement in the Company’s governance, and the flow of their communication with the Company’s managerial and supervisory bodies.
At the 28th AGM of 7 July 2022, shareholders:
According to the 2023 financial calendar, the regular AGM is set for 6 July. The Company must give a clear 30 days’ notice before the AGM is held and publish it on the AJPES website, in the Company’s printed or online publication if it is due for publication at the time of the notice and on the Company’s website. The notice must also comply with the Financial Instruments Market Act.
Further information on shareholders and voting rights is available under ‘Investor and Share Information’.
The Supervisory Board supervises the Company’s operations and business management and selects and appoints members to the Management Board. The body meets at least four times a year. Under the provisions of the Articles of Association, the Supervisory Board pre-approves the annual business and financial plan and the strategy for adoption by the Management Board. It also carries out other tasks in accordance with the Companies Act. It primarily approves (a) the appointment, removal, and remuneration of the Head of Internal Audit; (b) the act regulating the purpose, meaning, and duties of Internal Audit; and (c) the annual and multi-year plans of Internal Audit. It is also briefed about the annual report of Internal Audit. The President of the Supervisory Board concludes contracts with the external auditor. Only with the Supervisory Board’s consent can the Management Board invite shareholders in the AGM notice to attend the AGM and vote even if they are not present at the meeting in person (Item 6.21 of the Articles of Association).
The Supervisory Board consists of nine members: six are elected by the AGM, and the Company’s Works Council elects three employee representatives. The President of the Supervisory Board is always elected from the AGM-appointed members. Members are appointed for a five-year term and can be reappointed.
The 26th regular AGM was held on 9 July 2020. With the terms of office expired for Jože Mermal, Andrej Slapar, Julijana Kristl, and Boris Žnidarič, the AGM elected Jože Mermal, Matej Lahovnik, Julijana Kristl, and Boris Žnidarič to new five-year terms of office. Another two shareholder representatives sit on the Supervisory Board: Borut Jamnik elected by the AGM on 6 July 2017 and again on 7 July 2022, and Mojca Osolnik Videmšek elected by the AGM on 4 July 2019.
The President of the Supervisory Board is Jože Mermal. His deputies are Matej Lahovnik, the shareholder representative, and Franc Šašek, the employee representative. If the President of the Supervisory Board is absent, the shareholder representative replaces him, and if the latter is also absent the employee representative replaces him in turn.
The Supervisory Board’s performance complies with legislation, recommendations of professional associations, primarily the Slovenian Directors’ Association, and other good practice recommendations, particularly the Slovenian Corporate Governance Code.
Supervisory Board members’ remuneration, reimbursement, and other benefits are not directly linked to the Company’s performance and are disclosed in the financial report under the Note entitled ‘Related party transactions’ and in the report to the AGM on Management and Supervisory Board remuneration. In addition to attendance fees, members receive fixed amounts for exercising their functions and additional payments, i.e. for membership on committees, chairing the Supervisory Board or acting as a deputy to its president, presiding committees, and for special undertakings. All remuneration amounts were fixed by resolutions passed at the 27th regular AGM in 2021.
Supervisory Board members report to the Company and competent institutions on any acquisitions or disposals of Company shares, and Krka makes the information public. Please find the disclosure on how many Krka shares Supervisory Board members hold in the ‘Related party transactions’ section of the financial report.
In addition to the Companies Act, also the Rules of Procedure of the Supervisory Board govern any potential conflict of interest of the Supervisory Board members. Supervisory Board members must consider the Company’s objectives when discharging their duties and accordingly subordinate any personal interests or interests of third parties. All members were asked to complete a conflict of interest questionnaire. The questionnaire is available on the Krka website. The Rules of Procedure of the Supervisory Board outline steps to be taken by members in any case of a conflict of interest. The document is available at http://www.krka.biz/en/for-investors/documents/corporate-governance-documents/. A conflict of interest can constitute an impediment to voting. Any non-temporary material conflict of interest may be grounds for terminating a member’s term of office and is assessed when drafting the proposal for that person’s election.
The work of the Supervisory Board and related committees in 2022 is detailed in ‘2022 Supervisory Board report’, published on SEOnet (http://seonet.ljse.si) of the Ljubljana Stock Exchange, ESPI of the Warsaw Stock Exchange, and Krka’s webpages.
President of the Supervisory Board
Jože Mermal (born 1954) is from Ljubljana and holds a university degree in economics. Since 2019, when BTC introduced the one-tier management system, Mermal has chaired the company’s management board. He had successfully managed BTC for over 26 years before that, having worked creatively in many senior managerial positions since 1978.
He was the driving force behind the project to restructure and transform public warehouses into a thriving, dynamic, and rapidly expanding company that has also become one of Europe’s largest business, shopping, entertainment, recreation, culture, and innovation centres: BTC City. As the founder and strategist of BTC, he has been supporting investments in development to reach the company’s long-term goal: to make BTC an open company for future generations. Under his stewardship, the company has forged links with long-term business partners through various exploits, creating a unique business ecosystem and seeking new opportunities and challenges in an age of mass society, globalisation, innovation, and sustainable development.
In partnership with the Municipality of Ljubljana, he has been involved in setting up a 230-hectare urban regeneration project for the city of Ljubljana, the Šmartinska District Partnership. Crystal Palace, the Radisson Blu Plaza Hotel, and Ikea have been constructed as part of the project. He has also collaborated with the Municipality of Ljubljana in setting up the Intermodal Logistic Terminal (ILT) Ljubljana.
Under his management, ABC Accelerator was established in 2015. Its principal function is the development of a start-up business ecosystem. He also holds key managerial roles in various sports organisations and at international sporting events.
Under his management, BTC has received a plethora of awards and prizes for various community projects. He participates in cultural, sporting, educational, humanitarian, and scientific events, which he supports and is involved in.
It was followed by the highest managerial lifetime achievement award, the Best Manager of South-East Europe 2016 award, which is bestowed by the Independent Agency for the Selection and Promotion of Managers. Mermal was awarded the title of a 2017 honorary citizen of Ljubljana, the highest honour bestowed by the Municipality of Ljubljana, for his contribution to the renown, significance, and development of the municipality and its inter-city and international relations. At the awards for best managers and companies from Central and South-Eastern Europe, he received the Best Manager and Best Company in Europe lifetime-achievement award in 2019. In 2020, the Management Board of the Managers’ Association of Slovenia awarded Mermal the Lifetime Achievement Award in Management.
Matej Lahovnik holds a PhD in economics. He is a full professor at the Faculty of Economics in Ljubljana and has worked there since 1995. As a researcher, teacher and mentor, he deals with strategic management, mergers and acquisitions, organisation and business skills. Lahovnik has served twice as Minister of Economic Development and Technology to the Government of the Republic of Slovenia. He led the corporate governance and investment negotiation teams during Slovenia’s OECD membership talks.
He has been involved in many scientific project teams researching the behaviour of enterprises and financial institutions in transition; Slovenian economic development strategy; successful competitive strategies of Slovenian and Croatian companies; company acquisitions in economies in transition; and market regulations post-EU accession. He has authored or co-authored many papers on strategic management and mergers and acquisitions published in scientific and research journals and at conferences. He has co-authored a scientific monograph and authored or co-authored two university textbooks.
Boris Žnidarič holds a PhD in social sciences and a master’s degree in law. Up to his retirement, he served on the management board of Kapitalska družba, d. d., Ljubljana, a company that manages additional funds for pension and disability insurance. Before that, he held various roles at the Triglav Group insurance company. He was assistant to the president of the management board of Zavarovalnica Triglav, where, in addition to leading and directing heads of organisational units, he was also responsible for strategic human resource management at subsidiaries. He was on the management board of Triglav Osiguranje in Zagreb, Croatia. He also managed the Celje regional unit of Zavarovalnica Triglav, and led the central insurance fraud prevention and detection department. Before taking up that role, he was an adviser to a management board member for strategic human resource management in the Triglav Group, and an assistant director for legal, human resources, and general affairs at the Ljubljana unit. He holds a certificate of professional competence for supervisory board membership. In addition to his diverse career in insurance, he is also a university lecturer.
Borut Jamnik (born 1970) is from Ljubljana and graduated in mathematics from the Faculty of Natural Sciences and Engineering at the University of Ljubljana. He commenced his career at the Agency of the Republic of Slovenia for Restructuring and Privatisation. After a brief spell at the Securities Market Agency of Slovenia, Jamnik took up a post at the IT and analyses department of Kapitalska družba, a company that evaluates investments and prepares the grounds for management decisions. He managed the project that led to the establishment of the First Pension Fund in Slovenia.
In 2000, he began his term on the management board of Kapitalska družba in charge of finance, analyses, IT, and pension fund management activities. Jamnik chaired the management board of Kapitalska družba from 2003 to 2005 and from 2008 to 2011. In the intervening years, he was a board member responsible for finance and group management at Hit, then at Probanka Asset Management, first as a management consultant and later as a management board member. During that tenure, he oversaw the merger of two hotels, HIT Alpinea and Kompas Hoteli KG, and was involved in negotiations with the strategic partner, the then Harrah’s Entertainment. He chaired the board of a special business consultancy Posebna družba za podjetniško svetovanje (PDP) until its dissolution following the merger with Slovenski državni holding (SDH, Slovenian Sovereign Holding). The process involved a series of financial and business restructurings, culminating in the sale of the companies.
In 2011 he was appointed chairperson of the management board at Modra zavarovalnica, where he is responsible for asset management, compliance, planning and controlling, legal and HR matters. Since 1999, he has been a member of or chaired many governing bodies of major Slovenian companies, including Telekom Slovenije, Pivovarna Laško, Zavarovalnica Triglav, NLB, Luka Koper, Comet, Swaty, Lesnina, Žito, Krka, etc. Until 2018, he was a management board member of the European Association of Public Sector Pension Institutions (EAPSPI). He was a supervisory board and audit committee member at Nova KBM bank until 4 January 2023.
Mojca Osolnik Videmšek (born 1966) holds a university degree in economics. She sits on the management board of Gorenjska banka, a bank, and is responsible for risk management. A bank employee since 2014, she sat on the management board from 2014 until 2019, and acted as the director of the bank’s subsidiary GB Leasing, d. o. o. (2019–2022). Her other duties included financial management, back office, compliance management, human resource management, organisation, and legal affairs.
Before taking up employment with Gorenjska banka, she was responsible for various challenging areas of work at another Slovenian bank, NLB, d. d., primarily concerning corporate governance at the NLB Group. As director of Capital Investments Management and Control, she sat on several supervisory boards and audit committees of subsidiaries in Slovenia and abroad. She was also director of the office of the management board and secretary general at NLB.
She has also gained experience in executive positions in public administration. From September 1994 until April 1999, she worked as head of the Prime Minister’s Office. Between 2001 and 2003, she was director of the Administrative Office of the Prime Minister of the Republic of Slovenia and, for a brief spell in 2000, Secretary General at the Ministry of Foreign Affairs. She holds a certificate from the Slovenian Directors’ Association. She sat on the management board of the Slovenian Directors’ Association for three terms of office.
Julijana Kristl holds a PhD in pharmaceutical sciences and worked at the Faculty of Pharmacy at the University of Ljubljana (1977–2021). She upskilled at the University of Geneva, the University of Lyon, and the pharmaceutical industry.
Her scientific career started in the area of pharmaceutical technology. Her greatest achievements include sustainable development and deploying pharmaceutical nanotechnology in Slovenia and beyond. Her work initially focused on developing and evaluating API nanodelivery systems that support innovative modes and new treatment mechanisms.
Other notable achievements include lipid and polymer nanostructure (various nanoparticles and nanofibres) research and development, the discovery of mechanisms for increasing active ingredient solubility and bioavailability, and understanding the correlation between the structural composition and the real-time cell response on contact with them. Owing to her achievements, she is a pharmaceutical nanotechnologist of global renown. In 2021, the Ministry of Education, Science and Sport of the Republic of Slovenia awarded Kristl the Zois Lifetime Achievement Award. She was awarded emeritus status by the University of Ljubljana in 2022 for her significant contribution to the development of pharmaceutical science and dedicated pedagogical and scientific work.
Throughout her career, she held many managerial posts, serving as Vice-Dean, Head of the Chair of Pharmaceutical Technology, Dean of the Faculty of Pharmacy, and as Vice-Rector at the University of Ljubljana (two terms). She is an active member of many prominent commissions and committees at state and university levels. Since 2021, she has actively participated in the council of the Slovenian Quality Assurance Agency for Higher Education, Slovenian Directors’ Association, Slovenian Pharmaceutical Society, and the Outstanding Achievements Awards and Recognition Committee of the Republic of Slovenia.
She is committed to research, gaining and sharing know-how with students and the scientific and business communities. She sets high professional goals, is future-focused, and acts to benefit the community. Her knowledge, personal skills, independence, and autonomy are solid foundations for a successful tenure on the Supervisory Board of Krka.
Deputy President of the Supervisory Board
Franc Šašek (born 1967) has a degree in organisational sciences. He joined Krka in 1984 and heads up Technical Services. From the outset, he has worked in engineering and technical services ranging from technologist, Head of the Technical and Technological Preparations Department, and later senior specialist in maintenance and project management.
In 2004, he was the SAP PM-maintenance project team leader for the rollout of the business process management system (SAP) and subsequently appointed process owner for maintenance in the Krka Group. In 2021, he was appointed as the process owner to the project team for the rollout of the new system, SAP S/4HANA, again as the maintenance project manager.
He has served as an authorised person and trainer for quality assurance since 1999. He conducted internal audits of the integrated quality system as a certified internal quality auditor between 2000 and 2013. He was appointed Information Security Officer for engineering and technical services in 2007, and in 2019 also Business Continuity Officer. He is jointly responsible for integrated quality system maintenance, compliance and business continuity in the organisational unit and the Company.
The Management Board’s primary duties are to:
The Management Board has five members:
The President and other members of the Management Board of Krka were not members of any governance or supervisory bodies outside the Krka Group in 2022.
The term of office of Management Board members is six years. Members can be reappointed. The candidacy procedure and selection of the Management Board members took place in 2021, when the Supervisory Board appointed the Management Board for a term of office commencing on 1 January 2022.
The Rules of Procedure of the Management Board define the Management Board’s operational functions and assignment of duties. The body’s operating approach is to coordinate opinions and make decisions by consensus. In line with the Rules of Organisation and the Rules of Procedure of the Management Board, Management Board members also have executive management duties. Every member is responsible for a certain number of organisational units, which facilitates
Mateja Vrečer (born 1966) has worked at Krka since 1990. She started as a pharmaceutical engineering graduate, later passing the pharmaceutical engineering certification examination, which she followed up with a Master’s degree and then a doctorate in pharmaceutical sciences. She first worked in Research and Development on regulatory feasibility studies for planned new products, and once approved, she managed product registration and product launch campaigns in Slovenia. In 1997, she was appointed Deputy Director of Quality Management, and in March 2007, she took up the role of head of International Quality Assurance. In September 2011, she accepted the position of Director of Quality Management. She was an employee representative of the Krka Supervisory Board in 2005–2009 and 2009–2014. In June 2014, she was reappointed to her third term of office. The Works Council elected Vrečer as an employee representative for another term of office commencing on 21 June 2019.
Tomaž Sever was born in 1967. After graduating as a mechanical engineer, he acquired a master’s degree in management and organisational sciences. He has been employed at Krka since 1995. He is Deputy Director of Sales and Director of Region Central Europe, entrusted with market research; establishing and expanding Krka’s presence in individual markets; specifying the product range; recommending pricing strategies for individual markets; taking part in the preparation of sales campaigns; designing, developing, and managing distribution channels; and participating in the sales network creation abroad. Before joining Krka, he worked for IBM Slovenia from 1992 to 1995, first as an information systems sales representative and later managing information system installation projects. Sever joined the Krka Supervisory Board as an employee representative in the 2005–2009 term, was reappointed for another five-year term of office in 2009, and started his third term as an employee representative in June 2014. The Works Council elected him to the Supervisory Board as an employee representative for another term of office that commenced on 21 June 2019.
In accordance with Article 280 of the Companies Act, the Supervisory Board appointed Borut Šterbenc, an independent accounting and auditing expert, to the Audit Committee. He is not a member of the Supervisory Board.
Independent Accounting and Auditing Expert, Member of the Audit Committee
Certified auditor, Borut Šterbenc (born 1978 in Ljubljana) holds a university degree in economics. He graduated from the Faculty of Economics, University of Ljubljana. On 1 January 2020, he assumed chairmanship of the management board of Kolpa, d. d., Metlika. Up to 2011, he was a project manager at KPMG, where he planned, led, and conducted complex audits in many Slovenian companies, including Krka, Intereuropa, Sava, NEK, and Lama. Šterbenc is also a supervisory board member at Pokojninska družba A, d. d. and an experienced rapporteur to governance and supervisory bodies. He is a certified auditor registered with the Agencija za nadzor nad revidiranjem (Agency for Public Oversight of Auditing). He also holds a certificate of professional competence for supervisory board membership issued by Slovenian Directors’ Association. He is fluent in English, Croatian, and Russian.
Direct cooperation between the Management Board and directors of organisational units. The following bodies assist the Management Board:
The committees bring together Management Board members, managerial staff, and experts from individual sectors in Krka. They prepare business policies and strategic guidelines by individual areas and have some decision-making responsibilities for implementing annual plans. Certain committees also have a risk management remit. The Sustainability Board has been active since 1 January 2023.
Remuneration, reimbursements, and other benefits for Management Board members are fixed in work contracts between the Supervisory Board and individual Management Board members. In compliance with the Companies Act, the remuneration policy for management and supervisory bodies is decided on by a consultative resolution. This provision has been applied to AGMs since 24 August 2021.
In 2022, payments to Management Board members were made in cash. The data are disclosed in the financial report under the Note entitled ‘Related Party Transactions’, and in the report on remuneration for the members of the Management and Supervisory Boards of Krka, reviewed at the AGM of 7 July 2022.
Management Board members and their related parties report to the Company and the competent institutions on any acquisition or disposal of the Company’s or related parties’ shares. Krka makes this information public.
Management Board members’ obligations regarding any potential conflict of interest are governed by the Companies Act, and operationally also by the Rules of Procedure of the Management Board based on good practices, in particular on the Corporate Governance Code for Listed Companies. Under the Rules of Procedure of the Management Board, the members must be absolutely loyal to the Company. They must disclose any conflict of interest to the Supervisory and Management Boards immediately but no later than three days after it arises. They must comply with anti-competitive practices throughout their term of office. Under the Rules of Procedure, they can accept seats on supervisory bodies of companies outside the Krka Group only after notifying and obtaining approval from the Supervisory Board of Krka. In 2022, no member of the Management Board of Krka was a member of a supervisory body of any company outside the Krka Group. The existence of any conflict of interest is assessed prior to their nomination.
As regards the Management Board’s powers, the shareholders adopted a resolution at the 26th AGM of 9 July 2020, authorising the Management Board to acquire treasury shares over a 36-month period provided that total treasury shares, including new purchases and shares already held, do not exceed 10% of total share capital. The Company informed the public about the treasury share repurchase programme on the web portal of the Ljubljana Stock Exchange SEOnet (http://seonet.ljse.si).
Please, find below the CVs of the members of the Management Board presided over by Jože Colarič. Their six-year term of office commenced on 1 January 2016 and ended on 31 December 2021. The Supervisory Board reappointed the unchanged Management Board for another six-year term of office that commenced on 1 January 2022.
President of the Management Board and CEO
Jože Colarič (born 1955 in Brežice, Slovenia) completed his secondary education at Gimnazija Novo mesto, then continued his studies at the Faculty of Economics in Ljubljana, graduating in 1979.
He has been employed at Krka since 1982. He started in the Finance Sector, where he initially headed Foreign Currency Payments, and then won promotion to Assistant Director. In 1989, he began managing the Exports Department within the Import-Export Sector. Two years later, he became Deputy Director of Import-Export.
Early in 1993, Colarič was appointed Deputy Chief Executive for Marketing and Finance. In September of the same year also assumed management of the Marketing-and-Sales Sector.
At their meeting of 12 July 2004, the Supervisory Board appointed Colarič President of the Management Board and Chief Executive Officer. His five-year term of office began on 1 January 2005. At their meeting of 21 January 2009, the Supervisory Board appointed him for another six-year term of office commencing on 1 January 2010. Under his management, Krka has developed into one of the leading generic pharmaceutical companies in the world and built solid foundations for growth. Colarič’s actions rely on Krka’s in-house knowledge, new product development, annual investments, recruitment, and regular dividend payments. In 2015, the Supervisory Board unanimously appointed him President of the Management Board and CEO for a new six-year term of office commencing on 1 January 2016. When that term of office ended, the Supervisory Board appointed him President of the Management Board and CEO for another six-year term of office commencing on 1 January 2022. He put forward an unchanged Management Board, and the Supervisory Board unanimously reappointed to the Management Board for the 2022–2027 term of office the Worker Director proposed by the Works Council.
Member of the Management Board and Director of Pharmaceutical R&D and Production
Aleš Rotar (born 1960 in Zadar, Croatia) graduated in pharmacy from the Ljubljana Faculty of Natural Sciences and Engineering in 1984, and earned a master’s degree seven years later. In 1993, he received his MBA from IEDC, Brdo. He earned his doctorate from the Faculty of Pharmacy, Ljubljana, in 2000.
He started working at Krka in the Stability Department in 1984. In 1991, he was appointed Head of Pharmaceutical Technology and two years later Head of Pharmaceutical Development within Research and Development. In 1998, he was appointed Deputy Director and in 1999, Director of Research and Development.
He was appointed to the Management Board in 2001. He began his second term on 31 July 2002 and was reappointed for the period 31 July 2007 to 31 December 2009. Rotar has been Director of Research and Development since 2002. At their meeting of 29 July 2009, the Supervisory Board reappointed him to the Management Board for a further six-year term of office, starting on 1 January 2010. Rotar has notably contributed to know-how and establishment of business functions for in-house research and development at Krka. Owing to his strong performance, in November 2015, the Supervisory Board unanimously appointed Rotar to the Management Board for a new term of office from 2016 to 2021 following a nomination by Colarič. Within that term, he successfully united development and production processes into Pharmaceutical R&D and Production, one of Krka’s largest organisational units. Synergies between the experts from development and production helped enhance technology transfer and product life cycle management, leading to higher production output. During his terms of office, Krka almost doubled product launches.
Following his 2021 nomination by Colarič, the Supervisory Board unanimously appointed him to the Management Board for another six-year term of office commencing on 1 January 2022.
Member of the Management Board and Director of API R&D, Production and Supply Chain
Vinko Zupančič (born 1971 in Novo mesto, Slovenia) finished his secondary education at Gimnazija Novo mesto. He graduated from the Faculty of Pharmacy in 1996, earning a master’s degree in pharmacy. In 1998, he passed a certification examination in pharmacy and in 2010, earned a doctorate from the Faculty of Pharmacy.
He joined Krka in 1997 as a Warehousing and Transport of Product Supply trainee. In 1998, he became a warehouse technologist and then a senior warehouse technologist. In 2000, he assumed the role of assistant to the head of Warehouse and Transport Services. In 2002, he became Deputy Head of Supply Chain. Commencing on 1 February 2004, Zupančič took up his appointment as Director at Krka’s representative office in Bangalore, India. He returned to Krka in Slovenia on 1 July 2005 as Head of Supply Chain at Product Supply. He was appointed Deputy Director of Product Supply on 1 December 2008 and Director of Product Supply on 1 January 2010.
On 29 July 2009, the Supervisory Board appointed him to the Management Board for a six-year term commencing on 1 January 2010. Krka’s significant competitive advantage is that we manufacture most of the APIs and raw materials we require, enhancing product economics and cutting response time. Zupančič has been integral to the success of this strategy. Following his 2015 nomination by Colarič, the Supervisory Board unanimously appointed him to the Management Board for a term of office from 2016 to 2021. During that term, he successfully managed raw material development, production, and the supply chain. He played a key role in supply chain management regarding finished products, from improving raw material economics to process optimisation. He is also credited with continuously streamlining warehousing capacities and optimising road and other means of transport.
Following his 2021 nomination by Colarič, the Supervisory Board unanimously appointed him to the Management Board for another six-year term of office commencing on 1 January 2022.
Member of the Management Board
Bratož began his career at Krka in 2001 in the Finance department, where he managed several major projects. In 2003, he began working in Sales, Region Central Europe, primarily in charge of the Polish market. Owing to his strong performance, he was appointed Director of Krka - Polska in 2007, where he managed marketing, sales, production, and distribution operations. Two years later, he was appointed President of the Board of Directors.
Bratož and his team worked together to make Krka - Polska one of the largest and most successful Krka subsidiaries. Product sales and production volume doubled during his tenure in Poland, winning him and Krka - Polska many awards.
Bratož has extensive knowledge of all business functions of a large corporation. Following his 2015 nomination by Colarič, the Supervisory Board appointed him to the Management Board for his first term of office, from 2016 to 2021. He contributed to the renewal of our development strategy. He was also accountable for managing finance, the economics of international and domestic business operations, Krka Group controlling, business intelligence, and the development of business informatics. He instigated the implementation of business compliance, corporate integrity, and personal data protection in the Company. During his term of office, Krka accelerated digitalisation and the use of cloud technologies and upgraded information security. He leads the expert team for enhancing sustainable management in the Company. As a member of the Management Board, Bratož cooperates closely with the Works Council and the two trade unions. He is also responsible for employee recreation, meals during work time, housing issues, and Krka’s societies.
He sits on the supervisory board of the Chamber of Commerce and Industry of Slovenia. Following his 2021 nomination by Colarič, the Supervisory Board unanimously appointed him to the Management Board for another six-year term of office commencing on 1 January 2022.
Member of the Management Board – Worker Director; Deputy Director of Pharmaceutical Production
Milena Kastelic (born 1968 in Novo mesto, Slovenia) holds a degree in food technology. After finishing her secondary education at Gimnazija Novo mesto in 1986, she enrolled at the Biotechnical Faculty at the University of Ljubljana. In 1991, she won the Prešeren Award for students for her undergraduate diploma thesis, ‘Evaluation of glucoamylase activity in yeast Saccharomyces diastaticus’. In 1993, she completed training in work design at the REFA Association in Germany.
She started her career at Krka in 1992 and has been a successful staff member ever since. Over nearly three decades, her professional career has been closely linked to herbs, the production of non-prescription products, and prescription pharmaceuticals for human use and animal health. She completed her traineeship in the Auxiliary Medicinal Products and Herbs Programme with an assignment on the technology of drying plant-based raw materials. She worked as a production technologist for five years. In 1996, she became the Head of the Plant for the Production of Herbal Medicines, today’s Bršljin Department, which she managed successfully until April 2018. At present, Kastelic heads Semi-Solid, Liquid and Other Products. She took up the role of Deputy Director of Pharmaceutical Production in charge of the corresponding segment in July 2021 and also delivers employee training.
As Krka’s internal auditor of 15 years, she has contributed to enhancing business processes in the Company. This function allowed her to learn about the workings of other organisational units, the importance of close cooperation between them, and the results of mutual cooperation.
In 2015, the Works Council proposed her as the Worker Director. The Supervisory Board unanimously appointed her to the Management Board for her first term of office from 2016 to 2021. Kastelic is well-trusted by the employees, and on that account, the Works Council reappointed her Worker Director in 2021. The Supervisory Board, therefore, unanimously appointed her to the Management Board – Worker Director for another six-year term of office commencing on 1 January 2022.
Roles and responsibilities of Management Board members are available at https://www.krka.biz/en/about-krka/whos-who-in-krka/management-board/.
Key areas of the Diversity Policy are gender, age, and qualification profile diversity. The policy pursues a balanced gender structure, suitable interdisciplinarity and age structure, allowing for the transfer of experiences and knowledge. The policy addresses the diversity of the Management and Supervisory Boards. However, the Company also intends to apply it rationally to all other management levels.
Krka provides its employees with equal opportunities, regardless of their gender, race, colour, age, medical condition or disability, religious, political or any other belief, trade union stewardship, national or social origin, family status, financial standing, sexual orientation, or other personal particulars.
Diversity policy monitors are:
1. Human Resource Committee of the Supervisory Board;
2. Supervisory Board;
3. Management Board;
4. Works Council;
5. Any committees involved in procedures for selecting members to management and supervisory bodies;
6. Human Resources of Krka.
The Krka Group comprises the controlling company Krka and subsidiaries in Slovenia and abroad. Generally, Krka is the sole owner of the subsidiaries incorporated as limited liability companies.
Uniform governance, organisation, and operation rules are applied to all companies in the Krka Group, unless otherwise required by national legislation. The controlling company sets the strategies and objectives of all individual subsidiaries in the Krka Group and monitors the implementation of their plans. To ensure cohesive management and supervision across the Group, the controlling company’s Management Board also acts as the Annual General Meeting of all subsidiaries.
An exception is Ningbo Krka Menovo Pharmaceutical Co. Ltd., the joint venture in China, where Krka holds 60%, and the Chinese partner, Ningbo Menovo, a 40% shareholding. Krka has two representatives in the company’s three-member Board of Directors, one of whom is the President.
Corporate integrity, compliance, and transparency of operations are important at Krka and apply to all levels of business operations, employees, and third parties. We constantly strive to enhance the ethics culture and safeguard Krka’s renown and assets. When working and carrying out tasks, the benchmark for all employees is to comply with fundamental ethical principles of honesty, loyalty, professionalism, applicable regulations, and Krka’s bye-laws. We are constantly working to raise employee awareness of potential fraud, non-compliance and other violations, and ways of managing them, accountability in their detection, and reporting.
Krka’s Code of Conduct, containing principles and rules of ethical conduct, good business practice, and standards of conduct, is the umbrella document for this area. The Management Board adopted the document in 2018 at the Group level. It was updated in 2020 and is to be reviewed and, if necessary, updated biennially. It was last reviewed in January 2023. It is available in 29 languages on our corporate website or websites of our subsidiaries. Subsidiaries must take national legislation and transparent business practices into account.
The Code is binding on all employees.
The Code outlines how to act in case of conflicts of interest. A conflict of interest exists when the personal interests of an individual affect or could affect the ability of an employee to carefully and objectively make decisions and carry out work to the benefit of Krka. A conflict of interest can also arise from an individual’s involvement in entrepreneurial, scientific, political, or other associations. The basic principle employees must follow is making decisions in Krka’s interest. Under the Code, employees must refrain from decision-making with a conflict of interest risk.
At the Krka Group level, we provide regular education and employee awareness on the importance of corporate compliance and corporate integrity. Employees take refresher courses every two years via eCampus, while Marketing employees also attend internal professional meetings.
Krka’s various departments screen customers, suppliers, and business partners. For now, we also manage risks related to corporate compliance and corporate integrity in this manner. New employees are informed accordingly at induction seminars and receive a printed copy of the Code. Training course attendance records are kept or logged via eCampus.
Any violation of Krka’s Code of Conduct, potential fraudulent, corruptive, or any other non-compliant action causing harm to Krka is handled in accordance with Directive (EU) 2019/1937 or the ensuing national legislation, and internally, with the Rules on Fraud Prevention, Detection and Investigation.
Subsidiaries with more than 250 employees have followed our example and set up their own channels. The compliance officer considers the reports and, in turn, appoints a working team for each case separately by including experts on relevant issues. We guarantee anonymity to reporters and safeguard them against any potential retaliatory measures. When a case is closed, we adopt corrective measures if necessary.
Krka’s Code of Conduct entered into force on 1 May 2018. Since then, the compliance officer has received 72 reports for consideration, 8 in 2022; 15 in 2021; 25 in 2020; 10 in 2019; and 14 in 2018. On the back of those reports, we adopted relevant corrective measures to further strengthen our internal controls.
A Chief Compliance Officer, whose autonomous and independent function is to monitor corporate integrity, is appointed at the Krka Group level. He liaises with Legal Affairs, employees from individual organisational units who advise on managing compliance in their respective areas, and a secretary assists him. The Chief Compliance Officer briefs the Supervisory Board on his activities through the Integrity Plan discussed by the body biennially, which happened last in 2022. He reports to the Management Board on all activities once a year.
Our subsidiaries with 250 or more employees employ their own compliance officers. In 2022, subsidiaries in the Russian Federation, Poland, Ukraine, Germany, and Terme Krka (Slovenia) had their own compliance officers. They report to Krka’s Chief Compliance Officer every quarter.
In 2020, based on good practice (Corporate Governance Code for State-Owned Enterprises), we drew up the Integrity Plan that describes risk in the areas of integrity, ethics, and compliance in business operations and proposes improvements. The plan is updated every year. The plan commits us to constant improvements in operational compliance in the following areas.
The 2022–2023 Integrity Plan includes as follows:
Probabilities and consequences of adverse events are evaluated as low, moderate, or high. Individual risk is evaluated vis-à-vis of potential harm and the likelihood of it occurring. With respect to the risk level and established internal controls, further corrective actions are taken if necessary.
Our Russian Federation, Poland, and Ukraine subsidiaries drew up their integrity plans in 2021, while our German subsidiary and Terme Krka (Slovenia) prepared them in 2022.
In 2022, no high risk was detected in connection with any area listed above.
Cooperation with the healthcare community relates in particular to healthcare workers, healthcare organisations, patients, and patient societies.
We regularly update all these rulebooks. They have been translated into the national languages of the countries where our marketing network operates. Marketing employees receive information through eCampus, at internal cyclic meetings, and training courses for marketing employees. They learn about the rules mentioned above and sign a relevant declaration.
Two umbrella documents set down non-discrimination principles; Krka’s Code of Conduct and the Integrity Plan, an implementation document.
To date, we have not received any reports on purported discrimination based on race, skin colour, gender, religious or political conviction, nationality, or social origin.
In 2022 and over the past five years, Krka did not fund any political campaigns, political organisations, lobbyists, or lobbying organisations.
Krka Group companies are members of those advocacy groups where their membership is obligatory or considered a common practice in the industry.
We regularly disclose any transfers of funds to healthcare professionals, healthcare providers, associations, and patient societies. We publish disclosures on our corporate website every year by 30 June for the preceding year.
We manage sponsorships and donations in the context of Krka Group’s sustainable business operations. Activities are carried out in accordance with The Krka Group Sponsorship Manual governing sponsorships and donations. In line with our primary mission, ‘Living a healthy life.’, we allocate most of our sponsorships and donations to projects related to health and quality of life. We allocate the majority of funds to sports, culture, healthcare, science, education and humanitarian actions. Please refer to the ‘Sustainable Development’ section for further information.
On 31 May 2019, Krka signed the Commitment to Respect Human Rights in Business Operations instigated by the Ministry of Foreign Affairs of the Republic of Slovenia. 18 major Slovenian companies signed the document. At the state level, the issue is governed by National Action Plan of the Republic of Slovenia on Business and Human Rights.
Krka contracts currently do not include stipulations on human rights. However, we are committed to honouring them by Krka’s Code of Conduct. We comply with all human rights legislation and standards in all countries where we operate.
Human resources are referred to by the Integrity Plan, updated yearly; the latest update was made in June 2022.
Internal auditors discharge their duties in the Krka Group based on medium-term and annual work plans per the applicable rules (International Standards for the Professional Practice of Internal Auditing, Code of Ethics).
In line with the 2022 work plan, seventeen regular internal audits were conducted using the COSO (Committee of Sponsoring Organizations of the Treadway Commission) methodology.
This methodology is globally recognised and serves as the basis for comprehensive risk management monitoring. Internal auditors use these methods to assess the fulfilment of audit objectives in several categories: business operations, reporting, and compliance with the regulations of each audit area.
Internal auditors reviewed processes in: API R&D; Analytics Development; QA Incoming Materials and APIs; Sales; Digital Marketing; Promotional Material Preparation; Environmental Protection; Hazardous Materials Warehouse, and IT management. Regular internal audits were also conducted in several subsidiaries and representative offices in Slovenia and abroad. Moreover, internal auditors provided consulting services in line with the aforementioned standards. Internal Audit primarily participated in the preparation of the ESG Policy and strategy.
made recommendations, categorised them by individual risk levels, and regularly verified their implementation.
GRI 3-3, 415-1
GRI 2-28
GRI 2-23, 2-24, 3-3
The Krka Group has established internal controls, i.e. guidelines and procedures at every level of operation to manage financial and tax reporting risks. Internal controls ensure the reliability of financial reporting and compliance with applicable legislation and other internal and external regulations. Implementing standard information systems in subsidiaries and developing business information systems facilitate the exchange of accounting data between the subsidiaries and the controlling company, and therefore also control of information.
Accounting controls, including internal tax controls, are based on the principles of veracity and segregation of duties, transaction controls, updated accounting records, reconciliation of accounting balances and the actual balance, separation of record-keeping from payment transactions, professionalism of the accounting staff, and independence.
The Krka Group Tax Strategy and Krka Group Tax Code of Conduct set out the policy, objectives, guidelines, and principles of tax management, including transfer pricing, based on principles and rules of ethical conduct and good business practices and standards of conduct, which are defined in Krka’s Code of Conduct.
The basic guidelines and principles that the Krka Group follows in the tax field are to: comply with the legislation in the country in which we operate; settle tax liabilities voluntarily and on time; avoid risky tax decisions; consider tax perspective when changes occur or when introducing new business models; monitor changes in tax legislation and continuously train employees involved in the tax process; work with tax authorities and ensure open, fair and constructive cooperation, and maintain a good partnership. All this should be ensured through the appropriate organisation and functioning of the Krka Group’s tax function and clearly defined responsibilities.
Accounting and tax controls are closely linked to information technology controls, which, among other things, serve to restrict and supervise access to networks, data and applications and the completeness and accuracy of data capture and processing. Authorised external agents also verify the compliance of operations and the existence of the requisite controls within information systems annually.
We manage risks related to the consolidated financial statements of the Krka Group by directing the accounting activities and their supervision in the subsidiaries and by auditing the annual financial statements of all Krka Group subsidiaries.
The audit firm KPMG SLOVENIJA, podjetje za revidiranje, d. o. o., audits the financial statements of the controlling company and the consolidated financial statements of the Krka Group. The audit firm was appointed as the auditor for financial years 2022, 2023, and 2024 by shareholders at the 28th Annual General Meeting of Krka held on 7 July 2022.
The external auditor reports audit findings to the Management Board, Supervisory Board, and the Audit Committee of the Supervisory Board.
Transactions between Krka and the audit firm KPMG SLOVENIJA, podjetje za revidiranje, d. o. o., and transactions between the Krka Group companies and individual audit firms are disclosed in the ‘Notes to the financial statements’ section, item ‘Transactions with the audit firm’.
GRI 3-3, 207-1, 207-2, 207-3
| Name | Function | First appointed | Duration of current term of office | Representing | Meeting attendance record |
|---|---|---|---|---|---|
| Julijana Kristl | President | 2015 | 2025 | Shareholders | 6/6 |
| Boris Žnidarič | Member | 2017 | 2022 | Shareholders | 6/6 |
| Mojca Osolnik Videmšek | Deputy President | 2020 | 2025 | Shareholders | 6/6 |
| Franc Šašek | Member | 2010 | 2025 | Shareholders | |
| Mateja Vrečer | Member | 2016 | 2025 | Shareholders | |
| Tomaž Sever | Member | 2019 | 2024 | Employees | |
| Deputy President | 2009 | 2024 | Employees | ||
| Member | 2005 | 2024 | Employees | ||
| Member | 2005 | 2024 | Employees |
| Male | Male | Male | Female | Male | Female | Male | Female | Male |
|---|---|---|---|---|---|---|---|---|
| Slovenian | Slovenian | Slovenian | Slovenian | Slovenian | Slovenian | Slovenian | Slovenian | Slovenian |
|---|---|---|---|---|---|---|---|---|
| 1954 | 1970 | 1971 | 1953 | 1948 | 1966 | 1967 | 1966 | 1967 |
|---|---|---|---|---|---|---|---|---|
| Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes |
|---|---|---|---|---|---|---|---|---|
In 2022, no permanent or relevant conflicts of interest were identified in respect of any Supervisory Board member. Statements of independence are published on the Company’s website.
| President of the Audit Committee | Member of the Audit Committee | Member of the Human Resource Committee | President of the Human Resource Committee | Member of the Audit Committee | Member of the Audit Committee | Member of the Human Resource Committee | Member of the Human Resource Committee |
|---|---|---|---|---|---|---|---|
| No | 6/6 | 6/6 | 4/4 | 4/4 | 6/6 | 6/6 | 4/4 |
|---|---|---|---|---|---|---|---|
Supervisory Board members, especially shareholder representatives, have seats on supervisory or management boards of other companies, but not to the extent that would influence their work on the Supervisory Board of Krka. They comply with the provisions of the Companies Act (ZGD-1).
support
Long-standing work on employee inclusion and participation in management; elected employee representative on the Supervisory Board
Experience in the field of quality (head of quality management at Krka); elected to the Supervisory Board as an employee representative
Leadership and organisational experience in the field of responsible sales (Deputy Director of Sales at Krka); elected to the Supervisory Board as an employee representative
| Name and surname | Function | Meeting attendance record | Gender | Citizenship | Year of birth | Education and qualifications | Independent according to the Corporate Governance Code for Listed Companies | Membership of supervisory bodies of other companies | Competence in sustainability management |
|---|---|---|---|---|---|---|---|---|---|
| Borut Šterbenc | Independent external expert of the Audit Committee in accordance with Article 280 of the Companies Act | 6/6 | Male | Slovenian | 1978 | Holds a university degree in economics with experience in planning, leading, and conducting complex audits; is a certified auditor registered with the Agency for Public Oversight of Auditing | Yes | Member of the hedge fund committee of Pokojninska družba A, d. d | Transparency in terms of reporting and business operations; is a certified auditor |
Name and surname
| Name | Function | Remit on the Management Board | First appointment to the Management Board | Duration of current term of office | Gender | Citizenship | Year of birth |
|---|---|---|---|---|---|---|---|
| Aleš Rotar | President | Marketing, sales, human resources, investments, public relations, legal affairs, new products to a certain extent, certain administrative services | 1997 | By the end of 2027 | Male | Slovenian | 1955 |
| Vinko Zupančič | Member | Research and development of finished products, new products, quality management, health and safety at work | 2001 | By the end of 2027 | Male | Slovenian | 1955 |
| David Bratož | Member | API R\&D and production, supply chain management | 2010 | By the end of 2027 | Male | Slovenian | 1955 |
| Milena Kastelic | Member | Corporate performance management, finance, information technology, relations with trade unions and works council, certain administrative services | 2016 | By the end of 2027 | Female | Slovenian | 1955 |
| Member, Worker Director | Acts as a workers’ representative and represents their interests in human resource and social issues | 2016 | By the end of 2027 | Female | Slovenian | 1955 |
| 1960 | University degree in economics |
|---|---|
| 1971 | PhD in pharmaceutical sciences |
| 1976 | PhD in pharmaceutical sciences |
| 1968 | University degree in economics |
| University degree in food technology |
NoNoNoNoNo
Extensive leadership experience; numerous awards for running a large company; an outstanding reputation as a good businessman; under his leadership, Krka developed into one of the leading international generics.
Knowledge of and extensive experience in the development and production of quality products for accessible healthcare (managing development, research, pharmaceutical production, new products).
Supply chain management, contributed to the uninterrupted supply of medicines in markets and a resilient and flexible vertically integrated business model.
Head of the sustainability team at Krka; contributed to the development of the local community (Krka’s societies); contributed to tax and reporting transparency (responsible for the relevant organisational unit).
Yes. Members’ independence is assessed upon their appointment. Under the Rules of Procedure of the Management Board, members must immediately disclose any conflicts of interest. The Rules of Procedure of the Management Board propose measures to manage such conflicts. Management Board remuneration details are disclosed in the ‘Related Party Transactions’ section.
21
GRI 2-9, 2-10, 2-11, 2-12, 2-15, 2-17, 405-1
In 2022, Krka’s code of reference was the Slovenian Corporate Governance Code for Listed Companies (hereinafter: the Code), adopted on 9 December 2021 by the Ljubljana Stock Exchange and the Slovenian Directors’ Association. The Code entered into force on 1 January 2022 and is published on the Ljubljana Stock Exchange website.
We, the Management and Supervisory Boards of Krka, tovarna zdravil, d. d., Novo mesto hereby declare that in 2022 individual members of the Management and Supervisory Boards and the Management and Supervisory Boards as bodies of a listed company acted in compliance with the principles and recommendations of the Code. Some of the recommendations were not implemented in full. However, we have always endeavoured to implement these recommendations and find appropriate ways of doing so. Individual derogations from the Code are explained below.
In the context of self-assessment, the Supervisory Board can establish an annual training plan for its members and determine indicative training costs. In 2022, no proposal for additional training was put forward, so the plan was not adopted (Item 15.1 of the Code).
Supervisory Board members evaluated the board’s performance by thoroughly following the methods and Supervisory Board Assessment Manual prepared by the Slovenian Directors’ Association. The evaluation process was carried out professionally and objectively. As there was no need for external professional support in 2022, an external audit of the Supervisory Board’s performance in collaboration with a specialised institution or other experts was not conducted (Items 16.2 and 16.4 of the Code). The Internal Audit of Krka monitors the procedures related to corporate governance to the extent required by International Standards for the Professional Practice of Internal Auditing.
We use a digital application to distribute Supervisory Board materials securely. Supervisory Board members can access the archive until the end of their terms in office (Items 14.2 and 14.6 of the Code), which complies with our Information Security Policy.
According to our Rules of Procedure of the Supervisory Board, the President of the Supervisory Board has two deputies: a shareholder representative and an employee representative. This is necessary to ensure the inclusion of employee representatives in the key activities of the bodies. The Rules of Procedure of the Supervisory Board state that when the president is absent or unavailable to attend, the shareholder representative is first to assume the president’s duties and only in the absence of the former does the employee representative assume this role. This ensures we do not deviate significantly from the Code, which stipulates that only a shareholder representative may act as Deputy President of the Supervisory Board (Item 17.4 of the Code).
In 2022, Krka’s ‘Corporate governance statement’ was reviewed by an external auditor as part of the regular audit. An additional external assessment of the statement’s adequacy was not performed (Item 5.6 of the Code).
We do not list any association of the Management and Supervisory Board members with any governance or supervisory bodies of non-related companies in the uniform tables (Attachments C1 and C2 to the Code in force) in the ‘Corporate governance statement’ section of the 2022 Annual Report of Krka. The Management Board members do not engage in corporate governance and supervisory functions outside the Krka Group, while information about Supervisory Board members’ engagements is included in their CVs (Item 5.5 of the Code).
Variable remuneration for the Management Board is always paid in two parts: as an advance payment based on semi-annual results; and as back pay after the Supervisory Board confirms the annual report at their meeting, always together with the monthly salary for the following month (Item 23.2 of the Code).
The Supervisory Board updated the Management Board variable remuneration criteria in 2012, 2014, 2016, and 2018 in consideration of additional Management Board duties related to business strategy, changes to the business environment, or remuneration trends. The Supervisory Board also made considerable adjustments to the remuneration policy in 2022 and submitted them for AGM approval.
The Supervisory Board did not set the criteria every year in line with the recommendations under Item 14.11 of the Code because they are related to the Krka Group’s long-term development strategy.
Annual Report 2022 – Business Report
36
derogation from Article 21.6 of the Code, which addresses all companies, not only the non-related ones. We publish contact details for investors and the public on our website but not the names of individuals (Item 31.2 of the Code) because several persons are in charge of various areas. We also made public the Rules of Procedure of the Supervisory Board. In the 2022 ‘Corporate governance statement’, we disclosed the composition, remits, and other aspects concerning the operation of our bodies, and hence all essential information on corporate governance. We did not publish any other operational documents regarding the performance of the bodies in 2022 (Item 32.7 of the Code).
Two members of the Supervisory Board, i.e. employee representatives, could be regarded as members of the wider management team according to certain criteria (Item 13 of the Code). This is despite the fact that they cannot entirely independently make decisions for their respective work areas regarding financial resource allocations, employment, or strategy.
We also complied with 73% of the valid Best Practice for GPW Listed Companies code provisions, which applies to companies listed on the Warsaw Stock Exchange. We explain discrepancies in a separate document published in the dissemination system of the Warsaw Stock Exchange.
Novo mesto, 28 March 2023
Jože Colarič
President of the Management Board and CEO
Jože Mermal
President of the Supervisory Board
Jože Colarič
President of the Management Board and CEO
Dr Aleš Rotar
Member of the Management Board
Dr Vinko Zupančič
Member of the Management Board
David Bratož
Member of the Management Board
Milena Kastelic
Member of the Management Board – Worker Director
The Management Board of Krka, tovarna zdravil, d. d., Novo mesto (hereinafter the Company) hereby declares that all Krka Group subsidiaries adhere to Krka Group policies relating to the social sphere and human resources, respect for human rights and diversity, anti-corruption and anti-bribery management, and the environment. The non-financial statement applies to all Krka Group constituent entities, i.e. to Krka, the controlling company, and all Krka Group subsidiaries.
The Krka Group operates under the business model presented in the ‘Krka Group business model’ section and also monitors its position in various environments. Further information is available in the ‘Risk management’ section.
We at the Company and the Krka Group are committed to high ethical standards. Krka’s Code of Conduct includes principles and rules of ethical conduct, as well as good business practices and standards of conduct in the Krka Group, binding on all Company employees. The Code is the keystone for all other Company and Krka Group bye-laws. The guiding principle is to act in line with the highest moral standards, principles governing honesty, loyalty, and professionalism, and consistently comply with regulations and guidelines provided by international organisations for the pharmaceutical industry and bye-laws. The Code is published on the Company website. All business partners can access the Code, and we expect them to adhere to it when doing business with any Krka Group entity.
are known to be loyal, innovative, flexible, diligent, and focused on achieving business objectives and results. For further information, please see the sections ‘Employees’ and ‘Corporate social responsibility’.
We provide a safe and healthy working environment and regularly adopt measures to reduce and eliminate potential health and safety risks. We adhere to all regulations and bye-laws related to workplace health and safety. Smoking is prohibited at all Company and Krka Group sites.
We operate in line with all regulatory requirements and standards relating to human rights in all countries where the Company does business. We respect the dignity, personal integrity, and privacy of each individual. We also respect the freedom of speech and expression of opinions and always treat others with respect. We communicate openly with our employees, regardless of their professional qualifications and leadership position. All forms of unfair and unauthorised work are prohibited. Any discrimination against employees is prohibited. We treat all employees equally, regardless of nationality, race or ethnicity, national or social origin, gender, colour, medical condition, disability, religion or belief, age, sexual orientation, family status, trade union membership, financial standing, or any other personal circumstance.
Any form of harassment and ill-treatment in the workplace is prohibited. We provide adequate working conditions and an open and creative working environment. Our working environment is free from any psychological pressure, sexual or other harassment, or ill-treatment by other employees, superiors, or third parties. All employees are required to refrain from any inappropriate action that would undermine another person’s dignity. Any employee may report mobbing to the relevant company officer.
The diversity policy of the Company and the Krka Group applies the principle of integration and equal opportunities, which also applies to the composition of the supervisory and management bodies. In 2021, the Management and Supervisory Boards adopted, in line with the recommendations of the Slovenian Directors’ Association, the Diversity Policy and made the document available to the public. Please see also the ‘Corporate governance statement’ section, subsection ‘2022 Management and Supervisory Board diversity policy’.
22
The document Rules on Fraud Prevention, Detection and Investigation is available to the public and applies to the Company and the Krka Group. It governs the prevention of fraud and corruption, measures to combat it, and the responsibility of employees in its detection. We apply the principle of zero tolerance regarding fraud, corruption prevention, and corporate compliance. This means that no unethical, unprofessional, or unlawful conduct on the part of employees and business partners is allowed. We do not exploit the Company’s business opportunities, its assets, and information for personal, commercial, or third-party gain. We do not promise any benefits or give gifts to influence the decisions of national authorities, public officials, business partners, or other entities, nor do we accept gifts or any other benefits that may influence our decisions concerning our work. We ensure that persons with access to inside information are aware of such information's confidentiality levels and sensitivity. Our bye-laws govern trading in the Company’s financial instruments, and we have oversight mechanisms in place for employees and third parties handling such information. This gives us a platform to prevent potential abuses and insider trading. Periodic restrictions are in place for all persons with access to inside information. During this time they are prohibited from trading in the Company’s financial instruments. You can find more on this topic in the Krka’s Code of Conduct and the ‘Corporate governance statement’ section, subsection ‘Corporate compliance and integrity’. In 2022, no cases of corruption were detected or confirmed.
We safeguard the environment and respect environmental regulations, while working in tandem with the local community and beyond. We set out our commitment to preserving the natural environment in our Environmental Policy, which binds us to safeguard the environment in accordance with the newly issued ISO 14001:2015 standard, and prevent or reduce our environmental impact to the largest extent possible. More information is available in the ‘Natural environment’ section.
As a public limited company with more than 500 employees, the Company is subject to the EU Taxonomy Regulation (EU) 2021/852 on the establishment of a framework to facilitate sustainable investment and is committed to complying with all the applicable rules and regulations. We examined the economic activities that qualify as contributing to the environmental objectives set out in the Regulation. Based on our understanding, available data and assessment of requirements, we believe that none of our key activities belongs to one of the categories defined in the Annexes on EU taxonomy technical screening criteria, i.e. we believe they do not substantially contribute to climate change mitigation or adaptation. The Regulation and the issued delegated acts contain references and definitions that are currently still under interpretation and for which adequate explanations have not yet been published. We cannot exclude the possibility that substantial contributions of specific activities to EU taxonomy might be identified in the near future. As this Regulation is subject to further amendments, we will continue to consider its impact and the reporting obligations it imposes.
In 2022, we made an important step forward in integrating a sustainability perspective in our strategic planning and business operations in line with the ‘Krka Group key strategic objectives up to 2026’. We updated policies in our key areas and adopted strategic objectives in ESG-relevant domains per materiality assessment findings. We outlined guidelines for sustainable business operations in the ESG Policy of the Krka Group, the master document for strategic sustainability governance in relation to the environmental (E), social (S), and corporate governance (G) dimensions of the group. The Policy specifies management approaches to material sustainability areas. It sets down the fundamental principles and efforts for sustainable business followed by the Krka Group in its operations throughout value chain creation and in relations with various groups of stakeholders, from suppliers to customers and subsidiaries within the group. The fundamental objective of integrating the Krka Group sustainability principles and sustainable governance approaches into management processes and business decisions is to heighten awareness of sustainability-related risks and opportunities that can impact the success of our business operations and help improve their management going forward.
The ‘Corporate governance statement’, subsection ‘Corporate compliance and integrity’ describes our activities in the following areas: corporate compliance and integrity; corporate compliance and corporate integrity education and training; addressing purported irregularities; the role of the Chief Compliance Officer in the Company; integrity plan; management approach to non-discrimination; and human rights in business operations.
Regulation (EU) 2020/852 (hereinafter Taxonomy) sets the classification system for environmentally sustainable economic activities and is an important step towards achieving a climate-neutral Union in line with the EU climate objectives by 2050. ‘Taxonomy-aligned economic activity’ means an economic activity that complies with the requirements laid down in delegated acts supplementing the Taxonomy, whether or not a specified economic activity meets any or all technical screening criteria laid down in those delegated acts. The EU adopted Commission Delegated Regulation (EU) 2021/2139 of 4 June 2021 supplementing Regulation (EU) 2020/852 (hereinafter Delegated Regulation). An economic activity is taxonomy-aligned if it meets technical screening criteria for review specified in the delegated act on climate and is implemented in compliance with the minimal safeguards for human and consumer rights, fight against corruption and bribery, tax provisions, and fair competition.
To review and monitor economic activities of Krka and the Krka Group, we established a Krka Group interdisciplinary sustainability project team composed of experts from various organisational units, i.e. Environmental Protection; Engineering and Technical Services; Energy Supply; Transport; Corporate Performance Management; and Finance. We based our disclosures on examination of the said taxonomy documents, our current understanding of the matter, and available data. As the Delegated Regulation is to be upgraded, we intend to promptly examine all further explanations and requirements and consider their impact on upcoming disclosures of Krka and Krka Group data. We intend to improve our reporting systems in the transitional reporting period (2022 and 2023) in line with the recommendations of various regulators to ensure comprehensive disclosures in compliance with the Delegated Regulation.
The taxonomy from the start prioritises sectors that qualify as contributing substantially to climate change mitigation, so pharmaceutical industry for now does not fall under Annexes I and II to the Delegated Regulation. Also, a technical screening has not been done to identify other economic activities for additional inclusion in the currently valid Taxonomy. The technical screening has not been done yet to identify those economic activities that will probably not significantly contribute to climate change mitigation, but are unlikely to cause significant harm.
In compliance with Article 8 of the Taxonomy, the Krka Group discloses information and key performance indicators showing to what extent Krka’s and the Krka Group’s activities are related to economic activities that qualify as environmentally sustainable. Information disclosure is in line with technical screening criteria for determination of conditions under which an economic activity significantly contributes to climate change mitigation or adaptation, and for verification that the economic activity does not significantly harm any other environmental objective.
As regards the currently applicable Taxonomy, most activities performed by Krka and the Krka Group are for now excluded from reporting within the context of the Regulation (EU). They represent a minor part of Krka and the Krka Group exclusively supporting activities.
We calculated key performance indicators (KPIs) related to turnover, capital expenditure (CapEx), and operating expenditure (OpEx) in accordance with our understanding of the screening criteria set out in Annex I to Commission Delegated Regulation (EU) 2021/2178.
In the economic activity screening, we identified all three categories of key performance indicators for taxonomy-eligible economic activities of the controlling company Krka (hereinafter Krka) and the Krka Group.
The Krka Group’s business strategy is sustainability oriented. Corporate governance is one of key Krka Group strategic guidelines and is detailed in the Krka Group’s 2023–2026 ESG Strategy and ESG Policy. The Management and Supervisory Boards adopted them in 2022. We understand sustainable operations as responsible management of our impacts on the environment, society and economy. We integrate sustainability principles into our business operations, products and services as much as possible. We follow the sustainable development goals (SDG) of the United Nations specified in the 2030 Agenda and in compliance with the ESG guidelines provide for adequate identification and management of sustainability related risks and opportunities.
One of Krka Group’s important strategic commitments and goals is reduction of our carbon footprint. We intend to implement our action plan for reduction of greenhouse gas emissions and hence pursue effective green transition. We therefore expect that a large part of our revenue, capital expenditure (CapEx), and operating expenditure (OpEx) will be included in the updated list of activities eligible or aligned with the taxonomy. Please see the ‘Sustainable development’ section and the ‘Krka’s sustainable development indicators’ chart on pages 8 and 9 for details on sustainability of operations.
Please find below key performance indicators of Krka and the Krka Group in compliance with Annex I to the Commission Delegated Regulation (EU) 2021/2178.
Krka Group operating income totalled €1,726,650 thousand in 2022, and included sales revenue and other operating income. The items are posted in the income statement and disclosed in ‘Notes to consolidated financial statements of the Krka Group’, Note 4 – ‘Revenue from contracts with customers’ and in Note 5 – ‘Other operating income’. Operating income associated with taxonomy-aligned economic activities totalled €435 thousand, or 0.03% of total operating income. Operating income derived from taxonomy non-eligible economic activities of €1,726,215 thousand accounted for 99.97% of total operating income. We generated the major proportion of revenue from taxonomy-eligible economic activities by separate collection and transport of hazardous waste (NACE E38.11) totalling €336,000 or 0.02% of total Krka Group operating income. Technological water treatment (NACE E37.00) yielded €80 thousand or 0.005% of operating income, while generation of electricity (NACE D35.11) yielded €19 thousand or 0.001% of total Krka Group operating income.
Krka operating income totalled €1,558,213 thousand in 2022, and included sales revenue and other operating income. They are posted in the income statement and disclosed in ‘Notes to financial statements of Krka’, Note 3 – ‘Revenue from contracts with customers’ and Note 4 – ‘Other operating income’. Operating income associated with taxonomy-aligned economic activities totalled €435 thousand, or 0.03% of total operating income. Revenue derived from taxonomy non-eligible economic activities in total of €1,557,778 thousand accounted for 99.97% of total operating income. We generated the major proportion of operating income from taxonomy-eligible economic activities by separate collection and transport of non-hazardous waste (NACE E38.11), totalling €336,000 or 0.02% of total Krka operating income. Technological water treatment (NACE E37.00) yielded €80 thousand or 0.005% of operating income, while production of electricity (NACE D35.1.1) yielded €19 thousand or 0.001% of Krka operating income.
Krka Group investments are the basis for calculation of capital expenditure key performance indicator and amounted to €109,622 thousand in 2022. The total included acquisition of property, plant and equipment (PP&E), right-of-use assets, and acquisition of other intangible assets. They are disclosed in ‘Changes in equity’, Note 11 – ‘Property, plant and equipment’, and Note 12 – ‘Intangible assets’ in ‘Notes to consolidated financial statements of the Krka Group’. Taxonomy-aligned investments totalled €1,289 thousand or 1.18% of Krka Group total CapEx in 2022. Investments in taxonomy non-eligible assets totalled €108,333 thousand or 98.82% of total Krka Group CapEx. Most taxonomy-aligned investments were associated with technological water treatment (NACE E37.00) totalling €550 thousand or 0.50% of total Krka Group CapEx. Investment in existing buildings (NACE F41, F43) amounted to €389 thousand or 0.35% of total CapEx, while investment in transmission and distribution or electricity (NACE D35.12, D35.13) totalled €350 thousand or 0.32%.
Operating expenses of the Krka Group comprised of total operating expenses decreased by depreciation and amortisation totalled €1,237,755 thousand. Operating expenses are disclosed in ‘Notes to consolidated financial statements of the Krka Group’, Note 6 – Costs by nature. Taxonomy-aligned operating expenses totalled €8,410 thousand or 0.68% of Krka Group operating expenses. Taxonomy non-eligible operating expenses totalled €108,333 thousand or 99.32% of Krka Group operating expenses. Major taxonomy-aligned operating expenses were associated with technological water treatment (NACE E37.00), totalling €2,350 thousand or 0.19% of Krka Group operating expenses. Transmission and distribution of electricity (NACE D35.12, D35.13) followed at €1,943 thousand or 0.16% and steam and air-conditioning supply (NACE D35.30) at €1,818 thousand or 0.15% of operating expenses of the Krka Group.
Operating expenses of Krka comprised total operating expenses decreased by depreciation and amortisation totalled €1,118,127 thousand. Operating expenses are disclosed in ‘Notes to financial statements of Krka’, Note 5 – Costs by nature. Taxonomy-aligned operating expenses totalled €8,002 thousand or 0.72% of Krka operating expenses. Taxonomy non-eligible operating expenses totalled €1,110,125 thousand or 99.28% of Krka operating expenses. Major taxonomy-aligned operating expenses were associated with technological water treatment (NACE E37.00), totalling €2,246 thousand or 0.20% of Krka operating expenses. Transmission and distribution of electricity (NACE D35.12, D35.13) followed at €1,943 thousand or 0.17% and steam and air-conditioning supply (NACE D35.30) at €1,818 thousand or 0.16% of operating expenses of Krka.
| Substantial contribution criteria | DNSH criteria | Taxonomy-aligned proportion of turnover, year N | Taxonomy-aligned proportion of turnover, year N-1 |
|---|---|---|---|
| 1 | 2 | 3 | 4 |
| 5 | 6 | 7 | 8 |
| 9 | 10 | 11 | 12 |
| 13 | 14 | 15 | 16 |
| 17 | 18 | 19 | 20 |
| 21 | Economic activities | Codes | Absolute turnover |
| Proportion of turnover | Climate change mitigation | Climate change adaptation | Water and marine resources |
| Circular economy |
| Category (enabling activity) | Category (transitional activity) | € million | % | % | % | % | % | % | YES/NO | YES/NO | YES/NO | YES/NO | YES/NO | YES/NO | YES/NO | % | % |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| A. TAXONOMY ELIGIBLE ACTIVITIES | A.1 Environmentally sustainable activities (taxonomy-aligned) | ||||||||||||||||
| Electricity generation using solar photovoltaic technology | D35.11 | 0.02 | 0.00 | 100 | YES | YES | 0.00 | 0.00 | |||||||||
| Sewerage | E37.00 | 0.08 | 0.01 | 100 | YES | YES | 0.01 | 0.00 | |||||||||
| Collection and transport of non-hazardous waste in source segregated fractions | E38.11 | 0.34 | 0.02 |
| Turnover of environmentally sustainable activities (taxonomy-aligned) (A.1) | 0.44 | 0.03 | 0.03 | 0.00 |
|---|---|---|---|---|
| A.2 Taxonomy-eligible but not environmentally sustainable activities (not taxonomy-aligned activities) | / | 0.00 | 0.00 | 0.00 |
| Total (A.1 + A.2) | 0.44 | 0.03 | 0.03 | 0.00 |
| B. Taxonomy-non-eligible activities | Turnover of taxonomy-non-eligible activities (B) | 1,726.22 | 99.97 | |
| Total (A + B) | 1,726.65 | 100.00 |
| Substantial contribution criteria | DNSH criteria | Taxonomy-aligned proportion of CapEx, year N | Taxonomy-aligned proportion of CapEx, year N-1 |
|---|---|---|---|
| 1 | |||
| 2 | |||
| 3 | |||
| 4 | |||
| 5 | |||
| 6 | |||
| 7 | |||
| 8 | |||
| 9 | |||
| 10 | |||
| 11 | |||
| 12 | |||
| 13 | |||
| 14 | |||
| 15 |
| Codes | Absolute CapEx | Proportion of CapEx | Climate change mitigation | Climate change adaptation | Water and marine resources | Circular economy | Pollution | Biodiversity and ecosystems | Minimum safeguards |
|---|---|---|---|---|---|---|---|---|---|
| A. TAXONOMY ELIGIBLE ACTIVITIES | |||||||||
| A.1 Environmentally sustainable activities (taxonomy-aligned) | Transmission and distribution of electricity | D35.12, D35.13 | 0.35 | 0.32 | 100 | YES |
| Sewerage | E37.00 | 0.32 | 0.00 | |
|---|---|---|---|---|
| Reconstruction of the existing buildings | F41, F43 | 0.55 | 0.50 | |
| CapEx of environmentally sustainable activities (taxonomy-aligned) (A.1) | 1.29 | 1.18 | 1.18 | 0.00 |
| A.2 Taxonomy-eligible but not environmentally sustainable activities (not taxonomy-aligned activities) | - | 0.00 | / | |
| CapEx of taxonomy-eligible but not environmentally sustainable activities (not taxonomy-aligned activities) (A.2) | - | 0.00 | 0.00 | 0.00 |
| Total (A.1 + A.2) | 1.29 | 1.18 | 1.18 | 0.00 |
| B. Taxonomy-non-eligible activities | CapEx of taxonomy-non-eligible activities (B) | 108.33 | 98.82 | |
| Total (A + B) | 109.62 | 100.00 |
| Economic Activities | Codes | Absolute OpEx (€ million) | Proportion of OpEx (%) | Climate Change Mitigation (%) | Climate Change Adaptation (%) | Water and Marine Resources (%) | Circular Economy (%) | Pollution (%) | Biodiversity and Ecosystems (%) | Minimum Safeguards 2022 | Minimum Safeguards 2021 | Category (Enabling Activity) | Category (Transitional Activity) |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| YES/NO | YES/NO |
| Activity | Code | Value 1 | Value 2 | % | YES/NO | YES/NO | Value 3 | Value 4 | |
|---|---|---|---|---|---|---|---|---|---|
| Electricity generation using solar photovoltaic technology | D35.11 | 0.01 | 0.00 | 100 | YES | YES | 0.00 | 0.00 | |
| Transmission and distribution of electricity | D35.12, D35.13 | 1.94 | 0.16 | 100 | YES | YES | 0.16 | 0.00 | |
| District heating/cooling distribution | D35.30 | 1.82 | 0.15 | 100 | YES | YES | 0.15 | 0.00 | |
| Heat/cooling production using waste heat | D35.30 | 0.59 | 0.05 | 100 | YES | YES | 0.05 | 0.00 | |
| Sewerage | E37.00 | 2.35 | 0.19 | 50 | 50 | YES | YES | 0.19 | 0.00 |
| Collection and transport of non-hazardous waste in source segregated fractions | E38.11 | 1.70 | 0.14 | 100 | YES |
| Transport by motorbikes, passenger cars and light commercial vehicles | H34.32, H49.39 | 0.14 | 0.00 | |||||
|---|---|---|---|---|---|---|---|---|
| OpEx of environmentally sustainable activities (taxonomy-aligned) (A.1) | 8.41 | 0.68 | 0.68 | 0.00 | ||||
| A.2 Taxonomy-eligible but not environmentally sustainable activities (not taxonomy-aligned activities) | - | 0.00 | / | / | - | 0.00 | 0.00 | 0.00 |
| OpEx of taxonomy-eligible but not environmentally sustainable activities (not taxonomy-aligned activities) (A.2) | 8.41 | 0.68 | 0.68 | 0.00 | ||||
| Total (A.1 + A.2) | ||||||||
| B. Taxonomy-non-eligible activities | OpEx of taxonomy-non-eligible activities (B) | 1,229.35 | 99.32 | |||||
| Total (A + B) | 1,237.76 | 100.00 |
| Substantial contribution criteria | DNSH criteria | Taxonomy-aligned proportion of turnover, year N | Taxonomy-aligned proportion of turnover, year N-1 | Substantial contribution criteria |
|---|---|---|---|---|
| Codes | Absolute turnover | Proportion of turnover | Climate change mitigation | Climate change adaptation | Water and marine resources | Circular economy | Pollution | Biodiversity and ecosystems | |||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Minimum safeguards | 2022 | 2021 | Category (enabling activity) | Category (transitional activity) | € million | % | % | % | % | % | % |
| YES/NO | YES/NO | YES/NO | YES/NO | YES/NO | YES/NO |
| Activity | Code | Turnover | % | YES/NO | YES/NO | % | % |
|---|---|---|---|---|---|---|---|
| Electricity generation using solar photovoltaic technology | D35.11 | 0.02 | 0.00 | 100 | YES | YES | 0.00 |
| Sewerage | E37.00 | 0.08 | 0.01 | 100 | YES | YES | 0.01 |
| Collection and transport of non-hazardous waste in source segregated fractions | E38.11 | 0.34 | 0.02 | 100 | YES | YES | 0.02 |
| Turnover of environmentally sustainable activities (taxonomy-aligned) (A.1) | 0.44 | 0.03 | 0.03 | 0.00 |
| Turnover of taxonomy-eligible but not environmentally sustainable activities (not taxonomy-aligned activities) (A.2) | - | 0.00 | 0.00 | 0.00 | |||
|---|---|---|---|---|---|---|---|
| 0.44 | 0.03 | 0.03 | 0.00 | ||||
|---|---|---|---|---|---|---|---|
| Turnover of taxonomy-non-eligible activities (B) | 1,557.78 | 99.97 | |||||
|---|---|---|---|---|---|---|---|
| 1,558.21 | |||||||
|---|---|---|---|---|---|---|---|
| Substantial contribution criteria | DNSH criteria | Taxonomy-aligned proportion of CapEx, year N | Taxonomy-aligned proportion of CapEx, year N-1 |
|---|---|---|---|
| 1 | 2 | 3 | 4 |
| 5 | 6 | 7 | 8 |
| 9 | 10 | 11 | 12 |
| 13 | 14 | 15 | 16 |
| 17 | 18 | 19 | 20 |
| 21 | Economic activities | Codes | Absolute CapEx |
| Proportion of CapEx | Climate change mitigation | Climate change adaptation | Water and marine resources |
| Circular economy | Pollution | Biodiversity and ecosystems | Climate change mitigation |
| Climate change adaptation | Water and marine resources | Circular economy | Pollution |
| Biodiversity and ecosystems | Minimum safeguards | 2022 | 2021 |
| Category |
| Activity | Category | € million | % | YES/NO | YES/NO | YES/NO | YES/NO | YES/NO | YES/NO | YES/NO | % |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Transmission and distribution of electricity | D35.12, D35.13 | 0.35 | 0.43 | 100 | YES | YES | 0.43 | 0.00 | |||
| Sewerage | E37.00 | 0.09 | 0.11 | 100 | YES | YES | 0.11 | 0.00 | |||
| Reconstruction of the existing buildings | F41, F43 | 0.39 | 0.48 | 100 | YES | YES | 0.48 | 0.00 | |||
| CapEx of environmentally sustainable activities (taxonomy-aligned) (A.1) | 0.83 | 1.01 | 1.01 | 0.00 |
| - | 0.00 | / | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00 | 0.00 | ||
|---|---|---|---|---|
| Total (A.1 + A.2) | 0.83 | 1.01 | 1.01 | 0.00 |
| CapEx of taxonomy-non-eligible activities | (B) | 80.63 | 98.99 | |
|---|---|---|---|---|
| Total (A + B) | 81.46 | 100.00 |
| Taxonomy-aligned proportion of CapEx, year | N | Taxonomy-aligned proportion of CapEx, year | N-1 |
|---|---|---|---|
| 1 | 2 | 3 | 4 |
| 5 | 6 | 7 | 8 |
| 9 | 10 | 11 | 12 |
| 13 | 14 | 15 | 16 |
| 17 | 18 | 19 | 20 |
| 21 | Economic activities | Codes | Absolute OpEx |
| Proportion of OpEx | Climate change mitigation | Climate change adaptation | Water and marine resources |
| Circular economy | Pollution |
| Category | (enabling activity) | Category | (transitional activity) | € million | % | % | % | % | % | % | YES/NO | YES/NO | YES/NO | YES/NO | YES/NO | YES/NO | YES/NO | % | % |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| A. TAXONOMY ELIGIBLE ACTIVITIES | A.1 Environmentally sustainable activities (taxonomy-aligned) | ||||||||||||||||||
| Electricity generation using solar photovoltaic technology | D35.11 | 0.01 | 0.00 | 100 | YES | YES | 0.00 | 0.00 | |||||||||||
| Transmission and distribution of electricity | D35.12, D35.13 | 1.94 | 0.17 | 100 | YES | YES | 0.17 | 0.00 | |||||||||||
| District heating/cooling distribution | D35.30 | 1.82 | 0.16 | 100 | YES | YES |
| D35.30 | 0.59 | 0.05 | 100 | YES | YES | 0.05 | 0.00 |
|---|---|---|---|---|---|---|---|
| E37.00 | 2.25 | 0.20 | 50 | 50 | YES | YES | 0.20 | 0.00 |
|---|---|---|---|---|---|---|---|---|
| E38.11 | 1.40 | 0.12 | 100 | YES | YES | 0.12 | 0.00 |
|---|---|---|---|---|---|---|---|
| H49.32, H49.39 | 0.01 | 0.00 | 100 | YES | YES | 0.00 | 0.00 |
|---|---|---|---|---|---|---|---|
| 8.00 | 0.72 | 0.72 | 0.00 |
|---|---|---|---|
| - | 0.00 | / | / | - | 0.00 | 0.00 | 0.00 |
|---|---|---|---|---|---|---|---|
| 8.00 | 0.72 | 0.72 | 0.00 |
|---|---|---|---|
| --- | |||
| # Annual Report 2022 – Business Report |
| Total (A.1 + A.2) | B.Taxonomy-non-eligible activities | OpEx of taxonomy-non-eligible activities |
|---|---|---|
| (B) | 1,110.13 | 99.28 |
| Total (A + B) | 1,118.13 | 100.00 |
Jože Colarič
President of the Management Board and CEO
Dr Aleš Rotar
Member of the Management Board
Dr Vinko Zupančič
Member of the Management Board
David Bratož
Member of the Management Board
Milena Kastelic
Member of the Management Board – Worker Director
The current Krka Group development strategy covering the five years from 2022 to 2026 was prepared by the Management Board and approved by the Supervisory Board of Krka in November 2021. The strategy focuses on maximising added value for the Krka Group and investors. It covers all areas of operation within the Krka Group, especially its core pharmaceutical and chemical activities. The strategy views the Krka Group as an international company since it operates through subsidiaries and representative offices abroad and cooperates with partners wherever it is present. It regards all business processes within the Krka Group, from development and production to marketing and sales, including all support processes. The Krka Group updates its development strategy every two years. The next update is planned for autumn 2023.
Living a healthy life.
We are continually consolidating our position as one of the leading generic pharmaceutical companies in the world.
The development strategy is based on an in-depth analysis of Krka’s position in the global generic pharmaceutical industry. The strategy outlines the originator and generic pharmaceutical industry characteristics, growth projections for the generic market, and Krka’s position in the international generic pharmaceutical industry. These aspects were considered in identifying possibilities and opportunities for further development and independent existence in the future.
In addition to these starting points, the strategy comprises three different sections: strategy and objectives at the Krka Group level, objectives by regions and territories with a product range strategy, and strategies of individual business functions and processes. It also includes a draft development, financial, and investment business plan.
The strategy also considers risk management, which is integral to all Krka Group business processes. Risk management is based on the Risk Register. The Risk Register provides a comprehensive overview of risks at the Group level, designed to promptly identify and manage factors that could derail the objectives defined in the development strategy. Every time the strategy is updated, the Risk Register is also updated. Further information on risks is available in the ‘Risk Management’ section.
The strategy also outlines the Krka Group’s focus on sustainability and reinforces our commitment to further integrate sustainability aspects into corporate governance and business decisions, thereby maintaining our economic, social and environmental responsibility to the environment in which we operate.
To attain at least 5% average annual sales growth in terms of volume/value, achieve above-average sales growth against market dynamics, and remain or rank among the leading generic pharmaceutical companies with our brands in individual markets and selected therapeutic categories.
To strengthen and optimise the vertically integrated business model, proven to be an effective strategic guideline and a comparative advantage. To ensure high standards of product quality, safety, and efficacy.
To keep the focus on maximising the long-term profitability of the products sold from development and production to marketing and sales, including all other functions within the Krka Group, and to achieve an average EBITDA margin of at least 25%.
To ensure that new products and vertically integrated products account for the largest possible proportion in total sales in addition to the existing range of products, also referred to as ‘the golden standard’. To provide products from new therapeutic classes, enter new therapeutic categories and specialities as an innovative generic pharmaceutical company and develop complex products, including biosimilars.
To ensure growth through long-term partnerships and targeted acquisitions in addition to organic growth. The primary goal is to increase sales by entering new markets and adding new products.
To allocate 10% of revenue to research and development and an approximate amount of calculated amortisation, i.e. €110 million annually on average, to investments.
To pursue a stable dividend policy and consider the Group’s financial requirements for investments and acquisitions when determining the net profit share for dividend payout each year, and to allocate at least 50% of net profit of majority shareholders for dividends.
To upgrade the Krka Group’s sustainability culture, integrate sustainability aspects into corporate governance and business decisions, and maintain our economic, social and environmental responsibility to the environments in which we operate. To disclose sustainability topics in accordance with the GRI standards in 2022 and obtain an ESG rating in 2023.
To exploit digitalisation potentials in all business phases.
To maintain independence.
To consolidate and strengthen our presence in our traditional markets of Regions East Europe, South-East Europe, Central Europe, and Slovenia and bolster our presence in the Region West Europe and in Asian markets.
To maximise sales potential in all six sales regions and to focus primarily on key markets (the Russian Federation, Poland, Ukraine, Germany, Slovenia, Romania, Hungary, the Czech Republic, Slovakia, and Croatia), key customers, and key products.
To strengthen our position as one of the five leading generic pharmaceutical companies in all our traditional markets, which involves strengthening our sales and market shares, especially in therapeutic categories with a traditionally strong Krka’s presence (cardiovascular system, central nervous system, gastrointestinal tract, and pain relief), and in categories with a high growth potential (diabetes and cancer).
To enhance the visibility of Krka (Krka and TAD brands) and our market position in markets of the Region West Europe through our subsidiaries and unrelated partners and to strengthen our position as one of the ten leading generic pharmaceutical companies in all western European markets.
To market our products under our brand names in the Region Overseas Markets through partnerships with unrelated parties and through our companies. To continue product registration and sales activities and win tenders in China through direct presence in the market.
To enter the segment for complex generic products. To introduce innovative products in key therapeutic areas, namely combinations, new strengths, dosage forms, and delivery systems. To expand the range of sterile dosage forms.
To assess specific projects on biosimilars with strategic partners in European markets and to assume a central role in regulatory affairs, sales and marketing of these projects. To prioritise therapeutic areas of diabetes and diseases of the immune system.
To extend the range of non-prescription products not affected by seasonal demand. To supplement the portfolio with products that complement key therapeutic areas as regards prescription pharmaceuticals. To focus on markets of Regions East Europe, Slovenia, and South-East Europe.
To focus on companion animal products – the most promising segment in animal health – accounting for more than 60% of animal health sales. To extend the range of antiparasitics and pain relief medicines with dermatologicals and cardiovascular agents. To maintain production and sales of products for farm animals. To focus on our key markets and all markets in Region West Europe and to assess entry to the US market.
To develop generic medicines and prepare relevant registration documents before data protection expires and obtain marketing authorisations before the product patent or marketing protection expires to be one of the first generic entrants.
To ensure cost competitiveness and manage further sales growth of established products under lifecycle management principles while taking into account new regulatory requirements on safety and quality of medicines and obtaining additional marketing authorisations for new markets.
To manage the development and production of vertically integrated active ingredients manufactured at Krka and our contractual partners using our own technological processes and provide sufficient quantities of high-quality and cost-competitive active ingredients to be incorporated in our finished products.
To invest in production, development, and infrastructure facilities in a stable and optimal manner.
To actively seek opportunities for further sales growth by entering new markets and increasing market shares in selected existing markets through acquisitions of pharmaceutical companies, products and technologies, and long-term partnerships.
To reduce the impact of financial risks on the Krka Group operations, especially credit and currency risks.
To ensure transparent reporting and provide up-to-date information to investors and financial community and improve the visibility of our business model, strategic guidelines and financial results to enhance the appeal of Krka share to shareholders and investors.
To further pursue digitalisation of business operations, manage information technology efficiently and in compliance with regulatory standards, and ensure high availability and information security of the implemented IT solutions.
To strengthen professional and cost synergies within the Krka Group and maximise the utilisation of competitive advantages in the business environments of our subsidiaries abroad.
To ensure personnel are appropriately qualified by providing continuous training to employees throughout their careers at Krka.
To strengthen internationalisation within the Krka Group by managing employee potential in an international environment and ensure the activation of all human resource potentials to attain strategic and operational goals of the Group.
To effectively identify and manage sustainability risks and opportunities to strengthen Krka’s competitive advantages and maintain its long-term ability to achieve strategic goals and create value for stakeholders.
To enhance the visibility and positive image of the Krka Group with all stakeholders.
To ensure high levels of business ethics, integrity, transparency, and corporate and business compliance.
To strengthen the reputable and well-known Krka brand in our traditional markets (Regions Slovenia, South-East Europe, Central Europe, and East Europe) among general practitioners, selected specialists and pharmacists, and to continue to market the majority of products under our own brand names. To build reputation and recognition among target groups of specialists, to whom medicines from new therapeutic areas will be presented.
To strengthen the recognition of Krka (Krka and TAD brands) as well as its market position in the Region West Europe, primarily through subsidiaries and unrelated partners. To take advantage of the potential of the current range of products, expand the product range in the existing therapeutic areas while entering new therapeutic areas, and strengthen our position with pharmacists and selected target groups of doctors.
To market Krka products under our own brands, enter new markets by acquisitions and establishing specialised local joint ventures in which Krka has the majority share (marketing authorisations, marketing, etc.), and continue with marketing through unrelated partners in the Region Overseas Markets.
To retain cardiovascular diseases, the central nervous system, the gastrointestinal tract, and pain relief as the key therapeutic areas. To add diabetes to our key therapeutic areas.
To introduce innovative products, in addition to generic products, in the market of leading medicines (innovative combinations, new strengths, dosage forms, and delivery systems) in the key therapeutic areas.
To supplement the range of (double or triple) combinations for the treatment of high blood pressure, heart failure, and pain relief.
To supplement the portfolio of medicines for antiaggregant and anticoagulant therapy and oncology medicines with new products.
To continue entering into the therapeutic area of autoimmune diseases by introducing our new medicines for the treatment of multiple sclerosis. To assess possible entry into the therapeutic areas of rheumatic diseases and diseases of the alimentary tract.
To provide a wide range of medicines from other therapeutic areas with our products or products of unrelated partners (third parties).
To expand our portfolio of medicines by entering the segments of complex peptides and biosimilars.
To launch products from new therapeutic areas in several markets.
To provide key sales products through the vertically integrated business model.
To ensure cost competitiveness and profitability of key sales products by optimising formulations and technological procedures and manufacturing products cost-effectively. To ensure formulation and procedure optimisation and cost competitiveness of new products from the launching phase.
To launch products with higher sales potential among the first generics – right after patent expiry.
To launch at least one medicine with high sales potential and several medicines with less considerable sales potential every year.
To launch at least one medicine with high sales potential on each key market every year.
To retain medicines for pain relief, products for the gastrointestinal tract and metabolism, cough and cold remedies, and vasoprotectives as our key therapeutic areas.
To supplement the umbrella brands of medicines for pain relief, cough and cold remedies, and vasoprotectives with products with new ingredients and dosage forms.
To supplement our portfolio with products related to key therapeutic areas of prescription pharmaceuticals, with products that can be switched from prescription to non-prescription status (synergy in promotion), and products from other or new categories with marketing potential.
To search for new products of unrelated partners (third parties), which are promising and have appropriate economic value.
To focus on markets in sales Regions East Europe, Slovenia, and South-East Europe.
To retain products for companion animals (antiparasitics and medicines for pain relief) as our key therapeutic area.
To supplement the product range for companion animals with dermatologicals and medicines for the treatment of cardiovascular diseases.
To expand the product range for companion animals with new combinations, dosage forms, and technologies.
To maintain the existing range of products for farm animals.
To focus on markets in Region West Europe and selected traditional markets and consider possible entry into new markets.
To deliver at least 3% average revenue growth per year and increased profitability.
To ensure that foreign visitors account for one-third of total visitors.
To retain the leading market share among Slovenian natural health resorts in healthcare services.
In 2022, the Krka Group sales revenue amounted to €1,717.5 million, up 10% on 2021 and 6% more than planned. Of that, revenue from contracts with customers on sales of products and services amounted to €1,708.5 million, and revenue from contracts with customers on sales of materials and other sales revenue constituted the difference.
Regional dispersion of sales among Regions Slovenia, East Europe, West Europe, Central Europe, South-East Europe, and Overseas Markets is good. The largest sales region was Region East Europe. The Russian Federation remained the largest individual market.
The proportion of sales in markets outside Slovenia amounted to 94% as planned.
Prescription pharmaceuticals were the most important product group in terms of sales, accounting for 82% of total sales, which is in line with our plans.
Net profit of €361.1 million was higher than planned.
The number of the Krka Group employees was 0.8% higher than at the end of 2021.
Product and service sales are expected to reach €1.755 billion.
The proportion of sales in markets outside Slovenia is estimated at 94%.
Prescription pharmaceuticals are set to remain the most important product group, composing 82% of overall sales.
Profit is planned at approximately €300 million.
The total number of employees in Slovenia and abroad is expected to increase by 2%.
We plan to allocate €130 million to investments, primarily for expanding and modernising production facilities and infrastructure.
We have introduced sustainability criteria in the management of the Krka Group to contribute to its improved business performance in the 2022–2026 strategic period. We aim to make progress and increase the value of the Krka Group as a whole through a comprehensive sustainability management process.
At the beginning of 2022, the Member of the Management Board David Bratož was designated as the responsible person for sustainability and integration of the ESG system into business, and Finance as the dedicated body to integrate ESG topics into the strategy. An interdisciplinary sustainability project team has also started on its work. Its tasks will be transferred to a new body, the Sustainability Board, which will address ESG aspects at the Group level and operate under the umbrella ESG policy. At strategic meetings, management teams of all organisational units discussed the sustainable management model.
An upgrade of sustainability aspects of governance was identified as a strategic objective, which will be considered in updated relevant policies and a more comprehensive set of performance indicators.
We identified material ESG topics and divided them into six groups, which we will regularly verify and update. We considered the interests and expectations of key stakeholders about the industry and the Krka Group, regulatory requirements, requirements of professional guidelines and standards, media analyses, future risks, and opportunities related to the environment, society and governance.
We used the collected information as the basis for a double materiality matrix, presented in more detail in the ‘Sustainable Development’ section.
Dispersed international operations and the vertically integrated business model ensure the Krka Group’s stable performance despite shifting states of play in individual key markets.
The European economy adjusted to the situation caused by the COVID-19 pandemic and the situation in Ukraine. After momentum created by the post-pandemic reopening of the economy in 2021 and buoyant economic activity in the first half of 2022, economic expansion slowed in the summer. Inflationary pressures were ubiquitous in the economy. Generally, when prices rise, consumers cut back on spending, and companies shelve planned investments, increasing the probability of a recession. Macroeconomic development, including energy markets, will greatly depend on the European winter and the impact of sanctions against the Russian Federation. Economic and energy security anxiety will lead to short-term government relief measures, increasing fiscal, social and political challenges, primarily in countries with elections on the horizon.
Tightening financial conditions will deepen the expected recession in Europe. According to projections, the combination of slower economic growth, rising unemployment, and improving supply chain conditions will slow inflation over the next two years.
The situation at present puts macroeconomic policy decision-makers in a difficult position.
| Country | Pharmaceutical market growth (%) | Projected value of pharmaceutical market at wholesale prices (€ million) | FX rate (currency/€) | Annual change in GDP (%) | Annual inflation rate (%) |
|---|---|---|---|---|---|
| Slovenia |
| Country | Value | Growth Rate | Inflation Rate |
|---|---|---|---|
| Croatia | 1,700 | 1.0 | 6.1 |
| Romania | 5,600 | 1.2 | 6.5 |
| Russian Federation | RUB1,975 billion | 5.0 | -1.0 |
| Ukraine | from 5 to 0 | from 2,500 to 3,000 | 4.1 |
| Poland | 8,080 | 4.7 | 0.4 |
| Hungary | 2,370 | 0.6 | 16.4 |
| Czech Republic | 3,130 | 24.8 | 0.1 |
| Slovakia | 1,750 | 1.5 | 9.7 |
| Western Europe | 270,250 | 0.6 | 5.4 |
Pharmaceutical market forecasts are based on estimates from market data providers (e.g. IQVIA), the Evaluate® European Market Outlook database, and internal estimates. Other forecasts are based on bank and the European Commission reports.
significantly. Although softened by the fuel prices cap and other measures implemented by the government, inflation peaked in the third quarter of 2022, but slightly diminished in the last quarter of the year. The budget deficit in 2022 decreased due to rising tax revenues but is projected to increase again in 2023 due to new discretionary measures mitigating the impact of high energy prices. Public debt dropped below 70% of GDP in 2022, and is expected to further gradually decrease over the forecast horizon. The forecast assumes gradual consolidation of public finances when government support to mitigate the impact of high energy prices gradually phases out and growth picks up. The macroeconomic situation could be better than projected, depending on the announced revision of the public sector pay system and tax reform in 2023.
We estimate the sales value of pharmaceuticals in 2023 at €920 million, up 7% on 2022.
Croatia recorded high economic growth in 2022 on the back of booming exports, investments, and household consumption, benefiting from the recovery of tourism and other services. However, rising inflation and waning confidence amidst geopolitical tensions are expected to deteriorate the economic outlook and public finances in 2023 and 2024. Joining the Schengen Area and adopting the euro should have positive impacts on the economic activity. A mild recovery of GDP growth is projected in 2024. The labour market is projected to remain resilient despite weaker employment growth and persisting labour shortages. Inflation rates are expected to remain above average in 2023 and moderate in 2024. The government has already introduced measures to cap high energy prices, and is expected to continue in 2023. Further budget deficits are projected in 2023 and 2024, driven by expected extra increases in public wages and social transfers. Public debt significantly declined in 2022 due to strong GDP growth. However, the decrease is expected to moderate due to subdued economic growth.
We expect the value of the Croatian pharmaceutical market to grow by 9% in 2023 compared to the previous year, to approximately €1.7 billion.
Following strong economic expansion in 2022, the Romanian economy is expected to grow between 2% and 3% in the coming years. High inflation, tighter financing conditions, the negative impact of the situation in Ukraine and decelerating of other economies in the EU will slow growth. The unemployment rate levelled off in 2022 and should remain stable because of economic growth. Inflation is expected to persist before it subdues in 2024. The budget deficit is forecast to decrease gradually over the years on the back of high tax revenues, reduced current expenditure, and high economic growth. However, with elections approaching in 2024, it could be higher than expected. Public debt is expected to remain stable. Macroeconomic risks ahead lie in potential delays in rolling out Romania’s Recovery and Resilience Plan (RRP), which could decrease investments and economic growth.
We expect the value of the Romanian pharmaceutical market to grow by 9% year on year, reaching €5.6 billion.
The economic contraction in 2022 was significantly milder than expected. However, contraction is set to continue in 2023. The situation in Ukraine is projected to cause a milder, but longer recession than previously forecast. A shallow rebound in the economy is forecast in 2024, which will not be sufficient for the economic activity to reach levels before 2022. A gradual economic recovery is expected in the years ahead, similar to the recovery after the 2008 financial crisis. Economic activity is projected to rebound to the pre-2022 level only at the beginning of 2025. At the end of 2022, the price increases subdued due to a decline in economic activity. In 2023, inflation is forecast to ease gradually because households and companies have stocked up. The Russian economy prospered in the past because of oil and gas exports and integration in the global economy, which will be curtailed in the near future. Restrictions on oil exports and lower oil prices might place additional pressures on fiscal policy, leading to budget deficits and draw-downs from the National Welfare Fund.
We expect the value of the Russian pharmaceutical to reach RUB1,975 billion in 2023, and grow by 5% in national currency year on year.
Economic activity slumped in 2022 because of the military operations, especially in the east of Ukraine, with several million people displaced due to the unrest. The budget deficit saw a sharp increase. In 2022, primarily internal sources were used to finance the budget. In 2023, however, the government plans to secure external financing from the International Monetary Fund, US and EU. In 2022, monthly inflation rates spiked significantly as many commodities were in short supply. According to projections, inflation will rise in 2023 and start to level off towards the end of the year. High degrees of uncertainty and the unavailability of current macroeconomic data render forecasting difficult. Policymakers have limited options for managing the crisis; however, international donors provide support.
We expect the value of the Ukrainian pharmaceutical market to change by -5 to 0% and total between €2.5 billion and €3 billion in 2023.
People fleeing Ukraine, increased expenditure on national defence, and government energy crisis supports. Most of the economic supports are set to cease in 2024. Rising public debt is tempered by high GDP growth. Public debt is expected to increase in the coming years.
Given the anticipated 9% growth in 2023, the value of the Polish pharmaceutical market is estimated at approximately €8 billion.
After strong economic growth in the first half of 2022, the economy had to deal with increasing commodity prices and tighter financing conditions in the second half of the year. A sharp economic downturn and a fall-off in private consumption and investments are projected in 2023. Energy supply disruptions could have an enormous negative economic impact as Hungary has limited possibilities to substitute oil and gas imports from Russia in the short term. Government measures partly shield households from the impact of rising energy prices and mortgage interest rates. With economic growth slowing, unemployment growth is set to be limited. However, real wages are expected to drop due to high inflation. Inflation is expected to remain high in 2023 due to depreciation of the national currency but should ease in the coming year. Fiscal policy uses expansive measures to mitigate the impact of high energy prices. The budget deficit is expected to narrow in 2023 on the back of additional windfall tax revenue, which is expected to phase out in 2024 mostly. Public debt is expected to decrease in the coming years gradually. Potentially tightening conditions for public debt financing and limited access to the Recovery and Resilience Fund pose a risk to fiscal policy.
We expect the Hungarian pharmaceutical market to record 3% growth, reaching €2.4 billion in 2023.
High economic growth recorded in 2021 slowed in 2022. It is forecast to slow further in 2023 due to the spillover effects from the situation in Ukraine, high energy costs, and tightening financial conditions. Private consumption started to contract at the end of 2022 and is expected to continue in 2023. The unemployment rate is forecast to remain low. However, it could slightly increase in the coming years because displaced persons from Ukraine will start joining the labour force. Inflation peaked at the end of 2022 and inflationary pressures started subsiding. Inflation is forecast to subdue due to government measures in 2023. Relief measure expenditure is expected to increase the budget deficit; however, revenue from windfall taxes is set to stem it in 2023 and 2024 gradually. While public debt is still low compared to other EU Member States, growth over the past few years has outpaced the EU average. Public debt is forecast to continue rising in the years ahead.
The Czech pharmaceutical market is expected to grow by 4%, and its value to reach approximately €3.1 billion.
Economic growth is expected to be comparable to that in 2022. Subsidised energy prices are expected to stimulate economic growth, albeit a global demand slowdown affects economic activity. Successful absorption of the EU structural and recovery-and-resilience funds will be crucial for achieving economic growth. The unemployment level is expected to remain relatively stable due to qualified labour force shortages. Inflation is set to increase significantly in 2023 because increasing energy prices are being passed on to prices of consumables, especially food prices. Inflation is projected to wane in 2024. In 2023, despite increased tax revenues, the budget deficit is expected to increase due to the cost of energy and other cost-of-living measures. The deficit is projected to narrow in the coming year as inflationary pressures ease. Having hit an all-time high, public debt is set to gradually decline due to strong nominal economic growth, despite growing budget deficit and public debt.
We expect the value of the Slovakian pharmaceutical market to grow by 6% in 2023, reaching €1.75 billion.
Economic activity did not slow as much in 2022 as expected. Monetary policy tightening is expected to continue in 2023, reducing the demand just as supply bottlenecks are set to ease. A mild upturn is forecast for 2023 due to temporary buoyancy. Wage growth, relatively subdued so far, is set to gain momentum in 2023 but is expected to remain below inflation rates. Inflation peaked at the end of 2022 and is expected to subdue in the second half of 2023. Inflation is set to moderate and fall below the target rate in the following years. Neutral fiscal policy is expected in 2023. Rising budget deficit financing costs and reactivation of fiscal rules could restrict support to demand and economic activity.
We expect the value of the western European pharmaceutical market to grow by 3%, reaching €270 billion in 2023.
In accordance with legislation and good practice, risk management comes under the remit of the Management Board, which regularly reports on risks and adopted measures to the Audit Committee and the Supervisory Board. During each business results analysis, the Audit Committee and the Supervisory Board are briefed about the operational and financial risk management. The ‘2022 Supervisory Board Report’ describes their risk management work. The Krka Group monitors its exposure to various forms of risk daily and adopts measures to manage those risks.
The following committees and Management Board-authorised representatives also have certain risk management-related responsibilities:
Risk management is integrated into all business processes in the Group. The controlling company manages financial risks centrally at the Group level, while subsidiaries manage business risks independently in accordance with controlling company guidelines. We apply over 2,700 standard operating procedures relating to quality systems, other bye-laws, and instructions that determine the activities and responsibilities that allow uninterrupted operations and mitigate risks.
We use the following risk management support tools:
ESG (Environment, Social, Governance) risks are managed as part of various risks and are included in their risk management processes. Management approaches for specific material ESG topics are defined in the Krka Group Environment, Social and Governance (ESG) Policy, adopted by the Management Board and Supervisory Board of Krka. The Sustainability Board was established at the end of 2022. The responsibility for ESG issues is shared by the Sustainability Board and the Supervisory Board, Management Board, the ESG coordinator, and ESG managers responsible for specific sustainability-relevant organisational areas.
Below we outline Krka’s significant operating risks and how we manage them. Every risk assessment is based on assessing the extent of the damage and the probability of its occurrence. The final assessment of an individual risk is made by considering the extent of damage and the likelihood of it occurring at the same time, whereby the impact of control activities has already been taken into account. Preliminary risk assessments in the ‘Operational risks and business continuity’ table were made in the previous version of the Risk Register.
| Risk area | Risk description | Control activities | Preliminary risk assessment | Latest risk assessment |
|---|---|---|---|---|
| Availability of critical resources to ensure production and sales of key products | Unplanned stoppages and unavailability of key resources for production and sales of finished products (employees, buildings, equipment, various materials, media supply, information, epidemiological situation) | Business continuity management system, business impact analysis, requirement for the availability of critical resources and services, risk analysis by area; measures to increase process resilience against disturbance and mitigate consequences of incidents, supervision of hygiene, organisational, and technical measure implementation to prevent the spread of infections, business continuity plans for critical processes, training, tests, drills | Moderate |
Delays in the supply of production materials and finished products and ineffective utilisation of means of production
Careful supply chain planning in consideration of the economic, health, and political situation around the world, pandemics, natural disasters, explosions, etc., careful planning of production material inventories, maintaining contingency stocks, ensuring several sources from various locations; providing adequate production capacities at Krka’s sites and alternative sites with contract manufactures, presence of Krka experts at certain production sites of contract manufacturers, establishing remote technology transfer, fast adaptation to sudden increases in product demand by providing additional resources and adjusting priorities; setting up alternative transport routes for production materials and finished products
Loss of a manufacturing authorisation, distribution permit, or marketing authorisation
Compliance with legal and regulatory requirements, and implementation of all activities in the Krka Group processes that are critical in terms of good practices
Inadequate supplies of energy and industrial media to processes and substandard technical maintenance
Alternative power supply resources, robustly planned media supply systems, redundant system and equipment capacities, provision of key spare parts, and carefully planned maintenance processes
Business process disruption due to a disruption in information resources
Independent security checks and preventive measures to rectify disruption; assessment of different types of risks, information technology continuity plan, recovery procedures following major incidents and disasters
Workplace accidents or injuries, infectious diseases (epidemic, pandemic)
| Risk area | Risk description | Control activities | Preliminary risk assessment | Latest risk assessment |
|---|---|---|---|---|
| Workplace risk assessment | Preventive measures, introduction of cautionary measures – sanitary, health, and organisational actions that prevent the introduction and spread of potential infections, while also ensuring uninterrupted implementation of all work processes | Employee interchangeability, new recruitment methods, appropriate and regular communication with employees, employee education and training, reorientation of activities to basic processes in the case of a significant loss of available personnel (e.g. pandemic, natural and other disasters) | Moderate | Moderate |
| Protection of property | Alienation and destruction of property | Security plan, systematic threat assessment, and implementation of necessary measures | Moderate | Moderate |
| Research and development | Ineffectiveness of development processes; inadequacy of regulatory procedures and supply of new products | Detailed planning of development projects and management of regulatory processes | Moderate | Moderate |
| Marketing and sales | Regulation of the business environment and sales markets and inadequacy of marketing activities | Responding to changing geopolitical situations and statutory requirements related to business operations in markets, establishing standardised, compliant, and transparent sales and marketing activities |
Continuously educating and testing employees’ knowledge, using modern communication tools and channels
| Risk Level | Impact |
|---|---|
| Moderate | Moderate |
Infringement of third-party intellectual property rights or unjustified use of Krka’s intellectual property
Monitoring patent processes, consistent respect for the intellectual property rights of others, and forming provisions for potential damages when reasonable
| Risk Level | Impact |
|---|---|
| Moderate | Moderate |
Delays in hearings and decisions in cases where we have to seek the revocation of secondary patents of third parties in order to enter the market
Additional risk assessment and formation of provisions for potential damages where possible
Substandard quality of development and production process, substandard quality of products, and failure to maintain the validity of manufacturing authorisations and GMP certificates
Compliance with legal and regulatory requirements, planning of control procedures and quality assurance, regular evaluation and assessment of quality risks, supervision of product and process quality assurance, implementation of improvements and new statutory requirements in routine work processes, business continuity plan
| Risk Level | Impact |
|---|---|
| Moderate | Moderate |
Climate change, waste removal issues, environmental pollution due to hazardous substance spills and emissions during emergencies; deviations from statutory requirements, and loss of reputation due to excessive environmental pollution
| Risk area | Risk description | Risk management method | Preliminary risk assessment | Latest risk assessment |
|---|---|---|---|---|
| Foreign exchange risk | Potential major financial losses due to unfavourable changes in foreign exchange rates | Financial market tracking; monitoring currency exposure; working with leading global financial institutions; monitoring new practices of foreign | Moderate | Moderate |
| Investment projects | Poor decisions on investing in production and other capacities, and implementation of investments | Constant supervision of all project phases, plan monitoring, systematic selection of contractors | Moderate | Moderate |
| Human resources | Issues with providing key and qualified personnel (recruiting and retaining) and social dialogue with employees | Systematic work with key personnel, remuneration system, employee development, continuous education and training, measuring of the organisational culture and climate | Moderate | Moderate |
| Legal matters | Inadequate legal regulation of business relations and non-compliance with or incorrect interpretation of legislation, issues arising from potential court and other legal proceedings, especially disputes | Involving Legal Affairs department in key areas, cooperation with external specialised legal experts | Moderate | Moderate |
| Risk Type | Description | Mitigation Strategies | Impact | Likelihood |
|---|---|---|---|---|
| Exchange risk | Hedging; use of financial instruments; natural hedging | High | High | |
| Interest rate risk | Unfavourable interest rate changes | Monitoring interest rate changes; negotiations with credit institutions; hedging with appropriate financial instruments | Low | Low |
| Credit risk | Customers defaulting on payment prompt receivable write-off accrual | Credit rating calculations; limiting maximum exposure to individual customers; active management of receivables; utilisation of instruments for insurance of payments and receivables with a credit insurance company | Moderate | Moderate |
| Liquidity risk | Insufficient liquid assets for settling operating and financial liabilities | Credit lines agreed in advance and planned liquidity requirements; cash pooling | Moderate | Moderate |
| Risk of damage to property | Damage to property caused by natural disasters and other risk factors | Systematic risk assessment for buildings; taking measures in accordance with fire safety studies; arranging appropriate insurance | Moderate | Moderate |
| Risk of claims for damages and civil actions | Claims for damages by third parties due to loss events caused accidentally by Company activities, property, or products placed on the market | Insurance for civil, employer and environmental liability; product liability insurance; and clinical trials liability insurance | Moderate | Moderate |
| Risk of financial losses due to business |
Insurance of labour costs, amortisation and depreciation, other operating expenses and operating profit, and technical and organisational measures to reduce the impact of business interruption
Moderate
Moderate
Availability of critical resources to ensure the production and sales of key products. Major emergencies that halt the production and sales of products for a lengthy period could compromise the existence of the Krka Group. We analyse their impact on operations to estimate the criticality of processes and risks to operations. As a result of these activities, the Business Continuity Officer prepares Business Impact Analysis, Risk Assessment, and Business Continuity Management Strategy together with the persons involved in critical processes. The documents are discussed and adopted by Krka’s Management Board. The documents are renewed at least every five years or with each major technological and/or organisational change, the emergence of new threats or an increase of existing ones.
We apply effective measures to protect employees, property, and other key resources and prevent emergencies. We have designed action plans and disaster relief measures for emergencies, measures for mitigating direct damage, and emergency operations plans until normal operations can be restored. We prepare business continuity plans for each critical process or service based on the Business Continuity Management Strategy. In agreement with the Business Continuity Officer, we appoint persons responsible for critical processes to prepare and maintain these plans. Critical process or critical service managers and the Business Continuity Officer approve the plans.
The adequacy of plans is reviewed at least once a year and harmonised with the business continuity policy and strategy. Exercises and training are key to testing the implementation of individual business continuity measures. The Quality Committee discusses the adequacy of the implementation of these plans annually. In 2021, Krka’s Management Board also included pandemic-event measures in the Business Continuity Management Strategy. A pandemic could pose risks in various areas, resulting in, e.g. supply chain disruption, increased employee absences, and outsourcing-related issues.
We continuously monitor the supply market, suppliers, and prices of production materials to ensure the required quantities are in line with annual and monthly production plans and in accordance with the standard operating procedure (SOP). We carefully plan our inventories and maintain contingency stocks to ensure uninterrupted access to production materials required for manufacturing finished products.
We apply the adopted criteria to assess and select our suppliers and regularly audit them. Twice a year, the Quality Committee discusses the findings of past audits, indicators, supplier risk assessment, and the audit plan for the next period. A regular supplier audit is conducted every three years. In the case of emergencies and deviations, a risk assessment and an audit are conducted immediately. When selecting our contractual partners, we primarily focus on appropriate material specification, regulatory compliance, guaranteed quality and environmental protection, price competitiveness, and supply reliability. Relevant SOPs regulate the selection and evaluation of a contractual partner for the manufacture of finished products and the implementation and management of the transfer. SOPs are part of the quality system described in the ‘Quality management risks’ section. Further information on performed audits and regular controls are available in the ‘Inspections and audits of the management and quality system’ subsection of the ‘Quality’ section.
We ensure the punctual supply of finished products by managing the planning operations and monitoring the implementation of every product supply phase. Production material inventories are planned according to sales forecasts. Inventory levels are checked regularly, and we hold contingency stocks for strategically important production materials. We have several independent supply sources for APIs and production materials required for key products.
We carefully plan optimal utilisation of production capacities and measure production efficiency. In this respect, we introduce measures for continuous process improvement. We meet sales requirements by purchasing new equipment and making new investments; we increase our own production capacities and expand contractual alliances.
We comply with good warehousing and manufacturing practices when warehousing production materials, bulk products, and finished products. Several standalone warehouses are available in the case of major emergencies. We organise the transport of production materials and products using our own vehicles and those of our selected partners. All vehicles are equipped so as to ensure appropriate transport conditions and safety. We have set up several global (maritime, air, and road) transport routes that allow us to deliver materials should any emergency occur.
Technical service risks include those related to energy and industrial media supply, operation of active fire protection and property protection systems, reliability and availability of technical systems and equipment, and risk associated with the metrological control of measuring and regulation equipment and control systems.
We have two separate supply lines to provide uninterrupted electricity at the Ločna production site in Novo mesto, Slovenia. If the Ločna substation fails, the Bršljin substation can supply 3 MW of power to prevent possible damage to the infrastructure and buildings in winter. We use a diesel-powered generator for critical processes. We continuously monitor the situation on the electric power market and make partial purchases. We use natural gas to generate thermal power and extra-light fuel oil as a back-up fuel, of which we keep extra stocks.
As part of the Business Continuity Management Strategy and the Business Continuity Plan in terms of risks and opportunities due to climate change, we identified drinking water supply shortages for production purposes as a potential risk. At the main production site in Novo mesto, Slovenia, where most of Krka Group’s products are manufactured, the short-term, medium-term, and long-term water supply is adequate and the risk low thanks to public infrastructure upgrades in 2021. In the case of loss of water supply from the primary source due to force majeure, it is possible to connect to an alternative water source from the public infrastructure. We did not identify any other risks and opportunities due to climate change.
We mitigate risks related to inadequate production and distribution of power and process utilities (electricity, steam, heating water, compressed air, refrigerant water, river water, pharmaceutical and process water) by critical equipment redundancy, robust system planning, computer control, quality control of process utilities, regular preventive maintenance and system testing, and keeping critical spare parts in stock. Employees undergo regular training, and their skills and qualifications are regularly tested.
We carry out preventive and scheduled maintenance of air-conditioning systems. Our maintenance team is well-organised and trained to manage operational and maintenance issues. The team uses a central computerised control system to issue alerts rapidly and detect faults. It also keeps inventories of spare parts. Non-critical equipment is dispersed to ensure that a single breakdown does not significantly impact production capacities. Critical equipment is duplicated. All air-conditioning and power supply systems in server rooms are duplicated, have technical security systems in place, and are regularly tested for potential breakdowns.
We mitigate risks related to the reliability and availability of technical systems for active fire protection and property protection through constant computer control, regular preventive maintenance and system testing, critical equipment redundancy, robust system planning, and improvements. Employees undergo regular training, and their skills and qualifications are assessed regularly.
We mitigate risks related to the reliability and availability of technical systems and equipment by continuously monitoring performance, conducting preventive maintenance checks, servicing, improving the equipment, and introducing new maintenance approaches using modern diagnostic instruments. Failures and disruptions are rectified according to planned procedures and instructions. In order to remedy failures and disruptions promptly and effectively, we have our own qualified maintenance teams and spare parts inventories, which we regularly check and replenish. The employees who monitor, operate and maintain technical systems and equipment undergo regular training. Their qualifications and skills are assessed regularly.
Metrology is a major factor behind product and service quality, safety, and efficacy. It is closely related to measurement traceability and global comparability of measurement results. This is why we have a distinctive, stable and rational management system in place for monitoring and measuring equipment in compliance with the highest industrial standards. We regularly measure, calibrate, and maintain the monitoring and measuring equipment based on its GxP criticality assessment. We use approved procedures and apply the latest standards to minimise the risk of deviations.
We ensure the reliability and availability of technical systems and equipment with our own resources and in cooperation with external contractual partners.
Information Security Officer reports to David Bratož, a Management Board member, on the ISMS. Further information on the ISMS is available in the ‘Quality’ section. A comprehensive report on the Krka Group information security is discussed annually by the Information Technology Committee.
Krka specifies the criticality of information resources (information systems and services) using annual criticality assessments of business processes and information resources to implement the business process. All information systems, including infrastructure systems, refer to the criticality level of business services. Given the criticality in planning, constructing, and using information systems, we implement all relevant information and cyber security elements.
We have identified threats and risks regarding resource availability, confidentiality, and integrity for all critical information resources (information systems, equipment, premises, and employees using the information systems). Risk assessments by individual processes are reviewed and approved by directors or heads of organisational units in which the processes are carried out. Based on the assessments, organisational units take steps to eliminate unacceptable risks. Another method of threat detection involves independent security audits of our information resources. Information security internal audits are conducted in organisational units as well. We consistently eliminate any inconsistencies identified in external and internal audits and inspections.
In the field of information technology, we perform comprehensive security audits every two years, and partial security audits several times a year while eliminating any shortcomings. To mitigate risks during major emergencies, we introduced duplicated computer capacities for all critical information resources at two separate locations: back-up server rooms at the Krka headquarters (i.e. the Disaster Recovery Centre – DRC) and an adequate off-site location, where critical data is backed up daily.
We also mitigate information security risks using modern tools such as advanced threat protection (ATP) system, security information and event management (SIEM) system, vulnerability management system, user and entity behaviour analytics (UEBA) system, and periodic software updates.
As an international group, we are required to protect personal data in conformity with the national legislation of all countries where our subsidiaries and representative offices are located. The Management Board appointed a Data Protection Officer at the Company and Group level, who ensures that personal data are protected per EU regulations or national legislation insofar as it lays down different or stricter rules.
We manage all employee-related risks, systematically identify and evaluate them, and take appropriate measures to prevent and mitigate risks based on this. The Management Board checks and confirms the effectiveness of risk management.
We use our own methods to assess workplace risks concerning health and safety at work, i.e. the probability of a specific incident and its consequences and any probable health implications for individual workplaces. Risks are assessed periodically, and security measures are taken to keep them at acceptable levels.
In addition, authorised professionals for health and safety at work and responsible technologists assess the risks related to individual technological procedures. Risk assessments are conducted for all new technological procedures in research and development and if any changes are made to these procedures. This process results in the consent to the technological procedure including a risk assessment. Consent is issued for every technological procedure carried out on a pilot or production scale. The risk assessment methodology is based on identifying different risks related to each technological procedure. We identify hazards for each technological phase. Based on the occupational exposure band (OEB), exposure time, and hazard level, we determine the safety measures strategy to prevent employees from being exposed to a specific technological procedure. We continually verify the suitability and appropriateness of technical and organisational measures and personal protective equipment in practice by conducting relevant measurements during technological operations.
When there is a risk of infection (epidemic, pandemic), we implement a series of sanitary, health, and organisational measures to prevent the introduction and spread of the possible infection, while ensuring not to disrupt work processes. We promote health among our employees and constantly raise awareness of health and safety at work.
Identifying key and promising employees in all work processes allows us to ensure the replacement of employees in key job positions. The training and recruitment methods applied in all organisational units facilitate the quick exchange of employees posted in similar positions should a shortage of employees occur in a certain organisational unit due to large-scale absences or increased workload.
Protection of property
Krka’s products must be high-quality, safe, and effective. The required properties must be confirmed by relevant research and data, in compliance with regulatory requirements and standards. Risks to products and technologies include scientific and research risks and technological and technical risks. We mitigate these by introducing contemporary approaches and methods and exploiting in-house and acquired knowledge and experience in research, development, and technology.
Business and professional risks in product and technology development are managed based on a risk matrix at various levels of monitoring and decision-making. The responsibilities of leaders, organisational units, and work processes are clearly defined.
We appoint a project team with a leader to manage, monitor, and document all crucial activities for each project. The Development Committee approves proposals for new product development based on feasibility studies, in which the proposed project is considered from regulatory, developmental, safety, cost, and other aspects. In addition to key development milestones, the Development Committee also monitors all development projects to be able to respond appropriately to any market, development, or regulatory changes that require a change or adjustment in the development scenario. The Committee meets several times a year. In between the Committee meetings, we monitor projects at several organisational levels (project, product meetings, project meetings) and thus ensure that activities are appropriately controlled and directed. Key organisational units with precisely defined individual responsibility in the product development phase are New Products, Pharmaceutical R&D, API R&D, Quality Management, Pharmaceutical Production, and Industrial Property.
We mitigate these product and technological risks at the early stages of development through process updates, the introduction of modern technologies, and adjustments to regulatory requirements and through the successful work of highly educated professionals, constant broadening of knowledge, and state-of-the-art equipment. The vertically integrated development and production model is important, as it allows us to control the entire process, from raw materials to the finished products.
We maintain the vertically integrated development model with investments, annual achievements, and research-and-development results related to:
Regulatory risk management, associated with legislation changes and interpretation, starts at the early stages of developing a new product and continues throughout its life cycle. We monitor regulatory legislation, implement new requirements relating to active ingredients and finished products already in the development phase, and consider them when preparing registration documentation and registration strategies to mitigate risks. The acceptability of any increased risks is discussed and approved by the Development Committee or a subsidiary supervisory body. Through official consultative mechanisms, Krka verifies its development solutions for each product and the planned content of marketing authorisation documents with regulatory bodies. This reduces the risk of encountering potential issues or even failure when obtaining or extending marketing authorisations. We are also engaged in working groups of various industry associations to participate actively in drafting statutory amendments in this field.
The Krka Group has a broad marketing and sales network, as it sells its products in 73 countries worldwide. It operates in a variety of geopolitical and macro-economic climates, as well as in legal and competitive environments, and is exposed to different sales and marketing risks of varying intensities.
Our key advantages over the competition are our quick response to altered business circumstances, especially concerning the recent events in eastern Europe, and prompt adjustment of sales and marketing activities in individual markets. We continuously monitor market conditions (especially competing generic producers and national pharmaceutical industry), the legal frameworks related to the movement of goods and services and marketing pharmaceuticals, systemic pricing arrangements, and government reimbursements for pharmaceuticals (in some countries based on statutory partial co-funding of healthcare budgets by medicine suppliers, i.e. clawback) through Krka’s in-house departments and independent data sources.
The legal basis related to price recording and government reimbursements. We ensure that medicine advertisement is suitable and give special attention to organising and supervising employees’ work in the marketing network. Our employees undergo training regularly, and we frequently test their qualifications, skills, and familiarity with work directions, legislation, and applicable regulations. When marketing our products, we consistently comply with legislation, recommendations of Medicines for Europe, and ethical norms related to advertising pharmaceuticals. In this regard, we also carry out comprehensive training and knowledge assessment for our employees. We focus on business compliance, so marketing forms a part of the Company’s Integrity Plan, discussed by the Management Board. We also comply with the personal data protection legislation in marketing and sales.
We monitor the risks in existing markets and the risks related to entering new markets and new therapeutic areas, lowering prices of medicines in compliance with national regulations, cross-border reference country impacts, and risks associated with changing practises regarding the prescribing and/or dispensing and/or reimbursing of medicines. We systematically discuss entering new markets at annual meetings and determine where to obtain marketing authorisations for individual products. Before concluding sales agreements, the customer must present evidence that their business establishment is duly registered. We pay special attention to risks related to individual market environments and economies, risks associated with each customer, particularly the risk of their insolvency or bankruptcy, risks related to payment terms, and other risks related to compliance with contractual provisions. Foreign currency risks and their impact on euro-denominated sales revenue in markets where sales are conducted in national currencies (especially in the Russian Federation) remain among the most significant risks.
We continuously monitor market conditions, analyse them, adjust payment terms if necessary, and hedge against payment defaults. We systematically monitor the satisfaction level of direct customers. Krka’s Quality Committee discusses the report for each year. We monitor sales at the primary level (sales to direct customers, primarily wholesalers) and if possible, also at the secondary level (wholesalers’ sales to their customers, mainly pharmacies) and the tertiary level (sales to end-users in pharmacies). We ensure that inventories are optimised and sufficient throughout the distribution chain. We duly monitor pharmacy networks and any changes by individual market, and adjust our actions accordingly. Sales Committee meetings discuss all of the above regularly.
We regularly evaluate the market potential of individual therapeutic areas and their products. We use a range of external data sources and our own market research and analyses to monitor global, regional, and national trends as well as product supply in the market. Based on these, we define the product portfolio and our activities according to current market positions of particular active ingredients and their development path. We perform systematic analyses regarding product position and market share movements in individual therapeutic classes at least twice a year. The number of important new active ingredients available for marketing to generic manufacturers at present or in the future has been declining. Therefore, we seek opportunities in new innovative fixed-dose combinations of existing active ingredients and new therapeutic areas while continually striving to improve further the position of our products containing existing active ingredients. We monitor the effectiveness of our marketing strategies and tactics using performance indicators and exert systematic control over marketing activities, which we plan, implement, and analyse in cycles, including compliance in marketing and sales. Indicators at the Krka Group level are discussed once a year by the Sales Committee and by Krka’s Management Board in the context of performance indicators as part of the Company’s successful strategy implementation. At their regular meetings, supervisory bodies of subsidiaries and representative offices discuss more specific indicators at the level of individual markets.
Respect for the intellectual property rights of third parties, especially patent-related rights, is one of the fundamental principles of the Krka Group operations. Therefore, we start the development of a new product by analysing the status and extent of applicable third-party patent rights and determining which technical solutions are patent-protected. We define and direct our development work based on these findings and assess whether the technological and technical solutions produced by our own development infringe the applicable rights of third parties. The current situation and any potential changes in patent protection are monitored throughout a product’s development up to its launch.
If we believe that patents have been granted to third parties without proper grounds, which means that the subject of a patent is not actually an invention (the solution is not new or does not include an inventive step), and that such patents might hinder our work, we use the available legal remedies to cancel such patents. This prevents holders of such patents from filing actions against us for infringement. Despite these measures, if a patent holder considers that Krka has infringed its rights and takes legal action against Krka, we set aside appropriate provisions for potential damages and adopt relevant measures.
The Krka Group evaluates quality management risks from the aspects of product quality and safety and Group operations. We apply well-known risk assessment methods and implement them in line with good manufacturing practice requirements (ICH Q9 Quality Risk Management).
Product quality is defined during the development stage of a product and specified in the marketing authorisation documents. We adhere to standard procedures and requirements throughout the production process. From the purchase of various incoming materials, other purchases, and manufacturing processes to the manufacture of finished products, quality control, warehousing, and distribution, all while ensuring that the pharmaceutical product manufacturing complies with the relevant quality standards and the product’s marketing authorisation documents. When a product is already on the market, the pharmacovigilance system is used to establish, evaluate, and respond to new findings on adverse effects and other safety aspects of a medicine. We employ a special system to process customer feedback and pursue constant internal improvements according to the PDCA (plan, do, check, act) principle to upgrade and improve processes and products.
Product quality management is a primary activity that involves various quality assurance elements: we focus on the suitable quality of incoming materials (i.e. active ingredients, excipients, and packaging materials) and conduct risk assessments to classify material- and supplier-related risks. Based on the findings, we plan audits and other activities as part of the GxP partner evaluation procedure.
We ensure the compliance of our production and control equipment and production rooms by qualifications and validations of equipment, production rooms, production environment, manufacturing processes, computer systems, cleaning procedures, calibrations, qualification of instruments, as well as maintenance procedures to prevent undesirable effects on the production process and product quality. Systematic approaches, monitoring, and documentation of all processes, procedures, and controls are crucial for product quality assurance. We, therefore, regularly examine, overhaul, upgrade, and improve the quality system and ensure that any necessary changes are made correctly. Further information on the quality system is available in the ‘Quality’ section, subsection ‘Quality system objectives’.
We place a strong emphasis on ensuring data integrity in quality management, thereby mitigating the risk of improper use of test results when determining the suitability of raw materials, packaging, processes, and finished products.
Annual Report 2022 – Business Report
Continuous monitoring of new developments in legislation and timely implementation of new requirements reduces the risk of quality system inadequacy and, consequently, the risks related to maintaining manufacturing and marketing authorisations and GMP certificates.
We regularly raise awareness and provide employee training to ensure compliance with standard production and product control procedures. We control production processes, intermediate products, bulk products, finished products, and the production environment to ensure product compliance and conformity with national legislation and GMP principles in the EU and other countries where we market our products.
For non-compliant products (deviations, complaints), we apply control mechanisms, perform tests, investigate causes, and implement preventive and corrective actions to prevent any other non-compliance.
Concerning quality risk management, we separately assess the risks related to maintaining manufacturing authorisations, GMP certificates, and other management systems applied in Krka manufacturing and distribution units for every quality assurance element.
We regularly and systematically check the efficiency and effectiveness of the quality system in the Krka Group through external (agency and regulatory inspections, partner and certified body audits) and internal (internal self-control, internal audits, Quality Committee, quality indicators) verification. Where required, we make improvements and thus continuously upgrade the quality system and effectively manage risks related to product and service quality.
Krka recognises and manages any environment-related risks in line with the requirements of the ISO 14001 standard and by managing the business continuity system. Every year, we review all environmental aspects, the associated risks, and extraordinary events and evaluate their environmental impact. Risks and emergencies related to environmental protection, hazardous chemical handling, and climate change, are assessed and managed at meetings of the Committee for Monitoring Environmental Aspects at least twice a year and routinely by certain organisational units or business processes.
All identified risks are included in the Report on Implementing Environmental Management System, which the Quality Committee discusses once a year. We mitigate risks and minimise our environmental impact by using the best available techniques in manufacturing, warehousing, wastewater treatment, waste air treatment, and waste management, by operating spill containment and firewater retention systems, by preventive examinations and maintenance of equipment, employee training, and by employing our own fire brigade, which is qualified to intervene in cases of emergency, and emergency event drills.
Investment project risks primarily include risks related to planning investments and their value, the purchase of equipment, execution of works, and schedules, and risks associated with quality and changes to the original plan. We reduce these risks through document planning and preparation, the established system for selecting contractors and equipment suppliers, and their regular reviews. We supervise all execution phases. We review the compliance of project documents from the technical, technological, and regulatory points of view and the compliance of contractual documents from the legal and accounting aspects. We examine whether potential changes are justified and what impact they could have on costs and schedules. We constantly monitor costs, i.e. regular costs and those incurred by subsequent changes in a project.
We pay special attention to key personnel who are crucial to attaining the objectives of the Krka Group and are also highly sought after by our competitors.
We regularly plan and monitor our employees’ training and development while assigning them new work responsibilities, encouraging them to take on new duties, and delegating them to new positions. We schedule employee training and development in our annual training plan, prepared by organisational units in collaboration with Human Resources and Training and Development. The Quality Committee discuss the plan and implementation of Krka’s quality system training twice a year. Three times a year, the Human Resource Committee discuss the plan and implementation of other training and education programmes, such as part-time studies, Krka International Leadership School, and national vocational qualification programmes. We offer a range of incentives to strengthen employee loyalty to the Krka Group and minimise employee turnover.
We manage risks related to the lack of experts on the labour market by being actively present in the labour market, bolstering Krka’s image as a reputable employer, working with faculties and schools, and by awarding scholarships. This allows us to attract new employees required to meet our strategic, development, and sales plans. We systematically educate and train our employees to acquire national vocational qualification certificates.
The Krka Group manages financial risk centrally in the Finance division of the controlling company in Slovenia. Financial departments of subsidiaries and representative offices abroad perform risk management operational tasks in accordance with the guidelines set out by the controlling company. Key financial risks include credit, market, liquidity, and insurance-related risks.
The Krka Group’s primary market risk is foreign exchange risk. We monitor interest rate risk; however, in 2022, we did not take any measures due to low interest rate exposure. The risk of market value changes in raw materials and the risk of market value changes in shares and bonds do not significantly impact the Krka Group’s net financial result. This is why we monitor changes in exposure to these risks but do not implement any risk management measures.
The Krka Group operates in diverse international environments and is exposed to foreign exchange risks in certain sales and purchase markets.
| EUR | 42% |
|---|---|
| RUB | 23% |
| PLN | 10% |
| USD | 5% |
| RON | 4% |
| Other currencies | 16% |
The Russian rouble accounted for the major, 39%, share in the currency position of the Krka Group at the end of 2022. The rouble’s currency position strengthened compared to the beginning of the year. Hedging the rouble with derivative financial instruments was no longer possible from April 2022, which was the primary reason for the strengthening of the rouble position. It arises from trade receivables in the Russian market and partly from subsidiary funding in the Russian Federation by the controlling company.
The importance of the Russian sales market, the level of currency exposure, and the volatility of the Russian rouble are why we pay special attention to Russian rouble risk management. The availability of financial instruments was reduced, and we therefore focused more on natural risk mitigation methods.
Unlike with other currencies, a surplus of liabilities over assets has accrued in regular business operations from exposure to the US dollar, or in other words, the currency position is short. Exposure to the US dollar arose primarily from purchasing raw and other materials. Considering liquid financial assets in US dollars and dollar forward contracts that together offset the short financial position from operations, the 2022 year-end exposure to US dollars accounted for approximately 5% in total currency exposure of the Krka Group.
The exposure to the Romanian leu, accounting for 15% of the currency position at the end of 2022, arose from trade receivables accrued due to extended payment terms in Romania. Exposure to the Polish złoty resulted from trade receivables and manufacturing facilities held by the Group in Poland and accounted for 13% of the currency position. Other currencies, among them the Swedish krona, North Macedonian denar, Kazakh tenge, Serbian dinar, British pound, Czech koruna, Ukrainian hryvnia, and Hungarian forint, accounted for 28% of the Krka Group currency position.
Soaring energy prices, growing inflation, the risk of subdued global economic growth and tightening monetary policies of the major world central banks increased the volatility of foreign exchange rates in 2022.
The European Central Bank (ECB) raised key interest rates for the first time in 11 years in the third quarter of 2022. The US Federal Reserve was increasing the key interest rate even faster. Interest rates increased in our other important sales markets, for example, Poland, Hungary, Romania, and the Czech Republic. Uneven growth of interest rates added to the volatility of exchange rates in those countries.
The Central Bank of the Russian Federation intervened by increasing the interest rate in the first quarter of 2022. However, by the end of the year, it fell to 7.5%. The rouble’s value dropped in the first quarter of the year but then stabilised and increased despite strict international sanctions imposed on the Russian Federation. Its value dropped again in the last quarter of the year. The value of the Russian rouble denominated in the euro increased by 8.8% from the beginning to the end of the year and was, on average, 18.7% higher than in 2021.
The value of the US dollar denominated in the euro increased by 6.2% during 2022 and was, on average, 12.3% higher than the previous year. The US dollar strengthened primarily on the back of aggressive raises in interest rates by US Federal Reserves. The impact of the US dollar fluctuations on the net financial result of the Krka Group was offset using financial instruments.
The Ukrainian hryvnia lost approximately 20% of its value on the euro since the start of the Russian invasion. The macroeconomic situation in the country remains uncertain, which will continue to be reflected in currency movements.
The Polish złoty was relatively stable, and its value dropped by 1.8% from the beginning to the end of the year, while the average value was 2.6% lower than in 2021. The Romanian leu and Croatian kuna were very stable, and Croatia employed the ERM mechanism. From the beginning to the end of 2022, the value of the British pound dropped by 5.3%. The contribution of these currencies to the net financial result was negligible.
The Krka Group generally mitigates currency risks by natural hedging, primarily by increasing purchases and liabilities in currencies in which sales invoices are issued. When this is impossible, we use derivatives or do not hedge the risk. Generally, only forward contracts are used for hedging.
In 2022, we continued our policy of partially hedging the Russian rouble and US dollar with financial instruments. The risk exposure to the Russian rouble was partially hedged using forward contracts in the first quarter of the year, but this was no longer possible from April. As the value of the Russian rouble denominated in the euro strengthened, we generated net foreign exchange gains.
impact on the Krka Group result. In 2022 however, income from the US dollar hedging instruments offset this. We generated net foreign exchange losses from other currencies in 2022. Exposure to other currencies was not hedged. The Krka Group’s currency exposure to the Ukrainian hryvnia, Kazakh tenge, Serbian dinar, and certain other currencies is less significant, and no hedging instruments are available. The currency risk balance in 2022 was positive, totalling €52.7 million. The Krka Group’s net financial result, including currency risk result, interest income and expenses, and other financial income and expenses, totalled €51.9 million.
We intend to remain focused on activities for offsetting currency exposure by natural hedging methods. We plan to use financial instruments for partial hedging against risks entailed by volatile currencies accounting for a significant portion of Krka’s currency exposure.
| 31 Dec 2021 | 31 Jan 2022 | 28 Feb 2022 | 31 Mar 2022 | 30 Apr 2022 | 31 May 2022 | 30 Jun 2022 | 31 Jul 2022 | 31 Aug 2022 | 30 Sep 2022 | 31 Oct 2022 | 30 Nov 2022 | 31 Dec 2022 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| RUB | |||||||||||||
| HRK | |||||||||||||
| RON | |||||||||||||
| PLN | |||||||||||||
| USD |
| 31 Dec 2021 | 31 Dec 2022 | Low | High | Average | Standard | |
|---|---|---|---|---|---|---|
| deviation | Coefficient of variation* | ||||||
|---|---|---|---|---|---|---|---|
| RUB | 85.30 | 78.43 | 55.77 | 157.72 | 73.43 | 18.93 | 25.7% |
| HRK | 7.53 | 7.54 | 7.50 | 7.58 | 7.53 | 0.02 | 0.2% |
| RON | 4.95 | 4.95 | 4.82 | 4.95 | 4.93 | 0.02 | 0.5% |
| PLN | 4.60 | 4.68 | 4.49 | 4.95 | 4.69 | 0.09 | 1.8% |
| CZK | 24.86 | 24.12 | 24.12 | 25.87 | 24.57 | 0.26 | 1.1% |
| HUF | 369.19 | 400.87 | 352.92 | 430.65 | 391.15 | 19.84 | 5.1% |
| UAH | 30.87 | 37.93 | 29.30 | 39.49 | 34.18 | 2.94 |
| RSD | 117.44 | 117.29 | 116.84 | 117.73 | 117.30 | 0.17 | 0.1% |
|---|---|---|---|---|---|---|---|
| USD | 1.13 | 1.07 | 0.96 | 1.15 | 1.05 | 0.05 | 4.8% |
| GBP | 0.84 | 0.89 | 0.82 | 0.90 | 0.85 | 0.02 | 1.9% |
Interest rate risk is the risk of losses that result from a change in interest rates and is related to Krka’s non-current borrowings and investments.
The interest rate risk with current borrowings and current investments is managed as part of the Group’s liquidity risk. The Krka Group had no non-current borrowings in 2022.
If we obtain non-current borrowings or make non-current investments resulting in interest rate risk exposure, we will consider all options to mitigate the risk using relevant financial instruments.
The key credit risk of the Krka Group arises from trade receivables. This is the risk of customers failing to settle their liabilities by maturity dates.
The Krka Group introduced a centralised credit control process in 2004. The system includes all customers with credit limits exceeding €20,000. Numbering over 670 at the end of 2022, they accounted for more than 95% of total trade receivables. Receivables due from small customers accounted for less than 5% of total trade receivables. Control over small customers is decentralised in the sales network and under the constant supervision of the controlling company.
Credit control is a two-step process. The first step involves assessing the credit risk for each customer, determining hedging instruments, and assigning relevant credit limits. We assess each new customer and review the credit ratings of all customers twice a year. A customer’s credit rating includes many different financial and non-financial indicators, which fall into four categories; each has a different weight in the final assessment.
Each customer is assigned a customised credit limit according to the credit rating, expected shipment, and payment dynamics.
The second step in the credit-control process involves regular dynamic monitoring of a customer’s payment discipline. All Krka Group companies employ sales information systems that control available limits and overdue receivables whenever a product shipment is made. A shipment is automatically blocked if a customer is in arrears or if receivables together with the new shipment exceed the approved credit limit. Sales personnel are required to initiate a payment collection procedure or arrange hedging for the outstanding settlements.
The credit control process employs uniform rules which apply to all customers. Due to the specifics of sales markets, additional national controls have been introduced in individual subsidiaries. Credit control processes are regularly adjusted to changes in the sales markets.
Credit control guarantees permanent control over the quality of the trade receivables portfolio. The result is a low proportion of receivable write-offs and impairments in total Krka Group sales.
The amount of receivable write-offs and impairments is also low because receivables are dispersed across many customers and sales markets, with the majority of outstanding receivables due from customers with whom Krka has been doing business for several years.
A very complex credit risk situation in 2022 derived from COVID-19 pandemic-related challenges and the tense situation in Ukraine, the Russian Federation, and Belarus. These markets, where we further strengthened trade receivable management activities, were at our focal point. The credit risk management balance was favourable in 2022 as well. At the end of 2022, the value of trade receivables decreased by 14% compared to the beginning of the year. The amount of overdue and outstanding receivables remained within limits acceptable for Krka.
The amount of the newly established valuation allowance for receivables exceeded the amount of the reversed allowance. The impact of net impairments and write-offs on the Krka Group’s bottom line in 2022 was less than 0.11% of sales.
Since 2009, the Krka Group has insured part of its trade receivables with a credit insurance company. In the second quarter of 2020, we extended and supplemented trade receivable insurance. At the end of 2022, 96.1% of trade receivables were insured with a credit insurer. After deductibles, 86.7% of trade receivables were insured. Bank guarantees and letters of credit are used only exceptionally to secure payments.
The structure of receivables by sales region is stable and conforms to the structure of sales and payment terms in individual countries.
The maturity structure of receivables remained stable. The percentage of overdue receivables compared to total trade receivables remained low at the end of 2022.
| 0 | 50 | 100 | 150 | 200 | 250 | 300 | 350 | 400 | 450 | 500 |
|---|---|---|---|---|---|---|---|---|---|---|
| 132 | 124 | 6 | 8 | 17 | 306 | 311 | 377 | 460 | 385 |
| € million | 31 Dec 2018 | 31 Dec 2019 | 31 Dec 2020 | 31 Dec 2021 | 31 Dec 2022 |
|---|---|---|---|---|---|
| Uninsured receivables | 250 | 300 | 350 | 400 | 450 |
| Receivables insured with insurance company or bank | 12 | 13 | 9 | 12 | 12 |
| Total Receivables | 74 | 72 | 76 | 80 | 79 |
| Receivables by maturity | 165 | 186 | 168 | 241 | 144 |
| Region Slovenia | 73 | 74 | 62 | 58 | 73 |
| Region South-East Europe | 111 | 86 | 64 | 72 | 91 |
| Region East Europe | 4 | 4 | 3 | 5 | 6 |
| Region Central Europe | |||||
| Region West Europe | |||||
| Region Overseas Markets |
We aim at low receivable impairment and write-off total at the Krka Group level.
Business partners value Krka for its excellent financial discipline and stable cash flows. In 2022, we settled all financial liabilities regularly. Krka Group exposure to liquidity risk was low last year.
We did not use any new short-term funding from banks or draw funds from existing credit lines in 2022.
At the end of 2022, the Krka Group recorded excess liquidity, primarily as cash at bank or deposits with first-class commercial banks. The 2022 increase in excess liquidity resulted from surplus cash flow from operating activities over negative cash flows from investing and financing activities.
The European Central Bank started raising key interest rates gradually in the second half of 2022. Low-risk cash investments started providing positive returns. We deposited most of the cash surplus with commercial banks in accordance with internal investment diversification rules and in consideration of interest rate, liquidity, credit, and currency risks.
The controlling company manages liquidity risk centrally for the entire Krka Group. The controlling company finances subsidiaries through intra-group loans. Any potential cash surpluses are deposited with the controlling company. Excess cash from all Group companies is transferred to the controlling company’s master account automatically daily (cash pooling) or manually through individual bank transfers. This allows for cash management optimisation, currency risk mitigation, an overview of the liquidity of all Group companies, and enhanced security of cash transactions.
The Krka Group also reported favourable and stable liquidity ratios at the end of 2022.
| 2018 | 2019 | 2020 | 2021 | 2022 |
|---|---|---|---|---|
| 421 | 420 | 375 | 457 | 394 |
| 14 | 11 | 4 | 7 | 7 |
| 1 | 1 | 2 | 2 | 0 |
| 3 | 1 | 1 | 0 | 1 |
| 0 | 2 | 1 | 1 | 1 |
| 0 | 50 | 100 | 150 | 200 |
| 250 | 300 | 350 | 400 | 450 |
| 500 | € million |
Within maturity
Overdue up to 20 days
Overdue between 21 and 50 days
Overdue between 51 and 180 days
| Year | 2022 | 2021 | 2020 | 2019 | 2018 | 5-year average |
|---|---|---|---|---|---|---|
| Current ratio | 3.75 | 3.21 | 4.00 | 3.21 | 3.03 | 3.44 |
| Quick ratio | 2.42 | 2.21 | 2.54 | 2.02 | 1.89 | 2.22 |
| Acid test ratio | 1.37 | 0.69 | 1.04 | 0.62 | 0.38 | 0.82 |
| Receivables turnover ratio | 3.70 | 3.45 | 3.50 | 3.21 | 2.68 | 3.31 |
Current ratio = Current assets/Current liabilities
Quick ratio = (Current assets – Inventories)/Current liabilities
Acid test ratio = (Investments + Cash and cash equivalents)/Current liabilities
We plan to carefully manage cash flows and surplus liquidity within the Krka Group to ensure proper liquidity of all group companies in 2023.
The Krka Group holds insurance policies with domestic and foreign insurance companies to insure property, liabilities, and financial losses in the event of a business interruption. Insurance is one of the risk management tools. Our internal Insurance Policy defines types of insurance and their characteristics.
Decisions on insurance type and scope of coverage are made based on the materiality of risks and the insurance price. The materiality of risks is determined based on estimates concerning the probability of occurrence, the extent of potential damages, and the impact on operations. The Krka Group primarily invests in prevention because its effect on risk management is more optimal than taking out insurance policies. One of the reasons for taking out insurance could be legislation, which may require specific types of insurance.
The Krka Group adjusts the insurance scope and coverage to business growth, property value, and conditions in the international insurance markets. We also consider the wider community’s interests and those of our stakeholders, for example, concerning environmental liability insurance or product liability insurance.
product liability, clinical trials, product recalls, freight-in-transit, and business interruption. Insurance policies also indicate
| 3.03 | 3.21 | 4.00 | 3.21 | 3.75 | 1.89 | 2.02 | 2.54 | 2.21 | 2.42 | 0.38 | 0.62 | 1.04 | 0.69 | 1.37 | 0.0 | 0.5 | 1.0 | 1.5 | 2.0 | 2.5 | 3.0 | 3.5 | 4.0 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2018 | 2019 | 2020 | 2021 | 2022 |
the main risks, including property protection, especially against disasters (fire, earthquake, flood, storm, explosion), business interruption at manufacturing plants, product and other liabilities.
The controlling company manages the insurance policies of all Krka Group companies, except local car insurance policies, but still provides guidelines and monitors car insurance. The entire Krka Group is insured in compliance with uniform principles. The competitiveness and safety of individual insurance companies is reviewed every year. When selecting insurance companies, we consider the quality of coverage, premium rates, references, financial security (credit ratings and capital adequacy), and national legal requirements. Key performance evaluation criterion is the proportion of paid insurance premiums as a total of Krka Group revenue. We also attempt to keep premium rates as low as possible and ensure that premium growth falls behind the increases in the bases used to calculate premiums.
We continued the analysis of the international insurance market in 2022 to improve our insurance programme. Krka makes gradual improvements every year and simultaneously assumes part of the risk, either through insurance deductibles or by cancelling low-risk insurance policies. Four insurance audits were conducted at the Krka Group last year, with no critical recommendations made.
Krka has been investing systematically in damage prevention. Our buildings are designed so that their hazard exposure is as low as possible. They are equipped with active fire protection systems, for example, fire and smoke alarms, sprinkler systems, fire flaps, and emergency lighting. Preventive inspections and fire drills are arranged regularly. Employees undergo theoretical and practical emergency response training.
Planned preventive actions and insurance coverages have reduced property damage over the last five years, which remains low, and all insurance claims were promptly resolved.
Note: This chart does not include car or personal insurance
| 80 | 29 | 4 | 0 | 25 | 0 | 10 |
|---|---|---|---|---|---|---|
| Year | Year high | Year low | 31 December | Annual change (%) |
|---|---|---|---|---|
| 2022 | 120.00 | 80.80 | 92.00 | -22.0 |
| 2021 | 120.00 | 91.20 | 118.00 | 29.1 |
| 2020 | 92.60 | 54.00 | 91.40 | 24.9 |
| 2019 | 74.60 | 56.80 | 73.20 | 26.6 |
| 2018 | 59.80 | 53.60 | 57.80 | 0.5 |
In 2021, the Krka share price on the Ljubljana Stock Exchange increased by more than 29% but fell by 22% last year.
Reference: The Ljubljana Stock Exchange and S&P Dow Jones Indices LLC
| Year | 2022 | 2021 | 2020 | 2019 | 2018 |
|---|---|---|---|---|---|
| Earnings per share (1) (€) | 11.69 | 9.92 | 9.27 | 7.73 | 5.46 |
| Gross dividend per share (2) (€) | 5.63 | 5.00 | 4.25 | 3.20 | 2.90 |
| Dividend payout ratio (3) (%) | 56.6 | 53.6 | 54.3 | 58.2 | 60.8 |
| Dividend yield (4) (%) | 6.1 | 4.2 | 4.6 | 4.4 | 5.0 |
Krka shares are listed on the prime market of the Ljubljana Stock Exchange. Since April 2012, they have been dual-listed on the Warsaw Stock Exchange. All Krka shares traded on the Ljubljana and Warsaw stock exchanges are of the same class: ordinary and freely transferable. Each share, except treasury shares, carries one vote at the AGM. Krka shares are traded freely through brokerage companies and banks that are members of the Ljubljana or Warsaw stock exchanges.
Reference: The Ljubljana Stock Exchange and the Warsaw Stock Exchange
Krka shares are the most traded security on the Ljubljana Stock Exchange. In 2022, the average daily trading volume of Krka shares on the Ljubljana Stock Exchange reached €0.76 million or 7,600 shares, including blocks.
| Date | Trading volume (€ thousand) | Closing price (€) | |||
|---|---|---|---|---|---|
| Trading volume on LJSE | Trading volume on WSE | Closing price on LJSE | |||
| 31 Dec 2017 | 0 | 2,500 | 10,000 | 31 Dec 2017 | |
| 31 Dec 2018 | 12,500 | 15,000 | 17,500 | 31 Dec 2018 | |
| 31 Dec 2019 | 20,000 | 22,500 | 25,000 | 31 Dec 2019 | |
| 31 Dec 2020 | 31 Dec 2020 | 31 Dec 2020 | 31 Dec 2020 | 31 Dec 2020 | |
| 31 Dec 2021 | 31 Dec 2021 | 31 Dec 2021 | 31 Dec 2021 | 31 Dec 2021 | |
| 31 Dec 2022 | 31 Dec 2022 | 31 Dec 2022 | 31 Dec 2022 | 31 Dec 2022 |
| Shareholder | Shares owned | Stake (%) |
|---|---|---|
| Kapitalska družba, d. d. | 3,493,030 | 10.65 |
| Slovenski državni holding, d. d. (SDH) | 2,949,876 | 9.00 |
| Republic of Slovenia | 2,366,121 | 7.22 |
| OTP banka, d.d. | 1,547,420 | 4.72 |
| Erste Group Bank AG - PBZ Croatia Osiguranje |
| Clearstream Banking SA | 1 | 1,331,938 | 4.06 |
|---|---|---|---|
| Luka Koper, d. d. | 1 | 1,086,939 | 3.31 |
| State Street Bank and Trust | 1 | 377,959 | 1.15 |
| KDPW | 1 | 345,055 | 1.05 |
| Privredna banka Zagreb d. d. | 1 | 318,434 | 0.97 |
| Total | 14,250,742 | 43.46 |
The shares are held in custody accounts with the above-listed banks and are owned by their clients.
At the end of 2022, Krka had 47,170 shareholders, up almost 1% on the end of 2021.
Reference: KDD
In 2022, the Company acquired 101,941 treasury shares valued at €10,009 thousand on the regulated market and held 1,785,849 treasury shares as at 31 December 2022.
We adhere to the highest standards in conducting our business, which also applies to investor relations. We pursue corporate integrity, high levels of transparency in reporting, and engagement of shareholders, analysts, and financial professionals. We regularly informed the financial and general public about our business achievements throughout the year in compliance with valid regulations and stock exchange reporting rules. We provided them with information mainly related to our business results and the Krka Group’s strategy, complying with the information disclosure policy. Investors and financial analysts gave us feedback, which we always carefully examined and presented to our Management Board. In 2022, we participated in 16 investment conferences with investors from more than 15 countries. We organised four webcasts to present our quarterly business reports. We also held conference calls with more than 100 investors. Krka’s business results are available in Slovenian and English on SEOnet (http://seonet.ljse.si) of the Ljubljana Stock Exchange, ESPI of the Warsaw Stock Exchange, and Krka’s webpages.
GRI 2-29
| 39.2 | 38.5 | 38.2 | 38.8 | 40.4 |
|---|---|---|---|---|
| 27.2 | 27.1 | 27.1 | 27.1 | 27.1 |
| 7.7 | 7.6 |
| 31 Dec 2018 | 31 Dec 2019 | 31 Dec 2020 | 31 Dec 2021 | 31 Dec 2022 |
|---|---|---|---|---|
| Domestic retail investors | State ownership | Domestic legal entities and institutional investors | Treasury shares | Foreign investors |
In 2022, the Krka Group generated revenue of €1,717.5 million, a €151.7 million or 10% increase on 2021, of which revenue from contracts with customers on sales of products and services reached €1,708.5 million, and revenue from contracts with customers on sales of materials and other sales revenue constituted the difference. Over the past five years, average annual revenue grew by 4.4% in volume and 6.3% in value. Other operating income of the Krka Group amounted to €9.2 million.
In 2022, Krka (in this section referred to as ‘the Company’ for clarity reasons) generated revenue of €1,553.5 million, a €172.1 million or 12% increase on 2021, of which revenue from contracts with customers on sales of products and services amounted to €1,356.1 million; revenue from contracts with customers on sales of materials totalled €188.3 million; and other sales revenue reached €9.1 million. Other operating income amounted to €4.7 million.
The Krka Group posted operating expenses totalling €1,345.4 million, up €123.0 million or 10% on 2021. The Company incurred operating expenses totalling €1,200.3 million, up 8% on 2021.
Krka Group operating expenses comprised: costs of goods sold totalling €743.1 million; selling and distribution expenses totalling €349.1 million; R&D expenses totalling €162.6 million; and general and administrative expenses totalling €90.7 million. Operating expenses accounted for 78% of revenue and, over the past five years, ranged between 75% in 2020 and 83% in 2018 and 2019.
Costs of goods sold, up 10% on 2021, represented the largest item in the Krka Group operating expense structure. They accounted for 43.3% of total revenue in 2022, and 43.1% in 2021. Selling and distribution expenses increased by 14% and accounted for 20.3% of total revenue, up 0.8 percentage points on 2021. R&D expenses constituted 9.5% of total revenue (down 0.4 percentage points on 2021) and increased by 5%. General and administrative expenses amounted to 5.3% of total revenue, a 4% increase, while their proportion in revenue dropped by 0.3 percentage points.
Company operating expenses comprised: costs of goods sold totalling €663.3 million; selling and distribution expenses totalling €301.3 million; R&D expenses totalling €158.3 million; and general and administrative expenses totalling €77.4 million. Costs of goods sold represented the largest item in the Company operating expense structure and increased by 8%. They accounted for 42.7% of total revenue, up 1.8 percentage points on 2021. Selling and distribution expenses
| 1,232 | 1,390 | 1,447 | 1,381 | 1,554 | 1,332 | 1,493 | 1,535 | 1,566 | 1,717 | 0 |
|---|---|---|---|---|---|---|---|---|---|---|
increased by 11% and accounted for 19.4% of total revenue, down 0.2 percentage points on 2021. R&D expenses constituted 10.2% of total revenue (down 0.7 percentage points on 2021) and increased by 5%. General and administrative expenses accounted for 5.0% of total revenue, a 1% drop, while their proportion in total revenue decreased by 0.7 percentage point on 2021.
| € thousand | Krka Group | Company |
|---|---|---|
| 2022 | 57,668 | 57,744 |
| 2021 | 19,711 | 24,714 |
| 2020 | 23,259 | 31,786 |
| 2019 | 24,987 | 34,410 |
| 2018 | 5,935 | 17,382 |
| Financial expenses | Krka Group | Company |
| 2022 | -5,806 | -3,356 |
| 2021 | -12,082 | -12,083 |
| 2020 | -75,011 | -72,837 |
| 2019 | -14,814 | -14,751 |
| 2018 | -36,048 | -33,891 |
| Net financial result | 51,862 |
In 2022, Krka Group net financial result amounted to €51.9 million and €54.4 million for the Company. The Krka Group operates in diverse international environments and is exposed to foreign exchange risks in certain sales and purchase markets. Krka Group currency risk gain reached €52.7 million in 2022. Please see pages 70–73 for details about foreign exchange risks.
Krka Group financial income comprised: net foreign exchange gains totalling €43.6 million; derivatives income of €9.1 million; interest income totalling €3.8 million; income from dividends and other profit shares totalling €0.7 million; and other financial income of €0.5 million. Financial expenses consisted of interest expenses of €1.3 million and other financial expenses of €4.5 million.
Company financial income comprised: net foreign exchange gains totalling €45.1 million; derivatives income of €9.1 million; interest income totalling €2.4 million; income from dividends and other profit shares worth €0.7 million; and other financial income of €0.5 million. Financial expenses consisted of interest expenses of €1.7 million, and other financial expenses of €1.6 million.
| Year | Company EBIT (€ million) | Company net profit (€ million) | Krka Group EBIT (€ million) | Krka Group net profit (€ million) |
|---|---|---|---|---|
| 2018 | 199 | |||
| 2019 | 264 | |||
| 2020 | 339 | |||
| 2021 | 273 | |||
| 2022 | 358 | 381 |
€488.9 million, up €25.3 million or 5%. The Company created EBIT totalling €357.9 million, while its EBITDA reached €440.1 million. In 2022, profit before tax of the Krka Group increased by €70.7 million or 19% to €433.1 million. Its effective tax rate was 16.0%. Profit before tax of the Company amounted to €412.3 million.
The Krka Group recorded net profit totalling €363.7 million, up €55.5 million or 18% on 2021, while Company net profit totalled €348.2 million.
| € thousand | Krka Group | Company | ||
|---|---|---|---|---|
| 2022 | % | 2021 | % | |
| Index 2022/21 | ||||
| Non-current assets | 1,125,025 | 41.9 | 1,075,052 | 42.4 |
| 105 | ||||
| 1,123,594 | 44.6 | 1,094,724 | 45.1 | |
| 103 | ||||
| Property, plant and equipment | 779,336 | 29.0 | 773,657 | 30.5 |
| 101 | ||||
| 566,780 | 22.5 | 569,391 | 23.5 | |
| 100 | ||||
| Intangible assets | 102,550 | 3.8 | 104,301 | 4.1 |
| 98 | ||||
| 24,960 | 1.0 | 25,628 | 1.1 | |
| 97 |
| 188,309 | 7.0 | |
|---|---|---|
| 149,183 | 5.9 | |
| 126 | 522,545 | 20.7 |
| 486,336 | 20.0 | |
| 107 |
| 54,830 | 2.1 | |
|---|---|---|
| 47,911 | 1.9 | |
| 114 | 9,309 | 0.4 |
| 13,369 | 0.5 | |
| 70 |
| 1,562,475 | 58.1 | |
|---|---|---|
| 1,461,936 | 57.6 | |
| 107 | 1,392,950 | 55.4 |
| 1,332,521 | 54.9 | |
| 105 |
| 553,332 | 20.6 | |
|---|---|---|
| 455,707 | 18.0 | |
| 121 | 492,978 | 19.6 |
| 394,323 | 16.2 | |
| 125 |
| 402,730 | 15.0 | |
|---|---|---|
| 467,764 | 18.4 | |
| 86 | 357,889 | 14.2 |
| 424,588 | 17.5 | |
| 84 |
| Assets | € thousand | Krka Group | Company | |
|---|---|---|---|---|
| Total assets | 2,687,500 | 100.0 | 2,516,544 | 100.0 |
| At the end of 2022, Krka Group assets were valued at €2,687.5 million, a €150.5 million or 6% increase on year-end 2021. | ||||
| The ratio of non-current to current assets in the overall asset structure differed from that recorded at year-end 2021, as non-current assets decreased by 0.5 percentage points and totalled 41.9%. | ||||
| At the end of 2022, Company assets were valued at €2,516.5 million, an €89.3 million or 4% increase on year-end 2021. | ||||
| The ratio of non-current to current assets in the overall asset structure differed from that recorded at year-end 2021, as non-current assets decreased by 0.5 percentage points and totalled 44.6%. | ||||
| Krka Group non-current assets were valued at €1,125.0 million, a €50.0 million or 5% increase on year-end 2021. | ||||
| The most important item in the Krka Group asset structure was property, plant and equipment (PP\&E). It was valued at €779.3 million and accounted for 29.0% of total Krka Group assets (of which the Company’s PP\&E accounted for €566.8 million or 73% of Krka Group PP\&E). | ||||
| Intangible assets were worth €102.6 million and accounted for 3.8% of total assets (of which Company assets accounted for €25.0 million or 24% of total Krka Group intangible assets). | ||||
| Krka Group non-current loans totalled €77.5 million or 2.9% of its total assets. | ||||
| Krka Group current assets were valued at €1,562.5 million and increased by €100.5 million or 7% on year-end 2021. | ||||
| Trade receivables due from customers outside the Krka Group totalled €402.7 million, accounting for 15% of total Krka Group assets. | ||||
| Inventories amounted to €553.3 million or 21% of total Krka Group assets. | ||||
| Trade receivables decreased by €65.0 million or 14%, while inventories saw a rise of €97.6 million or 21%. | ||||
| Krka Group current loans totalled €6.3 million or 0.2% of its total assets. | ||||
| Cash and cash equivalents were valued at €518.9 million, up €359.1 million on year-end 2021, accounting for 19.3% of its total assets. | ||||
| Company non-current assets were valued at €1,123.6 million and increased by €28.9 million, up 3% on year-end 2021. | ||||
| The most important item worth €566.8 million or 23% of its total assets was PP\&E. | ||||
| Investments in subsidiaries totalled €355.8 million or 14% of its total assets. | ||||
| Intangible assets of €25.0 million accounted for 1% of total assets. | ||||
| The Company recorded non-current loans totalling €56.0 million or 2% of its total assets. | ||||
| Company current assets were valued at €1,393.0 million and increased by €60.4 million or 5% on year-end 2021. | ||||
| Trade receivables totalled €357.9 million or 14% of its total assets (of which trade receivables due from customers outside the Krka Group totalled €164.2 million). | ||||
| Inventories amounted to €493.0 million or 20% of its total assets. | ||||
| Inventories increased by 25%, but trade receivables decreased by 16%. | ||||
| The Company posted current loans totalling €6.7 million or 0.3% of its total assets. | ||||
| Cash and cash equivalents were valued at €470.3 million, up €325.3 million on year-end 2021, accounting for 18.7% of total Company assets. |
| € thousand | Krka Group | Company | 2022 |
|---|---|---|---|
| 2022/21 | 2022 | % | 2021 | % | Index | |
|---|---|---|---|---|---|---|
| Equity | 2,138,509 | 79.6 | 1,919,085 | 75.6 | 111 | |
| Non-current liabilities | 132,130 | 4.9 | 162,674 | 6.4 | 81 | |
| Current liabilities | 416,861 | 15.5 | 455,229 | 18.0 | 92 | |
| Total equity and liabilities | 2,687,500 | 100.0 | 2,536,988 | 100.0 | 106 |
attributable to Krka Group net profit totalling €363.7 million, other comprehensive income net of tax totalling €34.7 million, and acquisition of non-controlling interests totalling €6.2 million. Equity declined due to dividends paid totalling €175.0 million and redemptions of treasury shares totalling €10.0 million.
The Krka Group recorded provisions totalling €107.2 million (of which post-employment and other non-current employee benefits accounted for €96.0 million; provisions for lawsuits €10.6 million; and other provisions €0.7 million), an €18.9 million or 15% decrease on year-end 2021. Provisions for post-employment and other non-current employee benefits decreased by €28.3 million, other provisions declined by €0.6 million, while provisions for lawsuits increased by €10.0 million.
Of Krka Group current liability items, trade payables increased by €10.8 million (of which payables to suppliers abroad increased by €1.8 million and payables to domestic suppliers by €9.0 million). Current liabilities from contracts with customers increased by €33.0 million (of which bonuses and volume rebates increased by €31.1 million and contract liabilities by €3.1 million, while right of return decreased by €1.2 million). Other current liabilities declined by €103.7 million, of which liabilities from repurchase agreements (repo) dropped by €102.2 million and other liabilities by €3.3 million, while payables to employees increased by €1.8 million.
As at 31 December 2022, Company equity was up €184.7 million or 10% higher than at year-end 2021. The increase was attributable to Company net profit of €348.2 million and other comprehensive income net of tax totalling €21.5 million, while the decrease resulted from dividends paid totalling €175.0 million and redemptions of treasury shares totalling €10.0 million.
Company provisions amounted to €96.6 million (of which post-employment and other non-current employee benefits totalled €86.1 million and provisions for lawsuits €10.5 million). Compared to year-end 2021, provisions declined by €16.5 million or 15% following a €26.5 million drop in provisions for post-employment and other non-current employment benefits and a €10.0 million increase in provisions for lawsuits.
Of Company current liability items, trade payables increased by €16.0 million. Current liabilities from contracts with customers increased by €2.2 million, while other current liabilities decreased by €106.6 million, of which liabilities from repurchase agreements (repo) dropped by €102.2 million. At the end of 2022, Company current borrowings from subsidiaries amounted to €53.4 million.
| € thousand | Krka Group | Company | ||
|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |
| Net cash from operating activities | 467,651 | 386,097 | 407,733 | 348,239 |
| Net cash from investing activities | 76,414 | -372,637 | 105,073 | -338,401 |
| Net cash from financing activities | -187,022 | -169,850 | -189,807 | -163,901 |
| Net change in cash and cash equivalents | 357,043 | -156,390 | 322,999 | -154,063 |
Net change in Krka Group cash and cash equivalents (exclusive of exchange rate fluctuations) totalled €357.0 million in 2022, because positive cash from operating and investing activities was higher than negative cash used in financing activities.
The Krka Group generated profit from operating activities before changes in net current assets totalling €552.3 million. Changes in current assets that had a positive impact on cash flow included changes in trade receivables and trade payables, while changes in inventories, provisions, deferred revenue and other current liabilities had a negative impact.
Positive cash flows from investing activities totalling €76.4 million were primarily accrued from net payments for current loans totalling €189.6 million and payments for current investments of €153.8 million. Negative cash flows from financing activities totalling €187.0 million primarily resulted from dividends paid and other profit shares of €175.0 million and redeemed treasury shares of €10.0 million.
| Company 2021 | Company 2022 | Krka Group 2021 | Krka Group 2022 | |
|---|---|---|---|---|
| EBITDA margin | 25.9 | |||
| EBIT margin | 19.8 | |||
| Profit margin | 17.8 | |||
| ROE | 13.4 | |||
| ROA | 10.6 | |||
| 28.3 | ||||
| 23.0 | ||||
| 22.4 | ||||
| 17.7 | ||||
| 14.1 | ||||
| 29.6 | ||||
| 22.7 | ||||
| 19.7 | ||||
| 16.8 | ||||
| 12.9 | ||||
| 28.5 | ||||
| 22.2 | ||||
| 21.2 | ||||
| 17.9 | ||||
| 13.9 |
| € thousand | Krka Group | Company |
|---|---|---|
| 2022 | ||
| 2021 | ||
| 2020 | ||
| 2019 | ||
| 2018 |
1,717,4531,565,8021,534,9411,493,4091,331,8581,553,5141,381,3671,447,1121,390,2481,231,784
| 1 | 488,895 |
|---|---|
| 463,625 | |
| 502,432 | |
| 385,437 | |
| 343,280 | |
| 440,086 | |
| 358,188 | |
| 424,028 | |
| 345,929 | |
| 282,493 |
28.5%29.6%32.7%25.8%25.8%28.3%25.9%29.3%24.9%22.9%
| 2 | 381,211 |
|---|---|
| 354,788 | |
| 390,744 | |
| 274,195 | |
| 232,686 | |
| 357,870 | |
| 273,325 | |
| 338,882 | |
| 263,852 | |
| 199,305 |
| Year | Net Profit | Net Profit Margin | Assets | ROA | Equity | ROE |
|---|---|---|---|---|---|---|
| 1 | 363,662 | 21.2% | 2,687,500 | 13.9% | 2,138,509 | |
| 2 | 308,150 | 19.7% | 2,536,988 | 12.9% | 1,919,085 | |
| 3 | 288,949 | 18.8% | 2,235,542 | 13.1% | 1,751,812 | |
| 4 | 244,272 | 16.4% | 2,184,618 | 11.7% | 1,667,516 | |
| 5 | 174,008 | 13.1% | 1,985,069 | 8.9% | 1,540,270 | |
| 6 | 348,215 | 22.4% | 2,516,544 | 14.1% | 2,060,792 | |
| 7 | 245,216 | 17.8% | 2,427,245 | 10.6% | 1,876,142 | |
| 8 | 258,474 | 17.9% | 2,208,379 | 11.9% | 1,791,850 | |
| 9 | 249,411 | 17.9% | 2,129,960 | 12.3% | 1,664,178 | |
| 10 | 163,329 | 13.3% | 1,916,065 | 8.7% | 1,552,300 |
In 2022, the Krka Group generated €1,717.5 million from sales of products and services, a 10% year-on-year rise. Of that, revenue from contracts with customers on sales of products and services amounted to €1,708.5 million, while other revenue from contracts with customers on sales of material and other sales revenue constituted the difference. Sales in markets outside Slovenia reached €1,605.5 million and accounted for 94% of overall Krka Group sales. Product sales volume increased by 4%.
Region East Europe recorded the highest sales, €623.4 million, or 36.5% of total Krka Group sales. Region Central Europe achieved the second highest sales, €364.2 million, or 21.3% of total Krka Group sales. Region West Europe ranked third in terms of sales with €327.3 million, or 19.2% of total Krka Group sales. Sales in Region South-East Europe totalled €224.5 million, accounting for 13.1% of total sales, and in Overseas Markets €66.1 million or 3.9% of total sales. Region Slovenia generated sales of €103 million, accounting for 6% of total Krka Group sales.
| € thousand | Krka Group | Krka | ||||||
|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | Index 2022/21 | 2022 | 2021 | Index 2022/21 | |||
| Region Slovenia | 103,047 | 92,880 | 111 | 60,503 | 56,421 | 107 | ||
| Region South-East Europe | 224,523 | 209,166 | 107 |
| Region | 2022 (€ thousand) | 2021 (€ thousand) | Change (%) |
|---|---|---|---|
| East Europe | 220,624 | 205,491 | 107 |
| Central Europe | 387,489 | 320,973 | 121 |
| West Europe | 351,191 | 336,699 | 104 |
| Overseas Markets | 66,098 | 53,717 | 123 |
| Total | 1,708,542 | 1,560,288 | 110 |
6.0%
13.1%
36.5%
21.3%
19.2%
| Region | Q1 | Q2 | Q3 | Q4 |
|---|---|---|---|---|
| Slovenia | 23,432 | 25,988 | 27,780 | 25,847 |
| 18,270 | 23,502 | 27,033 | 24,075 | |
| South-East Europe | 60,310 | 58,951 | 53,575 | 51,687 |
| 53,276 | 58,990 | 51,900 | 45,000 | |
| East Europe | 146,700 | 140,983 | 126,464 | 209,230 |
| 132,122 | 144,401 | 121,226 | 150,029 | |
| Central Europe | 99,620 | 96,443 | 84,824 | 83,267 |
| 97,805 | 91,098 | 82,955 | 79,643 | |
| West Europe | 84,595 | 83,941 | 73,837 | 84,970 |
| 80,535 | 79,087 | 69,334 | 76,290 | |
| Overseas Markets | 15,991 | 16,486 | 16,611 | 17,010 |
| 12,515 | 14,945 | 14,298 | 11,959 | |||||
|---|---|---|---|---|---|---|---|---|
| Total | 430,648 | 422,792 | 383,091 | 472,011 | 394,523 | 412,023 | 366,746 | 386,996 |
Sales of products and services in Slovenia, one of our key markets, amounted to €103 million in 2022. Product sales reached €60.5 million, accounting for 7% growth in value. Prescription pharmaceuticals constituted the major proportion or 74%. Non-prescription products accounted for 22%, and sales of animal health products represented the remaining 3%.
Holding a 7.4% market share, we maintained the leading position among providers of generic medicines in Slovenia in terms of sales value. Health resorts and tourist services generated €42.6 million, up 17% on the year before, contributing 11% to sales growth in the domestic market.
Medicines for treating cardiovascular diseases, pain, the gastrointestinal tract, and the central nervous system contributed to the highest prescription pharmaceutical sales. Market shares of all key therapeutic classes of prescription medicines increased.
Medicines for treating cardiovascular diseases recorded the highest sales volume, most notably: Prenewel (perindopril/indapamide), Prenessa (perindopril), Amlessa (perindopril/amlodipine), and Amlewel (perindopril/amlodipine/indapamide). Of our cholesterol-lowering agents, sales of Sorvasta (rosuvastatin) were most substantial, and we also raised the profile of Sorvitimb (rosuvastatin/ezetimibe). We raised the profile of Roxiper, a single-pill combination of perindopril, indapamide, and rosuvastatin; and Roxampex, a single-pill combination of rosuvastatin, amlodipine, and perindopril.
| 2018 | 2019 | 2020 | 2021 | 2022 | |
|---|---|---|---|---|---|
| € million | € million | € million | € million | € million | |
| Region Slovenia | Region South-East Europe | Region East Europe | Region Central Europe | Region West Europe | Region Overseas Markets |
Algominal (metamizole), Nolpaza (pantoprazole) and Emozul (esomeprazole) were our most notable agents for treating gastrointestinal diseases. From our range for the central nervous system, our most prominent brands included: Asentra (sertraline), Mirzaten (mirtazapine), Dulsevia (duloxetine), Kventiax (quetiapine), Parnido (paliperidone), and Memaxa (memantine). We added to our portfolio an immunomodulatory agent Lenalidomide Krka (lenalidomide); two oncology agents, Sunitinib Krka (sunitinib) and Abiraterone Krka (abiraterone); an antidiabetic agent Maysiglu (sitagliptin).
Sales of non-prescription products were driven by Magnezij Krka, followed by Nalgesin S (naproxen), and Septabene (benzydamine/cetylpyridinium chloride). Sales of animal health products were driven by vitamins and minerals Grovit, and Floron (florfenicol).
Holding a 7.4% market share, we placed first among all providers of generic medicines. Of all medicines sold in Slovenia, one in five was made by Krka.
We were the leading provider of:
We were the leading provider of medicines containing alprazolam; atorvastatin; ciprofloxacin; dexamethasone; doxazosin; donepezil; enalapril; esomeprazole; gliclazide; indapamide; carvedilol; quetiapine; losartan, including losartan in combination with hydrochlorothiazide; memantine; metronidazole; naproxen; omeprazole; pantoprazole; perindopril, including perindopril in combinations with amlodipine and indapamide; ramipril; rosuvastatin; sertraline; simvastatin; tramadol in combination with paracetamol; valsartan, including valsartan in combination with hydrochlorothiazide; and venlafaxine.
We were the leading provider of generic medicines containing aripiprazole; duloxetine; etoricoxib; olanzapine; and tamsulosin.
We were the leading provider of non-prescription products as follows: products with effect on pharynx; non-steroidal anti-inflammatory drugs (NSAIDs); group B vitamins, proton pump inhibitors; magnesium-containing products; and vitamin D.
Nalgesin (naproxen), Nolpaza (pantoprazole), Sorvasta (rosuvastatin), Prenewel (perindopril/indapamide), Prenessa (perindopril), and Doreta (tramadol/paracetamol) were among medicines that achieved highest sales.
Region South-East Europe made product sales of €224.5 million, a year-on-year increase or more than 7%. We recorded growth on all regional markets. Absolute growth, however, was the highest in Croatia, where our sales totalled almost €5 million more than a year before. In terms of absolute year-on-year sales growth, it was followed by Romania, where sales increased by €4.5 million, and Serbia, where sales grew by €2 million.
Pharmaceuticals achieved 6% year-on-year growth. Non-prescription product sales advanced by 27%, while animal health products lagged behind the 2021 sales figure by over 3%.
In Romania, one of our key markets and the largest regional one, year-on-year sales increased by 8% to €63.2 million. Our market share reached 1.6% and market share volume more than 4.6% respectively, ranking us the sixth largest foreign provider of generic pharmaceuticals in the country. The most important medicines in terms of sales were Atoris (atorvastatin), Co-Prenessa (perindopril/indapamide), Doreta (tramadol/paracetamol), Roswera (rosuvastatin), and Nolpaza (pantoprazole). Our best-selling non-prescription products were Bilobil (ginkgo leaf extract), Herbion brand products, and Nalgesin (naproxen). Companion animal products constituted the major part of animal health product sales, notably Fypryst brand products, Milprazon (milbemycin/praziquantel), and Selehold (selamectin).
We ranked sixth among foreign providers of generic medicines, holding a 1.6% market share.
We were among the leading providers of:
We were the leading provider of medicines containing ciprofloxacin; duloxetine; enalapril; lansoprazole; losartan; mirtazapine; naproxen; norfloxacin; perindopril in combination with amlodipine; pramipexole; ropinirole; sulfasalazine; telmisartan; tramadol, including tramadol in combination with paracetamol; and venlafaxine.
We were the leading provider of generic medicines containing aripiprazole; ivabradine; ginkgo leaf extract; combination of perindopril and indapamide; and combination of perindopril, indapamide, and amlodipine.
Croatia ranked second regional market in terms of sales. Croatian sales totalled €41 million, up 14% on 2021. We ranked fifth among all providers of generic medicines and second among manufacturers of animal health products in the country. We recorded double-digit growth in sales of prescription pharmaceuticals and non-prescription products, while sales of animal health products declined.
In accordance with our plans, prescription pharmaceuticals generated the highest sales value, above all: Emanera (esomeprazole), Atoris (atorvastatin), Co-Perineva (perindopril/indapamide), Co-Dalneva (perindopril/amlodipine/indapamide), Roswera (rosuvastatin), Valsacombi (valsartan/hydrochlorothiazide), Helex (alprazolam), Dalneva (perindopril/amlodipine), and Doreta (tramadol/paracetamol). Of non-prescription products, Nalgesin (naproxen) and Septolete Duo (benzydamine/cetylpyridinium chloride) recorded the strongest sales. Of animal health products, Fypryst brand products and Enroxil (enrofloxacin) recorded most substantial sales.
We placed third among foreign providers of generic medicines, holding a 3.3% market share.
In 2022, we outperformed the entire market with respect to sales growth.
We were the leading provider of:
We were among the leading providers of:
We were the leading provider of medicines containing: alprazolam; atorvastatin; butamirate; ciprofloxacin; dexamethasone; diosmin; escitalopram; esomeprazole; clarithromycin; lansoprazole; losartan in combination with hydrochlorothiazide; norfloxacin; perindopril, including perindopril in combination with indapamide; rosuvastatin, including rosuvastatin in combination with ezetimibe; theophylline; tramadol in combination with paracetamol; and valsartan, including valsartan in combination with hydrochlorothiazide.
We were the leading provider of generic medicines containing: desloratadine; gliclazide; perindopril in combination with amlodipine; perindopril in combination with amlodipine and indapamide; valsartan in combination with amlodipine; valsartan in combination with amlodipine and hydrochlorothiazide; and simvastatin.
Serbia generated €32.2 million in sales and recorded 7% growth, ranking it third among regional markets. Owing to strong sales of prescription pharmaceuticals in pharmacies, rapid market share growth continued. Their share grew by 5% and accounted for 86% of total sales. Nolpaza (pantoprazole), Co-Amlessa (perindopril/amlodipine/indapamide), Roxera (rosuvastatin), Co-Prenessa (perindopril/indapamide), Atoris (atorvastatin), and Valsacor (valsartan) were key medicines from this group. Nolpaza (pantoprazole) with 6 million packs sold remained one of five medicines presenting strongest sales in Serbia. Our non-prescription product sales rose 30% on 2021 and were driven by: Nalgesin (naproxen), Bilobil (ginkgo leaf extract), and Septolete Total (benzydamine/cetylpyridinium chloride). Sales of animal health products edged down on 2021. Fypryst and Dehinel brand products, Enroxil (enrofloxacin), and Calfoset were at the forefront.
In Bulgaria, sales totalled €25.6 million, the same as in 2021. Prescription pharmaceuticals contributed the most to overall sales. Co-Valsacor (valsartan/hydrochlorothiazide), Valsacor (valsartan), Roswera (rosuvastatin), Co-Amlessa (perindopril/amlodipine/indapamide), Nolpaza (pantoprazole), and Wamlox (valsartan/amlodipine) generated strongest sales. Non-prescription product sales climbed by 24% on 2021, while animal health products advanced by 13%.
We have recorded sales growth in North Macedonia for eighteen successive years. Sales totalled €25.7 million, up a sound 5% on 2021. Krka remained the leading foreign provider of generic medicines in the country. Prescription pharmaceuticals were pivotal to overall sales, in particular: Roswera (rosuvastatin), Nolpaza (pantoprazole), Enap (enalapril), Co-Prenessa (perindopril/indapamide), Tanyz (tamsulosin), Atoris (atorvastatin), and Lorista (losartan). Our non-prescription product sales recorded a 4% year-on-year increase and were driven by: Septanazal (xylometazoline/dexpanthenol), Daleron (paracetamol), Bilobil (ginkgo leaf extract), Septolete Total (benzydamine/cetylpyridinium chloride), and Herbion brand products. Floron (florfenicol) and Fypryst brand products contributed to the 13% sales increase the most. In 2022, we started marketing several products in North Macedonia, most notably our prescription pharmaceuticals Maysiglu (sitagliptin) and Maymetsi (sitagliptin/metformin).
We recorded sales totalling €20.7 million, up 2%, in Bosnia and Herzegovina, again winning us the leadership among the foreign providers of generic medicines. Sales were driven, in particular, by prescription pharmaceuticals. Enap H and Enap HL (enalapril/hydrochlorothiazide), Roswera (rosuvastatin), Lexaurin (bromazepam), Amlewel (perindopril/amlodipine/indapamide), Nolpaza (pantoprazole), Atoris (atorvastatin), and Enap (enalapril) recorded strongest sales. At the end of the year, we launched two new prescription pharmaceuticals: Maysiglu (sitagliptin) and Maymetsi (sitagliptin/metformin). Non-prescription product sales were driven by: Nalgesin (naproxen), Septolete Total (benzydamine/cetylpyridinium chloride), Panatus (butamirate), B-Complex, and Bilobil (ginkgo leaf extract). Fypryst brand products and Rycarfa (carprofen) were key animal health products. Despite restrictions that applied to foreign manufacturers on certain reimbursement lists, we maintained a stable position and market share.
In Kosovo, we recorded a sales increase just shy of 8%, placing us among the leading providers of medicines in the country. Sales value reached €8.5 million. Prescription pharmaceuticals drove overall sales, with Lorista H (losartan/hydrochlorothiazide), Atoris (atorvastatin), and Roswera (rosuvastatin) generating the strongest sales.
Year-on-year sales went up by 6% to €3.8 million in Albania. As we expected, prescription pharmaceuticals constituted the mass of sales total. Ultop (omeprazole), Atoris (atorvastatin), and Nolpaza (pantoprazole) generated the strongest prescription pharmaceutical sales.
In Montenegro, we recorded sales total of €2.3 million, up 13%. Sales were driven in particular by prescription pharmaceuticals: Nolpaza (pantoprazole), Roswera (rosuvastatin), Lorista H and Lorista HD (losartan/hydrochlorothiazide). Our non-prescription product sales went up by 54% on 2021, driven by Septolete Total (benzydamine/cetylpyridinium chloride) and Nalgesin (naproxen). In 2022, we started marketing several products in Montenegro, most notably our prescription pharmaceutical Xerdoxo (rivaroxaban). This was our second year since we started marketing products ourselves in Greece. We extended our portfolio with antidiabetic agents and in 2022 recorded product sales totalling €1.5 million. Sales were driven by prescription pharmaceuticals, most notably by Pitavador (pitavastatin), Zalasta (olanzapine), Marixino (memantine), Rosuvador (rosuvastatin), Esolib (esomeprazole), and Co-Valsareta (valsartan/hydrochlorothiazide).
Region East Europe remained our leading sales region in 2022, with €623.4 million in sales, up 14% year on year. We recorded growth in all other regional markets, except in Ukraine. We recorded the highest absolute year-on-year sales growth in the Russian Federation, reaching over €54 million, and in Uzbekistan, up more than 8 million. We recorded the highest sales growth in relative terms in Turkmenistan.
The Russian Federation remained our key and largest individual market. Sales totalled €387 million, presenting 16% or €54.1 million year-on-year growth.
Prescription pharmaceuticals were the leading product group and accounted for 78% of total sales, up 9% or €23.7 million on 2021. Medicines that recorded strongest sales were: Lorista H and Lorista HD (losartan/hydrochlorothiazide), Lorista (losartan), Valsacor (valsartan), Nolpaza (pantoprazole), Co-Perineva (perindopril/indapamide), Co-Dalneva (perindopril/amlodipine/indapamide), Vamloset (valsartan/amlodipine), Roxera (rosuvastatin), Valsacor H and Valsacor HD (valsartan/hydrochlorothiazide), and Atoris (atorvastatin). We recorded the highest absolute growth with Co-Dalneva (perindopril/amlodipine/indapamide) and Lorista H and Lorista HD (losartan/hydrochlorothiazide). We successfully launched Roxera Plus (rosuvastatin/ezetimibe), Roxatenz-Amlo (rosuvastatin/perindopril/amlodipine), and the first two antidiabetic agents, Asiglia (sitagliptin) and Asiglia Met (sitagliptin/metformin). We were the leading provider of prescription pharmaceuticals for treating cardiovascular diseases in the Russian Federation.
Non-prescription products generated sales totalling €60 million, up 56% or €21.6 million on 2021. Septolete Total (benzydamine/cetylpyridinium chloride), products sold under the Herbion brand, and Nalgesin (naproxen) were at the forefront. We also recorded solid sales of Panatus (butamirate), Flebaven (diosmin/hesperidin), and Sleepzone (doxylamine).
Sales of animal health products were valued at €27 million, up 48%. Selafort (selamectin), Milprazon (milbemycin/praziquantel), and Enroxil (enrofloxacin) generated the strongest sales. We successfully launched Cladaxxa (amoxicillin/clavulanic acid).
We ranked third among foreign providers of generic medicines, holding a 1.8% market share. In 2022, we outperformed the entire market with respect to sales growth. We were the leading provider of prescription pharmaceuticals for treating cardiovascular diseases.
We were the leading provider of generic prescription pharmaceuticals in the pharmacy segment. We were the leading provider of:
We were among the leading providers of:
We were the leading provider of medicines containing: aripiprazole; atorvastatin; enalapril, including enalapril in combination with hydrochlorothiazide; losartan, including the losartan-based combinations with amlodipine and hydrochlorothiazide; naproxen; norfloxacin; olanzapine; pantoprazole; and valsartan, including all valsartan-based combinations with amlodipine and hydrochlorothiazide.
We were the leading provider of generic medicines containing escitalopram; esomeprazole; duloxetine; ivabradine; clopidogrel; perindopril, including all perindopril-based combinations with amlodipine and indapamide; ramipril; rosuvastatin; and telmisartan.
We ranked second among foreign providers of generic medicines in the pharmacy segment, holding a 3.4% market share.
In 2022, we outperformed the entire market with respect to sales growth.
We were the leading provider of:
We were among the leading providers of:
We were the leading provider of medicines containing: atorvastatin; dexamethasone; enalapril in combination with hydrochlorothiazide; ginkgo leaf extract; carvedilol; clarithromycin; losartan in combination with hydrochlorothiazide; naproxen; pantoprazole; perindopril in combination with indapamide; rosuvastatin; simvastatin; and valsartan.
We were the leading provider of generic medicines containing betamethasone; enalapril; perindopril; perindopril in combination with amlodipine; and perindopril in combination with amlodipine and indapamide.
In Subregion East Europe B, which includes Belarus, Mongolia, Armenia, and Azerbaijan, our product sales reached €49.1 million, up 12%. Our product sales saw two-digit growth in Mongolia, Azerbaijan, and Armenia.
Sales in Belarus totalled €21.1 million, a 5% year-on-year increase. We increased our market share by above-average growth dynamics in terms of value and volume, retaining second place among foreign providers of generic medicines.
Co-Amlessa (perindopril/amlodipine/indapamide), Nolpaza (pantoprazole), and Co-Prenessa (perindopril/indapamide) accounted for the mass of prescription pharmaceuticals, our key product group. Of non-prescription products, Septolete Total (benzydamine/cetylpyridinium chloride) and products marketed under the Herbion brand sold best. Sales of our animal health products generated €0.9 million, with Trisulfon (sulfamonomethoxine/trimethoprim) recording the strongest sales.
In Mongolia, we recorded sales totalling €14.7 million and 17% year-on-year growth, maintaining our position as the leading foreign provider of medicines in the country. Growth of prescription pharmaceuticals was driven essentially by a sharp rise in sales of cardiovascular agents and antibiotics. Nolpaza (pantoprazole), Zyllt (clopidogrel), Lorista (losartan), Amlessa (perindopril/amlodipine), and Fromilid (clarithromycin) each recorded sales exceeding €1 million. Vamloset (valsartan/amlodipine) and Emanera (esomeprazole) are our two new medicines, which recorded the most notable increases in sales. Sales of non-prescription products were driven above all by Septolete Total (benzydamine/cetylpyridinium chloride), products sold under the Herbion brand, and Nalgesin (naproxen).
In Azerbaijan, our product sales reached €7.5 million or 15% growth on 2021. By holding a 3% market share, we were the leading generic manufacturer in the country. Sales of prescription pharmaceuticals, our leading product group, climbed by 14%. Following several years of contraction, non-prescription products grew by 61%, accounting for 5% of overall sales. Sales of animal health products totalled €0.2 million, similar to the year before.
Sales in Armenia totalled €5.8 million, a 32% year-on-year increase. Despite a high sales increase, the market share declined to 3.5%, and we ranked second among providers of generic medicines. Prescription pharmaceuticals accounted for 85% of sales, generated primarily by Co-Amlessa (perindopril/amlodipine/indapamide), Atoris (atorvastatin), and Kaptopril (captopril). We recorded a 57% increase in sales of non-prescription products. Septolete Total (benzydamine/cetylpyridinium chloride) and products marketed under the Herbion brand sold best.
Product sales in Kazakhstan, Moldova, and Kyrgyzstan were valued at €38.7 million, up 19% on 2021. We recorded growth in all markets of the subregion.
Product sales in Kazakhstan totalled €20.2 million, up 27% on 2021. Prescription pharmaceuticals accounted for 66% of sales. Nolpaza (pantoprazole), Ulcavis (bismuth), Valodip (valsartan/amlodipine), and Atoris (atorvastatin) generated the major part of total sales. Sales of non-prescription products amounted to €5.9 million, up 42%. Products sold under the Herbion, Septolete, and Pikovit brands recorded the strongest sales. Animal health products generated €1 million in sales, up 14%. Trisulfon (sulfamonomethoxine/trimethoprim) and Enroxil (enrofloxacin) sold best.
(valsartan), Lorista (losartan), and Roswera (rosuvastatin) generated the major proportion of sales total. Sales of non-prescription products amounted to €3.3 million, up 38%. Septanazal (xylometazoline/dexpanthenol), Herbion brand products, and Septolete Total (benzydamine/cetylpyridinium chloride) were sales leaders in the product group. Animal health product sales generated €0.4 million, or 33% more than in 2021. We started marketing new products Dekenor (dexketoprofen) tablets, Dulsevia (duloxetine), KontrDiar (nifuroxazide), and Rivaroxia (rivaroxaban).
We generated €5.3 million in product sales and recorded a 4% increase, winning us a 3.2% market share in Kyrgyzstan, and placing us third among generic pharmaceutical providers. Prescription pharmaceuticals accounted for a major (72%) share of total sales. Lorista (losartan), Atoris (atorvastatin), and Nolpaza (pantoprazole) generated the strongest sales. Sales of our non-prescription products were driven by Septolete Total (benzydamine/cetylpyridinium chloride), and products sold under the Herbion and Pikovit brands.
Our Subregion East Europe U, composed of Uzbekistan, Georgia, Tajikistan and Turkmenistan, generated €53.3 million in product sales, up 26%. We recorded growth in all markets of the subregion.
Product sales in Uzbekistan totalled €39.5 million, up 27% on 2021. We ranked first among all providers of medicines in the country and were the leading provider of medicines for treating cardiovascular diseases. Of our prescription pharmaceuticals, Lorista (losartan), Amlessa (perindopril/amlodipine), Co-Amlessa (perindopril/amlodipine/indapamide), and Valodip (valsartan/amlodipine) generated strongest sales. Of non-prescription products, Septolete Total (benzydamine/cetylpyridinium chloride) and products marketed under the Pikovit brand sold best.
Our product sales totalled €8 million in Georgia, a 14% year-on-year increase. Our 4.5% market share ranked us fifth of all providers of medicines in the country. Prescription pharmaceuticals were key in terms of sales; above all Lorista H and Lorista HD (losartan/hydrochlorothiazide), Amlessa (perindopril/amlodipine), Co-Amlessa (perindopril/amlodipine/indapamide), and Atoris (atorvastatin). Key non-prescription products were Herbion brand products.
In Turkmenistan, product sales totalled €2.9 million, almost a 60% year-on-year increase. Nolpaza (pantoprazole) and Amlessa (perindopril/amlodipine) from our leading product group of prescription pharmaceuticals, and non-prescription products sold under the Pikovit and Herbion brands generated strongest sales.
In Tajikistan, sales totalled €2.9 million, a 30% year-on-year increase. Pikovit, a non-prescription product, remained our best-selling product in the country. Nolpaza (pantoprazole) and Co-Amlessa (perindopril/amlodipine/indapamide) were our new products that contributed to sales growth the most.
Region Central Europe product sales totalled €364.2 million, up 4%. We recorded sales growth on all regional markets except in Hungary. We recorded the highest, 16%, sales growth in terms of value and in relative terms in the Czech Republic, amounting to €7.9 million.
In Poland, the largest regional market and our key market, product sales totalled €168.2 million, up 1% on 2021. We attained a 2.1% market share and ranked third among foreign providers of generic medicines in the country. Sales were driven by prescription pharmaceuticals, most notably pharmaceuticals from the reimbursement list. Our new medicines placed on the market in the past years also contributed significantly to sales.
We focused on medicines for treating cardiovascular diseases. We managed to retain sales at the same level as in 2021 despite colossal market pressures, remaining the leading provider of this product group. Valtricom (valsartan/amlodipine/hydrochlorothiazide) was one of our most notable new medicines launched in recent years, and our first generic medicine put on the reimbursement list in 2020. Sales increased by 59% compared to 2021. Another notable agent was Co-Roswera (rosuvastatin/ezetimibe), whose sales more than doubled from 2021. Through sales of our lipid lowering agents, notably Atoris (atorvastatin) and Roswera (rosuvastatin), we maintained the position of the leading provider of medicines despite intense competition and price pressure. Owing to Doreta (tramadol/paracetamol), which accounted for over a 55% market share, we were the leading provider of this combination for pain relief. We should also mention more than a 15% increase in sales of central nervous system agents, where Dulsevia (duloxetine) was a significant contributor, whose sales increased by 34%. We retained the leading position among all providers regarding prescription pharmaceuticals from the reimbursement list for patients aged 75 years and older, as we had more medicines on the reimbursement list than any other producer.
Year-on-year sales of non-prescription medicines rose by 63%. Septolete brand products were our leading non-prescription products. Septanazal (xylometazoline/dexpanthenol) followed by more than double year-on-year sales. Animal health products generated €6.1 million in sales, up 2%. Sales of Milprazon (milbemycin/praziquantel), up 33%, and Floron (florfenicol), down 18%, remained best-selling products.
We were the leading provider of medicines containing:
We were the leading provider of generic medicines containing:
In the Czech Republic, one of our key markets, year-on-year sales increased by 16% to €55.8 million. We ranked fourth among foreign providers of generic medicines, holding a 1.4% market share. Prescription pharmaceuticals remained the leading product group, with:
Sales of non-prescription products jumped by 53%. In addition to:
Sales of animal health products increased by 14%, with products sold under the Dehinel and Fypryst brands at the forefront.
We ranked fourth among foreign providers of generic medicines, holding a 1.4% market share. In 2022, we outperformed the entire market with respect to sales growth.
We were the leading provider of medicines containing:
Hungary, another of our key markets, generated sales of €47.1 million, down 6% year on year, placing the country third among our regional markets. We ranked second among primarily foreign providers of generic medicines in the country, holding a 1.8% market share. Prescription pharmaceuticals contributed most to sales, in particular:
Septolete Extra (benzydamine/cetylpyridinium chloride), and Flebaven (diosmin) were the most important non-prescription products. Our animal health product sales saw a decrease. Milprazon (milbemycin/praziquantel) and Fypryst brand products generated the strongest sales.
We ranked second among primarily foreign providers of generic medicines, holding a 1.8% market share.
We were the leading provider of medicines containing amlodipine in combination with telmisartan; indapamide; ginkgo leaf extract; clarithromycin; clopidogrel; losartan, including losartan in combination with hydrochlorothiazide; mirtazapine; pramipexole; rasagiline; and valsartan, including valsartan in combination with hydrochlorothiazide.
We were the leading generic provider of medicines containing aripiprazole and gliclazide.
Slovakia, another key market, the fourth regional market in size, generated product sales of €40.5 million. Prescription pharmaceuticals constituted the leading product group in terms of sales, most notably Nolpaza (pantoprazole), Co-Prenessa (perindopril/indapamide), Atoris (atorvastatin), Co-Amlessa (perindopril/amlodipine/indapamide), Prenessa (perindopril), and Amlessa (perindopril/amlodipine). Year on year, sales of non-prescription products went up by 32%. Best-selling products were Nalgesin S (naproxen) and the Septolete brand products. Animal health products recorded 4% growth, and Enroxil (enrofloxacin) and Fypryst brand products recorded the strongest sales.
We ranked fourth among all providers of generic pharmaceuticals, holding a 2.5% market share.
We were the leading provider of medicines containing: atorvastatin; dexamethasone; duloxetine; escitalopram; indapamide; carvedilol; quetiapine; paliperidone; pantoprazole; pramipexole; tramadol in combination with paracetamol; venlafaxine; valsartan, including valsartan in combination with hydrochlorothiazide.
We were the leading provider of generic medicines containing gliclazide and perindopril, including all perindopril-based combinations with amlodipine and indapamide.
Sales in Lithuania totalled €25 million, up 16% on 2021. Prescription pharmaceuticals constituted the major part of overall sales, above all Atoris (atorvastatin), Nolpaza (pantoprazole), Kaptopril Krka (captopril), Roswera (rosuvastatin), Escadra (esomeprazole), and Ravalsyo (rosuvastatin/valsartan). Sales of non-prescription products jumped by 59%. Key products were Septabene (benzydamine/cetylpyridinium chloride) and Nalgesin S (naproxen). Animal health product sales totalled €1.5 million, the same as in 2021.
Providers of generic medicines in the country. As expected, prescription pharmaceuticals constituted the major part of sales, above all Sorvasta (rosuvastatin), Nolpaza (pantoprazole), Prenewel (perindopril/indapamide), Atoris (atorvastatin), and Co-Amlessa (perindopril/amlodipine/indapamide). Sales of non-prescription products generated €2.7 million, a 98% year-on-year leap. Septanazal (xylometazoline/dexpanthenol) and Septabene (benzydamine/cetylpyridinium chloride) were leading products in the segment. Animal health product sales decreased by 16%.
In Estonia, sales totalled €10.6 million, up 8% on 2021. Prescription pharmaceuticals again contributed most to total sales, above all: Roswera (rosuvastatin), Co-Prenessa (perindopril/indapamide), Atoris (atorvastatin), Co-Dalnessa (perindopril/amlodipine/indapamide), and Prenessa (perindopril). Sales of non-prescription products increased by 53% compared to 2021. Septolete Omni (benzydamine/cetylpyridinium chloride) and products sold under the Herbion brand remained the leading medicines of this product group. Animal health product sales went up by 4%.
The markets of Region West Europe are collectively regarded as one of our key markets. Regional sales amounted to €327.3 million in 2022, a 7% year-on-year increase. Germany, Scandinavia, France, and Italy led in terms of sales. Sales through subsidiaries totalled €259.8 million, an 11% year-on-year increase. We generated 21% of regional sales through unrelated parties.
The leading product group were prescription pharmaceuticals, recording sales of €280 million, up 6% on 2021, and 86% of total regional sales. Medicines containing esomeprazole, valsartan, candesartan, losartan and pantoprazole were at the forefront. We remained one of the leading sartan providers on the markets of Region West Europe.
Animal health products recorded a 7% increase, accounting for 11% of overall regional sales. Sales through related parties grew by 23% in 2022, accounting for 58% of total sales of animal health products in Region West Europe. Of animal health products, sales were driven by antiparasitic products, most notably a single-pill combination of milbemycin and praziquantel in flavoured tablets. Medicines containing flubendazole and toltrazuril sold best of our products for farm animals.
Non-prescription products grew by 64%, composing 3% of total sales. Paracetamol-based products, Septolete brand products, and diosmin-based products were best-selling non-prescription products.
We follow the activities in the region by our key market, Germany, and four subregional units: Europe – South; Europe – Continental West; Scandinavia; Europe – West. We sell our products to other European countries that do not fall into any of our categories through unrelated parties. Our sales in these markets increased by 37% to €11.5 million.
Germany remained our most important regional and key individual market. Country sales reached €88.6 million, up 10% on 2021. Sales through our subsidiaries TAD Pharma and 123 Acurae amounted to €83.7 million. Our most important products in terms of sales were medicines for the treatment of cardiovascular diseases and for the gastrointestinal tract and metabolism, followed by medicines for treating the central nervous system. We remained one of the leading sartan providers in Germany. In 2022, we successfully launched antidiabetic agents from the gliptin product family, while medicines containing candesartan, valsartan, ramipril, and pantoprazole recorded the highest sales.
We ranked eighth among foreign providers of generic medicines in the pharmacy segment, holding a 1.6% market share. In 2022, we outperformed the entire market with respect to sales growth.
We were among the leading providers of:
After the originator’s patent expired, we were the leading generic provider of gliptin-based products in the last quarter of the year, holding a 10% market in terms of volume.
Subregion Europe – South comprises Italy, Portugal, and Spain. Subregional product sales totalled €79.8 million, a 4% year-on-year increase. Products marketed under our own brand names accounted for 72% of total subregional sales.
In Italy, year-on-year sales value increased by 1% to €31.1 million. Products marketed under our own brand names accounted for 70% of sales. We primarily increased sales of non-prescription products. The leading prescription pharmaceuticals were products containing pantoprazole, clopidogrel, atorvastatin, gliclazide, and quetiapine.
In Portugal, sales totalled €27.7 million, a 20% year-on-year increase. Sales of products under our own brand names went up by 16% and accounted for 75% of sales in the country. All product groups contributed to the rise. Prescription pharmaceuticals recorded the highest absolute growth maintaining more than a 6% generic market share. Of leading prescription pharmaceuticals, we should mention the single-pill combination of rosuvastatin and ezetimibe; esomeprazole; olanzapine; and the single-pill combination of perindopril and indapamide.
In Spain, year-on-year sales in terms of value decreased by 7% to €21 million. Sales through our subsidiary decreased by 2%. However, despite the drop, it accounted for a 4 percentage points increase in market share in the country compared to the previous year. We increased sales of non-prescription products. Medicines containing donepezil, pramipexole, galantamine, memantine, and dexamethasone generated the strongest sales.
France and the Benelux countries constitute our Subregion Europe – Continental West. The subregion recorded €55.5 million in sales, a 1% year-on-year increase. The proportion of sales through our subsidiaries increased by 6%, accounting for 49%.
Sales in France totalled €34.5 million, an 8% decrease on 2021. Sales through unrelated parties accounted for 66%. The best-selling medicines contained esomeprazole, gliclazide, and a combination of milbemycin and praziquantel – an animal health product. Sales through our subsidiary Krka France declined by 11% on 2021, primarily because of a medical representative shortage resulting in inadequate presence in the field. The majority of sales was generated by prescription pharmaceuticals, most notably those containing tadalafil; sildenafil; and emtricitabine in combination with tenofovir. In the non-prescription product group, medicines containing paracetamol stood out and were the best-selling product of the subsidiary also in 2022. We should also mention strong sales of antiparasitic agents from our animal health product range for companion animals, in particular, the combination of milbemycin and praziquantel.
In the Benelux, sales amounted to €21 million, a 21% year-on-year rise. We should point out increased sales under our product brands, which advanced by 24% compared to the year before. Agents containing valsartan; losartan; emtricitabine in combination with tenofovir; and milbemycin in combination with praziquantel generated the strongest sales.
In Scandinavia, sales climbed to €53.7 million. Our product sales were strongest in Sweden, followed by Finland, Norway, Denmark, and Iceland. Sales through our subsidiaries Krka Sverige and Krka Finland increased by 6% and 19%, respectively. Overall sales through subsidiaries reached 98%. Sales were driven by medicines containing esomeprazole, losartan, venlafaxine, sertraline, and candesartan. In Norway, we retained the leading position of many medicines, above all those containing esomeprazole, pantoprazole, and losartan. We were one of the leading generic manufacturers of medicines containing venlafaxine, etoricoxib, and duloxetine in Finland; paracetamol and sertraline in Sweden; and losartan and losartan in combination with hydrochlorothiazide in Denmark. Our product sales for the first time exceeded €2 million in Iceland.
The United Kingdom, Ireland, and Austria constitute our Subregion Europe – West. The subregion recorded €38.2 million in sales, a 6% year-on-year increase. The proportion of sales through our subsidiaries increased by 36%, accounting for 95%.
Sales in the United Kingdom grew by 5% year on year, totalling €14.8 million. Best-selling products were the animal health combination of milbemycin and praziquantel, and losartan. Sales through our subsidiary Krka UK saw a 123% year-on-year increase.
In Ireland, we generated €12.7 million in product sales, outperforming 2021 sales by 9%. Sales through our subsidiary Krka Pharma Dublin were up by 10%, accounting for 87% of total sales in-country. We were one of the leading providers of generic medicines containing esomeprazole, tadalafil, venlafaxine, candesartan, valsartan, indapamide, and duloxetine.
Region Overseas Markets generated sales of €66.1 million, a 23% year-on-year rise. All four sales offices recorded sales growth. Prescription pharmaceuticals were the key driver of the increase. We primarily marketed them under our own brands, accounting for over 90% of total regional sales.
Year-on-year sales in the Middle East increased by 12% to €27 million, primarily due to increased sales to Iran, which remained our largest regional market. We recorded the highest relative growth in Saudi Arabia, where we expect high sales growth rates also in the future. We started marketing our products in Kuwait and successfully continued our sales from the launch in Bahrain at the end of 2020. In the Middle East, our best-selling products included: Asentra (sertraline), Nolpaza (pantoprazole), Valsacor (valsartan), Zyllt (clopidogrel), and Yasnal (donepezil).
Product sales in the Far East and Africa markets totalled €24.6 million, up 13% on 2021. Best-selling pharmaceuticals contained gliclazide; lansoprazole; tramadol in combination with paracetamol; doxazosin; and esomeprazole. In Vietnam, which remained our largest individual market in the area and the third-largest regional market, sales increased by 22%. We recorded the highest relative sales growth in the Philippines and Malaysia. We also started marketing our products in Australia.
Our subsidiary in China generated product sales totalling €12.8 million, more than doubling the 2021 sales figure. Strong sales of Palprostes (saw palmetto extract), the medicine made by our subsidiary TAD Pharma, continued. We also boosted sales through our joint venture, Ningbo Krka Menovo, which successfully marketed our pregabalin-based product. We launched pharmaceuticals containing losartan, atorvastatin, and rosuvastatin.
Our sales office in the Americas remained focused on the countries of Central America, where overall product sales totalled €1.6 million, a 15% year-on-year increase. Valsaden (valsartan/hydrochlorothiazide), Valsacor (valsartan), Rawel (indapamide), and Yasnal (donepezil) were our top-selling medicines.
In 2022, sales of prescription pharmaceuticals accounted for 81.4% of total sales, followed by non-prescription products at 10.7%, animal health products at 5.4%, and health resort and tourist services at 2.5%.
Krka Group sales revenue increased by 10% in 2022. Sales of prescription pharmaceuticals increased by 6.6%, non-prescription products by 32.6%, animal health products by 14.5%, and health resort and tourist services by 16.7%.
| Prescription pharmaceuticals | 81.4% |
|---|---|
| Non-prescription products | 10.7% |
| Animal health products | 5.4% |
| Health resorts and tourist services | 2.5% |
| € thousand | Krka Group | Company | 2022 | 2021 | Index 2022/21 |
|---|---|---|---|---|---|
| 1,572,949 | 1,442,566 | 109 | 1,267,805 | 1,135,800 | 112 | |
|---|---|---|---|---|---|---|
| – Prescription pharmaceuticals | 1,390,972 | 1,305,316 | 107 | 1,104,323 | 1,017,273 | 109 |
| – Non-prescription products | 181,977 | 137,250 | 133 | 163,482 | 118,527 | 138 |
| Animal health products | 93,041 | 81,257 | 115 | 88,270 | 75,694 | 117 |
| Health resorts and tourist services | 42,552 | 36,465 | 117 | |||
| Total | 1,708,542 | 1,560,288 | 110 | 1,356,075 | 1,211,494 | 112 |
| € thousand | 2022 | 2021 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 |
|---|---|---|---|---|---|---|---|---|---|---|
| Human health products | 400,342 | 386,472 | 348,348 | 437,787 | 368,010 | 380,236 |
| Prescription pharmaceuticals | 334,098 | 360,222 | 353,099 | 356,073 | 303,471 | 378,329 | 340,921 | 348,208 | 298,556 | 317,631 |
|---|---|---|---|---|---|---|---|---|---|---|
| Non-prescription products | 47,243 | 30,399 | 44,877 | 59,458 | 27,089 | 32,028 | 35,542 | 42,591 | ||
| Animal health products | 21,930 | 25,278 | 22,174 | 23,659 | 21,656 | 23,304 | 19,619 | 16,678 | ||
| Health resorts and tourist services | 8,376 | 11,042 | 12,569 | 10,565 | 4,857 | 8,483 | 13,029 | 10,096 | ||
| Total | 430,648 | 422,792 | 383,091 | 472,011 | 394,523 | 412,023 | 366,746 | 386,996 |
In 2022, sales of new products, i.e. products launched in individual markets in the past five years, accounted for 23% of Krka Group overall sales, or 1 percentage point down on the year before.
In 2022, the following new products were key in terms of absolute sales growth: Co-Roswera (rosuvastatin/ezetimibe), first marketed in 2019; Maymetsi (sitagliptin/metformin) and Lenabdor (lenalidomide), two medicines first marketed in 2022; and Valtricom (valsartan/amlodipine/hydrochlorothiazide), first marketed in 2018. One of the new products that recorded the highest sales increase in 2022 was the animal health product Selehold (selamectin), first marketed in 2019.
In 2022, we launched several new products containing new generic active ingredients and their combinations, and added new pharmaceutical forms or pack sizes to the existing range, and placed them on new markets.
Pharmaceuticals from key therapeutic areas generated healthy sales, achieving considerable market shares.
Included medicines for the treatment of cardiovascular diseases, the central nervous system, and the gastrointestinal tract.
We market our prescription pharmaceuticals under our brands in most European countries through our marketing and sales network. We have one of the most robust marketing and sales networks of all pharmaceutical companies in countries where we have a long-standing presence. We have been managing sales in most markets of Region West Europe through our network. We use it for communicating with the expert community, especially physicians and pharmacists.
| Russian Federation | Poland | Germany | Ukraine | Romania | Scandinavia | Czech Republic | Slovenia | Hungary | Slovakia |
|---|---|---|---|---|---|---|---|---|---|
| € million | € million | € million | € million | € million | € million | € million | € million | € million | € million |
| Index | 2018 | 2019 | 2020 | 2021 | 2022 | Index 2022/21 |
|---|---|---|---|---|---|---|
| Cardiovascular diseases | 56.4% | |||||
| Central nervous system | 12.4% | |||||
| Gastrointestinal tract | 11.9% | |||||
| 5.7% | ||||||
| 3.6% |
| Sartans | Combinations containing a diuretic | Combinations containing a calcium channel blocker | Combinations containing a diuretic and a calcium channel blocker | Combinations containing a statin |
|---|---|---|---|---|
| valsartan (Valsacor*) | valsartan/hydrochlorothiazide (Valsacombi*) | valsartan/amlodipine (Wamlox*) | valsartan/amlodipine/hydrochlorothiazide (Valtricom*) | valsartan/rosuvastatin (Valarox*) |
| losartan (Lorista*) | losartan/hydrochlorothiazide (Lorista H*) | losartan/amlodipine (Tenloris*) | ||
| telmisartan (Tolura*) | telmisartan/hydrochlorothiazide (Tolucombi*) |
telmisartan/amlodipine (Teldipin*)
candesartan (Karbis*)
candesartan/hydrochlorothiazide (Karbicombi*)
candesartan/amlodipine (Camlocor*)
olmesartan (Olimestra*)
olmesartan/hydrochlorothiazide (Co-Olimestra)
olmesartan/amlodipine (Olssa*)
olmesartan/amlodipine/hydrochlorothiazide (Olsitri*)
irbesartan (Ifirmasta*)
irbesartan/hydrochlorothiazide (Ifirmacombi*)
Valsartan is our most important sartan. Valsartan-based products placed second in terms of 2022 sales of all our products. We sold more than 1.3 billion valsartan-based tablets. This product group consists of five medicines: Valsacor (valsartan); Valsacombi (valsartan/hydrochlorothiazide); Wamlox (valsartan/amlodipine); Valtricom (valsartan/amlodipine/hydrochlorothiazide); and Valarox (valsartan/rosuvastatin). We are the leading generic producer of valsartan-based varieties in Regions Slovenia, Central, East, and South-East Europe, holding more than a 40% market share. Nearly two out of three patients on valsartan therapy in the said area are treated by a medicine made by Krka, adding up to 4 million patients. We are the leading producer of all valsartan products in Poland, the Russian Federation, and several other countries. Wamlox and Valtricom are the leading single-pill combinations of that kind in Regions Slovenia, Central, East, and South-East Europe, accounting for more than a 40% market share. We are one of the leading generic producers of the two single-pill combinations in Germany and the only provider of the triple combination in certain other countries. We started marketing Valtricom in Bosnia and Herzegovina in 2022, and as the first generic manufacturer in Azerbaijan and Kazakhstan. Valarox* is indicated for treating lipitension, and was the only single-pill combination of a sartan and a statin in Europe in 2022.
Losartan is our second most important sartan. Losartan-based products placed third in terms of 2022 sales of all our products. We sold more than 1.6 billion losartan-based tablets. This product group is composed of Lorista (losartan); Lorista H (losartan/hydrochlorothiazide); and Tenloris (losartan/amlodipine). Year-on-year sales of said products increased by more than 15%, placing them among our leading products in terms of absolute sales growth. We remained the leading producer of losartan-based medicines in Regions Slovenia, Central, East, and South-East Europe, holding more than a 55% market share. Lorista and losartan-based combinations were the leaders among all sartans in the Russian Federation, Uzbekistan, and certain other markets of Region East Europe. We successfully market losartan in Region West Europe. We are the leading generic manufacturer of losartan-based varieties in Germany, and the only provider of losartan/amlodipine single-pill combination. We were among the leading generic producers of losartan in Europe in 2022. We also started marketing it through our subsidiary in China.
Candesartan ranked third among our sartans as regards sales. We market Karbis (candesartan), Karbicombi (candesartan/hydrochlorothiazide), and Camlocor* (candesartan/amlodipine). We recorded the strongest sales of candesartan in Region West Europe. We were among the leading generic producers of candesartan and candesartan-based varieties in Germany. We surpassed all competitors in Poland and Lithuania.
Telmisartan-based products, which include Tolura (telmisartan); Tolucombi (telmisartan/hydrochlorothiazide); and Teldipin* (telmisartan/amlodipine), recorded highest sales increase of all our sartans. Our market share in Regions Slovenia, Central, East, and South-East Europe increased, reaching almost 20%, and we were the leading producer of all telmisartan-based products in the area. Our market share in Croatia, Slovenia, and Latvia exceeds 40%. We started marketing all three medicines in Uzbekistan in 2022.
| Angiotensin-converting enzyme (ACE) inhibitors | Combinations containing a diuretic | Combinations containing a calcium channel blocker | Combinations containing a diuretic and a calcium channel blocker | Combinations containing a statin |
|---|---|---|---|---|
| perindopril (Prenessa*) | perindopril/indapamide (Co-Prenessa*) | perindopril/amlodipine (Amlessa*) | perindopril/amlodipine/indapamide (Co-Amlessa*) | perindopril/indapamide/rosuvastatin (Roxiper*) |
| perindopril/amlodipine/rosuvastatin (Roxampex) | enalapril (Enap) | enalapril/hydrochlorothiazide (Enap-H*) | enalapril/lercanidipine (Elernap*) | ramipril (Ampril*) |
| ramipril/hydrochlorothiazide (Ampril HL*) | ramipril/amlodipine (Rameam*) | cilazapril (Cazaprol) | captopril (Blocordil*) |
comprehensive perindopril-based product range in Europe. It comprises: Prenessa (perindopril); Co-Prenessa (perindopril/indapamide); Amlessa (perindopril/amlodipine); Co-Amlessa (perindopril/amlodipine/indapamide); Roxiper (perindopril/indapamide/rosuvastatin); and Roxampex (perindopril/amlodipine/rosuvastatin). Roxiper; and Roxampex are used to treat lipitension, coexisting hypertension and hyperlipidemia. They combine three active ingredients in a single pill: two antihypertensives and a statin. We started marketing Roxiper and Roxampex* in new markets in 2022: the perindopril/indapamide/rosuvastatin single-pill combination in North Macedonia, Belarus, and Croatia, and the perindopril/indapamide/rosuvastatin single-pill combination in the Russian Federation. We remained the only provider of the two triple combinations in Europe. Our perindopril-based products accounted for an almost 15% market share, making us the leading generic producer of angiotensin-converting enzyme (ACE) inhibitors in Regions Slovenia, Central, East, and South-East Europe. Also, in 2022, we were the leading generic producer of perindopril in Europe.
Even though promotion focused primarily on our new angiotensin-converting enzyme inhibitors, Enap (enalapril) and enalapril-based combinations remained among our top ten products in terms of sales. In Regions Slovenia, Central, East, and South-East Europe, we held more than a 30% market share and were the leading producer of enalapril-based medicines. We ranked among the leading manufacturers of those products in Germany.
Angiotensin-converting enzyme inhibitors and sartans were our two most important groups of antihypertensives also in 2022. Our product portfolio also included Tenox (amlodipine), a calcium channel blocker; Rawel SR (indapamide), a diuretic; and several adrenergic receptor blockers: Coryol (carvedilol), Bloxazoc (metoprolol), Niperten (bisoprolol), Nolibeta (nebivolol); and a single-pill combination Sobycombi* (bisoprolol/amlodipine). Altogether, we supplied more than 40 antihypertensives in more than 150 strengths. In 2022, we started marketing metoprolol in Greece.
| Statins and other hypolipemics | Combinations of hypolipemics | Combinations containing a calcium channel blocker | Combinations containing other antihypertensives |
|---|---|---|---|
| rosuvastatin (Roswera*) | rosuvastatin/ezetimibe (Co-Roswera*) | perindopril/indapamide/rosuvastatin (Roxiper*) | perindopril/amlodipine/rosuvastatin (Roxampex*) |
| rosuvastatin/valsartan (Valarox*) | atorvastatin (Atoris*) | atorvastatin/amlodipine (Atordapin*) | simvastatin (Vasilip) |
| ezetimibe/simvastatin (Ezesimin*) | pitavastatin (Pitavador*) |
Roswera (rosuvastatin) was our most important statin in 2022 and also one of our top five products in terms of sales. Its sales increased by more than 15% in 2022, ranking it also in terms of absolute growth among our leading products. In Regions Slovenia, Central, East, and South-East Europe, it accounted for more than a 20% market share and remained the leading generic rosuvastatin in terms of sales value. Only our Atoris of all statins placed higher. Roswera recorded the highest absolute sales growth of all competitors in the area. We also started promoting rosuvastatin through our subsidiary in China. Our rosuvastatin range also comprises Co-Roswera (rosuvastatin/ezetimibe), which we started marketing in five new markets, including, among others, the Russian Federation, Serbia, and Azerbaijan.
Our second most important statin is Atoris (atorvastatin), one of our top ten leading products in terms of 2022 sales. It is one of our five products that in 2022 surpassed the milestone of 1 billion tablets sold. Like the year before, Atoris remained the leading statin in Regions Slovenia, Central, East, and South-East Europe. Its market share accounted for more than 20% of all statins in Slovakia, Lithuania, Latvia, and certain other markets. We market six atorvastatin strengths and are the only provider of 30 mg and 60 mg tablets in many countries. We also started marketing atorvastatin through our subsidiary in China.
In addition to statins, we also market a hypolipemic agent Ezoleta* (ezetimibe), which has a different mechanism of action. In Slovenia, Serbia, and the Baltic states, it remained the leading ezetimibe-based product in 2022. We also started marketing it in Vietnam and the United Arab Emirates then.
Statins are also incorporated in our single-pill combination medicines. This product group included two single-pill combinations of hypolipemics and ezetimibe, Co-Roswera and Ezesimin (ezetimibe/simvastatin), and several single-pill combinations for the treatment of lipitension containing agents for the treatment of hyperlipidemia and hypertension. Our lipitension medicines included: Valarox (valsartan/rosuvastatin), a single-pill combination of statin and sartan; and two single-pill combinations of statin and perindopril: Roxiper (perindopril/indapamide/rosuvastatin); and Roxampex (perindopril/amlodipine/rosuvastatin).
In addition to antihypertensives and hypolipemics, we also market Bravadin (ivabradine) indicated for treating stable angina pectoris and chronic heart failure and Apleria (eplerenone) classified as a diuretic, which is also indicated for treating chronic heart failure. Bravadin* held more than a 20% market share and was the leading generic variety of ivabradine in Regions Slovenia, Central, East, and South-East Europe, and one of the leading generic ivabradine-based medicines in Germany. We were the only provider of eplerenone in Lithuania and Estonia.
We market six advanced antidepressants from different groups.
We are the only producer in Germany that makes available the 90 mg strength of duloxetine.
Elicea (escitalopram) recorded the highest, almost 50%, sales growth of all our antidepressants in 2022. In Regions Slovenia, Central, East, and South-East Europe, its market share increased, strengthening its position as the leading generic escitalopram variety. In the said area, our antidepressants Asentra (sertraline) and Lamegom (agomelatine) were the leading generic varieties, while Mirzaten (mirtazapine) surpassed all competing products. We record strong sales also in Germany, where we are one of the leading generic producers of mirtazapine. Our antidepressant range is supplemented by Alventa (venlafaxine). In Romania, Kazakhstan, Ireland, and several other markets, it was the leading venlafaxine-containing antidepressant.
We market six atypical antipsychotics, including all five top-selling medicines from this class:
Kventiax (quetiapine) is our flagship antipsychotic. It is available in tablets and prolonged-release tablets, all together in ten strengths. In Regions Slovenia, Central, East, and South-East Europe, it held nearly a 15% market share and was the leading quetiapine. The product accounted for more than a 45% market share in Latvia, Slovenia, and Slovakia. We are the leading producer of all quetiapine prolonged-release tablets in the Russian Federation. In 2022, we started marketing Kventiax in Belarus.
Aryzalera (aripiprazole), our second most important antipsychotic, was the leading generic variety in that area, whereas our Zalasta (olanzapine) also placed among the leading generic varieties. Aryzalera and Zalasta accounted for more than a 40% market share and surpassed all competing products in the Russian Federation. We were the leading producer of all olanzapine products in Portugal. Sales of Aryzalera* increased by more than 30% in 2022, contributing the most in absolute terms to the increase in our antipsychotic sales.
Parnido (paliperidone), one of our new antipsychotics, was the only generic variety of paliperidone in tablets in Region West Europe and certain other markets. In 2022, we remained the leading generic producer of paliperidone in that pharmaceutical form in Europe. Zypsilan (ziprasidone) is also one of the leading generic varieties in Europe.
Our portfolio comprises three medicines for the treatment of Parkinson’s disease: Oprymea (pramipexole); Rolpryna SR (ropinirole); and Rasagea (rasagiline). We were one of the leading generic producers of this product group in Regions Slovenia, Central, East, and South-East Europe. We achieved more than a 15% market share in Hungary, surpassing all competitors. Our products were the leading generic varieties in Poland and Lithuania.
We recorded the highest sales of anti-Parkinson agents in Region West Europe, where we were one of the leading pramipexole producers in Germany, and the leading producer of generic varieties of pramipexole and ropinirole in Spain. Our products from this group are the leading generic varieties in Regions Slovenia, Central, East, and South-East Europe. We are the leading producer of all rasagiline products in Hungary. Rolpryna SR* was the leading ropinirole in Poland, Slovakia, Romania, and several other markets.
Four oral agents are used to treat Alzheimer’s disease; all four are also part of our product portfolio. We market Yasnal (donepezil), Marixino (memantine), Galsyo (galantamine), and Nimvastid (rivastigmine). They are available as tablets and capsules. Yasnal and Nimvastid are also available as orodispersible tablets. We were the only producer of rivastigmine in that pharmaceutical form in Regions Slovenia, Central, East, and South-East Europe. In 2022, we were among the leading generic producers of medicines for the treatment of Alzheimer’s disease in the region. We record robust sales in Slovenia, where we are the leading generic producer, and in Slovakia, where we outperformed all manufacturers.
We increased our market shares in the two markets in 2022 and were the top supplier of donepezil and galantamine. We were the leading producer of memantine in Slovenia and Lithuania.
| pantoprazole (Nolpaza*) | rabeprazole (Gelbra*) | esomeprazole (Emanera*) | omeprazole (Ultop) | lansoprazole (Lanzul*) |
|---|---|---|---|---|
Nolpaza (pantoprazole) was the leading proton pump inhibitor, accounting for more than a 12% market share in Regions Slovenia, Central, East, and South-East Europe. It was our most important proton pump inhibitor and ranked among our top five products in terms of sales. In 2022, we sold more than 1 billion tablets of Nolpaza, almost 100 million more than the year before. The medicine accounted for more than 70% of pantoprazole-based products in the Russian Federation, Lithuania, and Uzbekistan. Nolpaza was the leading pantoprazole-based product in those and many other countries. It accounted for more than one-third of all proton pump inhibitors in Slovenia, Serbia, and Slovakia, and was the leading medicine of that group in more than ten countries. Our pantoprazole was available as a non-prescription product in a few markets.
Emanera* (esomeprazole), our second most important proton pump inhibitor, ranked among our top ten products in terms of sales. It was the leading esomeprazole-based medicine in Poland, Czech Republic, Ireland, and many other countries, holding more than a 50% market share in seven markets. We record strong sales in the Region West Europe. It is the leading proton pump inhibitor in Ireland, and one of the leading generic esomeprazole varieties in Germany. Like the year before, we were among the leading generic producers of esomeprazole in Europe also in 2022. Our esomeprazole was available as a non-prescription product in a few markets.
Ulcavis* (bismuth) is indicated for the treatment of gastritis. In combination with antibiotics and proton pump inhibitors, it is indicated for the removal of Helicobacter pylori bacteria. It was the leading generic variety in Regions Slovenia, Central, East, and South-East Europe, and the only bismuth-based medicine in many markets of Regions Central and South-East Europe. It is also marketed as a non-prescription product.
naproxen (Nalgesin*)
tramadol (Tadol)
tramadol/paracetamol (Doreta, Doreta SR)
metamizole (Algominal)
pregabalin (Pragiola*)
diclofenac (Naklofen Duo*)
oxycodone/naloxone (Adolax*)
duloxetine (Dulsevia*)
dexketoprofen (Dekenor)
etoricoxib (Roticox*)
celecoxib (Aclexa*)
Doreta (tramadol/paracetamol) is our most important analgesic. We market two strengths of Doreta. In Hungary and Bulgaria, we are the only provider of the tramadol/paracetamol 75 mg/650 mg combination. We were the only producer in Europe that put prolonged-release tablets on the market in 2021, and we added to our range dispersible tablets in 2022. We were the only producer that made them available in Poland and Slovakia. We further strengthened the position of Doreta as the leading tramadol/paracetamol combination in 2022 in Regions Slovenia, Central, East, and South-East Europe. Year-on-year market share further increased, exceeding 50%. We also record strong sales in the Region West Europe, and are the leading producer of tramadol/paracetamol combination in Germany. We put Doreta on a new market, Lithuania, as the only provider of that single-pill combination.
Nalgesin (naproxen) is our second most important analgesic. It is a non-steroidal anti-inflammatory and antirheumatic medicine (NSAID). In Regions Slovenia, Central, East, and South-East Europe, Nalgesin was the leading naproxen-based medicine, accounting for over a 60% market share, which we further increased in 2022. This was the leading non-steroidal anti-inflammatory and antirheumatic medicine in Slovenia, and ranked among the leading ones in Croatia and Slovakia. We increased Nalgesin* sales by more than 35% in 2022, and the medicine ranked among our top ten products. It is also marketed as a non-prescription product.
Naklofen Duo (diclofenac) and Dekenor (dexketoprofen), and two analgesics from the coxib sub-class, Roticox (etoricoxib) and Aclexa (celecoxib), are also our non-steroidal anti-inflammatory and antirheumatic medicines. Our two coxibs are the leading generic varieties in their respective product groups in Regions Slovenia, Central, East, and South-East Europe. The market share of Roticox further increased in 2022. It ranked first among all competing products in Poland, Hungary and several other countries and was one of the leading generic varieties in Germany. In 2022, we started marketing it in Azerbaijan.
Our two agents, an antidepressant Dulsevia (duloxetine) and an antiepileptic agent Pragiola (pregabalin), are often used in neuropathic pain therapy. Pragiola was the leading generic pregabalin variety in Slovenia, Austria, Moldova, and Slovakia, while in Estonia it was the foremost of all pregabalin products, capturing a more than 50% market share. We started marketing Pragiola in new strengths in Poland and Estonia in 2022.
Algominal (metamizole) and Adolax* (oxycodone/naloxone) supplement our analgesic range.
We started marketing two new modern antidiabetic agents, Maysiglu (sitagliptin) and a single-pill combination Maymetsi (sitagliptin/metformin). Sitagliptin is a dipeptidyl peptidase-4 (DPP-4) inhibitor. These state-of-the-art agents can be used in the earliest stages of diabetes either independently or in combination with other agents. Their safety profile is excellent; they do not cause hypoglycemia, impact body weight, or increase the risk of urinary tract infections like agents from certain other product groups. We started marketing the two agents as one of the first generic producers in Europe in more than 20 countries, including Germany, the Russian Federation, Poland, and Romania.
This product group also comprises Glypvilo (vildagliptin), and Vimetso (vildagliptin/metformin), a single-pill combination added to the portfolio in 2022. We were among the first generic manufacturers to launch it in Hungary, Poland, Slovakia, Germany, Spain and several other markets. We also extended the marketing of Glypvilo* to Poland, the Czech Republic, Germany, etc.
Gliclada* (gliclazide), an antidiabetic agent from the group of sulphonylureas, retained the position of the leading generic variety of gliclazide. It was the only agent of its kind available in three strengths in 2022 in Regions Slovenia, Central, East, and South-East, where we are the leading generic producer of sulphonylureas. We also started marketing gliclazide in the United Kingdom in 2022.
Clopidogrel in several markets, and the top-performer of all clopidogrel products in Hungary and Kyrgyzstan, holding an over 40% market share. It also placed first in Uzbekistan. Zyllt* was the leading generic variety of clopidogrel in Regions Slovenia, Central, East, and South-East Europe, and its market share saw a further increase in 2022.
Eliskardia (prasugrel), which we started marketing in 2019, and Atixarso (ticagrelor), which we started marketing in 2021, are our new antiaggregant agents. Eliskardia was the leading generic variety of prasugrel in Slovenia. It ranked first among all prasugrel products in Germany and Slovakia.
Xerdoxo (rivaroxaban) is one of the most advanced anticoagulants, which we started marketing in 2020 as one of the first generic producers in Europe. In 2022, we put it on the markets of Moldova, Montenegro, and Kosovo.
Our portfolio of antibiotics comprises medicines from various classes: macrolides, β-lactam antibiotics, fluoroquinolones, and other antibiotics. Also, in 2022, like many years before, we remained the leading producer of fluoroquinolones and were one of the leading producers of macrolide antibiotics in Regions Slovenia, Central, East, and South-East Europe.
Fromilid (clarithromycin) is our most important macrolide antibiotic. It has been the leading generic variety of clarithromycin in the area. A fluoroquinolone Moloxin (moxifloxacin) has been the leading generic variety of moxifloxacin for years. Ciprinol (ciprofloxacin) and Nolicin (norfloxacin) are from the same product group and outperformed all competing products. We also market a fluoroquinolone Levalox (levofloxacin) and Azibiot (azithromycin) from the macrolide class.
Our range of β-lactam antibiotics comprises Furocef (cefuroxime) and Betaklav (amoxicillin/clavulanic acid).
We market four medicines for the treatment of HIV infection: Emtenovo (emtricitabine/tenofovir); Efavemten (efavirenz/emtricitabine/tenofovir); Darunasta (darunavir); and Atazam (atazanavir). We were one of the leading generic producers of the emtricitabine/tenofovir and efavirenz/emtricitabine/tenofovir combinations in Germany in 2022.
Our range of medicines indicated for benign prostatic hyperplasia includes Tanyz and Tanyz ERAS (tamsulosin), Dutrys (dutasteride), and Finpros (finasteride), Sidarso (silodosin), and Tadusta (dutasteride/tamsulosin). The latter two are our newest products. Vizarsin (sildenafil), Tadilecto (tadalafil), and Viavardis (vardenafil) compose our range of medicines for erectile dysfunction. Asolfena (solifenacin) and Loxentia* (duloxetine) are indicated for treating urinary incontinence.
We were one of the leading generic producers of the dutasteride/tamsulosin single-pill combination in Regions Slovenia, Central, East, and South-East Europe, and the leading generic producer of vardenafil. We were one of the leading generic producers of silodosin and dutasteride in Germany, while in Ireland and Austria we outperformed all producers of duloxetine. We ranked among the leading generic producers in individual markets also with other medicines for the treatment of diseases of the urinary tract.
Over the past several years, we started marketing 12 oncology agents, adding another four to the range in 2022: Lenabdor (lenalidomide), Abiratel (abiraterone), Sunitad* (sunitinib), and Bortezomib Krka (bortezomib).
Lenabdor* is indicated for multiple myeloma in cancer patients. In 2022, we launched it as the first generic producer in Germany, Italy, Poland and other countries, altogether 13. It was one of the leading lenalidomide products in Germany, the Russian Federation, Poland and several other countries.
Abiratel* is indicated for treating metastatic prostate cancer. We started marketing it among the first generic producers in Germany, France, Spain and ten other markets. In Germany, Finland, and Slovakia, we ranked among the leading generic providers of abiraterone.
We started marketing Sunitad* in eight countries, including Germany, France, and Slovenia. It is primarily indicated for treating metastatic renal cell carcinoma and gastrointestinal stromal tumours. It ranked among the leading generic varieties of sunitinib in Germany, Finland, and Slovenia.
Bortezomib Krka powder for solution for injection is indicated for treating patients with multiple myeloma. We made it available in Ireland, Scandinavia and the Benelux.
In 2022, we extended the marketing of oncology agents as well. We started marketing Everofin (everolimus) in Austria, France, the Czech Republic, Slovakia, and Hungary, and Dasatinib Krka (dasatinib) in Romania. We were one of the leading generic producers of dasatinib in Germany and Finland, and the only generic provider of dasatinib in Slovenia and Slovakia. Everofin* was among the leading everolimus products in the Czech Republic, Sweden, and certain other markets.
Meaxin* (imatinib), was one of the leading generic varieties in Poland, Bulgaria, etc., the leading generic variety in Slovenia, while it was the leading of all imatinib products in Bosnia and Herzegovina.
Our oncology portfolio was supplemented by Gefitinib Krka (gefitinib), Ecansya (capecitabine), Lortanda (letrozole); Escepran* (exemestane), etc.
In 2022, Krka Group sales of non-prescription products totalled €182.0 million, a 32.6% year-on-year increase. The Russian Federation, Romania, and Poland recorded the strongest sales growth. Common cold and flu incidence increased because COVID-19 pandemic restrictions were lifted, driving demand for cough and cold products, our most important group of non-prescription products.
We market non-prescription products through our marketing-and-sales network in most countries of Regions Central, East, and South-East Europe.
Septolete, Herbion, Nalgesin, and Bilobil are our most important non-prescription product brands in terms of sales.
Sales of cough and cold products rose sharply in 2022 because COVID-19 pandemic restrictions were lifted. This product group also comprises Septolete, our leading non-prescription product brand in 2022. Septolete is one of our top ten products in terms of sales. In terms of absolute sales growth, the product ranked second of all our products, and its sales increased by over 60% in 2022. Septolete Total* (benzydamine/cetylpyridinium chloride) spray and lozenges accounted for the most substantial part of the Septolete brand. We market eucalyptus, elder-and-lemon, and honey-and-lemon flavoured lozenges. It was the best-selling non-prescription product with effect on pharynx in Slovenia, Lithuania, Belarus, and Uzbekistan in 2022. We started marketing it in Iceland and made the spray available in Germany.
Herbion*, our second most important non-prescription product brand, also belongs to the cough-and-cold product group. It is one of our top 15 products in terms of sales. Its sales climbed by more than 50% year on year.
| Market | Sales (€ million) | ||||
|---|---|---|---|---|---|
| 2022 | Index 2022/21 | ||||
| Russian Federation | 125 | 51.0% | |||
| Slovenia | 100 | 18.6% | |||
| Ukraine | 75 | 10.5% | |||
| Uzbekistan | 50 | 6.8% | |||
| Romania | 40 | 6.4% | |||
| Kazakhstan | 30 | 3.1% | |||
| Poland | |||||
| Slovakia | |||||
| Belarus | |||||
| Croatia |
our leading products in terms of absolute sales growth. The brand includes herbal cough syrups for various types of cough.
Herbion Cowslip Syrup and Herbion Ivy Syrup facilitate expectoration, while Herbion Plantain Syrup relieves dry, irritating coughs. Herbion* Iceland Moss Syrup also relieves sore throat and hoarseness and relieves dry, irritating cough. Herbion Ivy Lozenges acts much like the syrup and helps expectoration. This pharmaceutical form is especially suitable for adults. The brand remained one of the three leading cough-and-cold product brands in Regions Slovenia, Central, East, and South-East Europe. It remained the leading natural syrup in 2022.
Septanazal (xylometazoline/dexpanthenol) is a nasal decongestant. It is available as spray for adults and spray for children. In Slovenia, Lithuania, and Latvia, it was one of the leading sprays in its category, and ranked first of all competing products in Moldova, holding an almost 20% market share. We started marketing Septanazal in the United Arab Emirates and Bahrain in 2022.
The naproxen-based analgesic Nalgesin* is our third most important non-prescription product brand. In 2022, it was a non-prescription brand that presented the highest absolute growth, recording an almost 50% sales increase. Like several consecutive years before, it remained the principal naproxen in Regions Slovenia, Central, East, and South-East Europe also in 2022. In Croatia and Slovenia, Nalgesin was one of the leading non-steroidal anti-inflammatory drugs available as a non-prescription product and was the leader in that product group in Slovenia. It is also marketed as a non-prescription product.
Bilobil* contains the ginkgo leaf extract, belongs to the peripheral vasodilators product group, and is indicated for slowing the progression of cognitive decline. The product ranked fourth among all our non-prescription products in terms of 2022 sales. It was one of the leading product brands containing ginkgo in Romania, Poland, and several other markets and was the leading product in Slovenia, Hungary, and certain other markets.
Pikovit and Duovit are our brands of vitamins and minerals. Duovit products are intended for adults, while Pikovit products are for children. We recorded strong sales of Pikovit, primarily in Region East Europe, where it was one of the leading brands of vitamins and minerals for children. Accounting for an over 50% market share, it placed first of all competing products in Uzbekistan and Kyrgyzstan.
Flebaven (diosmin) belongs to the group of vasoprotectives. It is used to treat chronic venous insufficiency, and acute haemorrhoidal syndrome. In certain countries, it is available on prescription as well. It recorded the highest sales growth in absolute terms in the Russian Federation and Portugal. Flebaven was one of the leading diosmin-based products in Slovenia, Estonia, and Slovakia.
Our food supplement Magnezij Krka (magnesium) is available in water-soluble granules. We supplemented the brand with a new 400 mg strength, which we started marketing in Slovenia. We made 300 mg magnesium available in Italy and Poland. In Slovene pharmacies, our brand was the foremost of all magnesium-based products, accounting for an over 40% market share.
Vitamin D3 Krka (cholecalciferol) is indicated for treating and preventing vitamin D deficiency and as adjunctive therapy in the specific treatment of osteoporosis. In 2022, we started marketing it in Armenia and Uzbekistan. Vitamin D3 Krka was the only vitamin D3 in tablets available on prescription or as a non-prescription product in Slovenia. It constituted a more than 40% market share and retained the principal position among vitamin D3-containing products in pharmacies.
In 2022, the Krka Group sales of animal health products amounted to €93.0 million, a 14.5% year-on-year climb. Sales generated in the Russian Federation, the United Kingdom, and the Benelux contributed most to sales growth.
We use our marketing and sales network to sell our animal health products in Regions Slovenia, Central, East, and South-East Europe and most markets of Region West Europe. On other markets of Regions West Europe and Overseas Markets, we market them through our partners.
The combination of milbemycin and praziquantel (Milprazon) was our best-selling animal health product in 2022. It was followed by products containing fipronil (Fypryst, Fypryst Combo), selamectin (Selehold), enrofloxacin (Enroxil), and products combining pyrantel and praziquantel (Dehinel, Dehinel* Plus).
| Market | Sales (€ million) |
|---|---|
| Russian Federation | |
| United Kingdom | |
| France | |
| Poland | |
| Benelux | |
| Germany | |
| Ukraine | |
| Czech Republic | |
| Portugal | |
| Croatia |
| Therapeutic Class | Index 2022/21 |
|---|---|
| Antiparasitics for companion animals | 55.8% |
| Antimicrobial pharmaceuticals for companion animals | 7.5% |
| Other products for companion animals | 2.8% |
| Antimicrobial pharmaceuticals for farm animals | 21.4% |
| Antiparasitics for farm animals | 5.5% |
| Other products for farm animals | 7.0% |
Animal products, which account for over 60% of animal health products. Our most flagship companion animal product is the antiparasitic Milprazon (milbemycin/praziquantel), which is also our leading animal health product in terms of sales. In 2022, we launched a new pharmaceutical form, Milprazon Chewable film-coated flavoured tablets for dogs and cats. The new natural liver flavour increases palatability, making administration easier. We started marketing the new product in Slovenia, Germany, the United Kingdom, Romania, and other markets, 15 in all. Total Milprazon* sales increased by more than 30% in 2022. In 2022, we placed it on the market in Switzerland.
Spot-on solutions account for a significant proportion of the companion animal product range. Fypryst is the most important spot-on brand and our second most important animal health product. The brand comprises Fypryst (fipronil) and Fypryst Combo (fipronil/S-methoprene). Fypryst is available in spot-on solution and cutaneous spray. We recorded the strongest sales in Region West Europe, above all in the United Kingdom.
Selehold* (selamectin) spot-on solution is another antiparasitic agent for treating companion animals. It is used to treat and prevent infestations with endo- and ectoparasites. We put it on the market in 2019, and in 2022 it was one of our top three animal health products. Its sales more than doubled and it was one of our leading animal health products in terms of absolute sales growth.
Another of our endectocides is Prinocate* (imidacloprid/moxidectin) spot-on solution. We launched it in 2020, and in 2022 its sales increased by almost 50%. It generated the strongest sales in the United Kingdom and other markets of our Region West Europe. We made it available in Portugal in 2022.
Another spot-on solution is the antiparasitic agent, Ataxxa (imidacloprid/permethrin). This combination is used to treat infestations with ectoparasites in dogs. We started marketing it in Greece and Finland in 2022, and on many markets registered a new indication, i.e. the repellent activity against ticks, mosquitoes, and sand flies. As a result, we recorded a high sales increase in 2022, up almost 70%.
Our portfolio of antiparasitic agents for companion animals includes the Dehinel brand products. This is one of our five leading animal health brands in terms of sales. We market Dehinel Plus (febantel/pyrantel/praziquantel) for small dogs and Dehinel Plus XL (febantel/pyrantel/praziquantel) for large dogs. Our range also included flavoured tablets Dehinel Plus Flavour (febantel/pyrantel/praziquantel) for dogs and Dehinel* (pyrantel/praziquantel) for cats.
An analgesic Rycarfa (carprofen), available in tablets and solution for injection, and an antimicrobial agent Otoxolan (marbofloxacin/clotrimazole/dexamethasone) ear drops also belong to our companion animal product range. Marfloxin* (marbofloxacin) is also an antimicrobial agent. Tablets are used for treating companion animals, whereas a solution for injection is used for farm animals.
We added to our companion animal portfolio a fixed-dose combination Cladaxxa (amoxicillin/clavulanic acid) from our antibiotic range in 2022. Chewable tablets in three strengths are indicated for treating bacterial infections of the skin, gums, respiratory tract, urinary tract, and intestines in cats and dogs. We made it available in the United Kingdom, the Russian Federation, Portugal, and elsewhere, in 15 countries in all. It is one of our animal health products that contributed the most to absolute sales growth in 2022.
Our leading antibiotic and one of our leading animal health products in terms of sales is Enroxil (enrofloxacin). Antibiotics Floron (florfenicol), Doxatib (doxycycline) also ranked among our ten best-selling animal health products. Our antimicrobials also included Trisulfon (sulfamonomethoxine/trimethoprim), Amatib (amoxicillin), and Tuloxxin (tulathromycin), which we also made available in the Russian Federation in 2022.
Our most important antiparasitic products for farm animals were Toltarox (toltrazuril) and Flimabend (flubendazole). The two products are among our top ten animal health products in terms of sales.
Ecocid* S ranks among our top ten animal health products. In 2022, we successfully marketed it for prevention against African swine fever.
Terme Krka generated sales revenue totalling €42.6 million in 2022, a 17% year-on-year increase. 2022 was a year of gradual economic recovery after the COVID-19 pandemic, and we recorded 321,996 overnight stays. Guests from abroad returned, accounting for a 13% share in overall sales of services. Guests from Italy and other neighbouring countries prevailed. The hotel annual occupancy rate reached 67%, a 7 percentage point year-on-year improvement. The three most notable segments in the service sales structure included diverse medical wellness programmes for individual guests, medical wellness programmes for groups of guests, and group business meetings. Sales of healthcare services generated one-third of total revenue.
and garden with a magnificent sea view. The boutique style of the refurbished Laguna meets the needs of demanding guests who seek privacy and a connection with nature.
| Prescription pharmaceuticals | APIs | Brands |
|---|---|---|
| agomelatine | Lamegom, Agomaval | |
| amlodipine | Tenox, Hipres, Alneta | |
| amlodipine/atorvastatin | Atordapin, Atorcombo | |
| amlodipine/valsartan | Wamlox, Vamloset, Valodip, Amlo-Valsacor | |
| amlodipine/valsartan/hydrochlorothiazide | Valtricom, Valsamtrio, Co-Vamloset | |
| amoxicillin/clavulanic acid | Betaklav, Hiconcil Combi | |
| aripiprazole | Aryzalera, Aripipan, Arisppa, Zylaxera | |
| atorvastatin | Atoris, Atoridor | |
| bismuth | Ulcavis, Ulcamed | |
| bisoprolol | Niperten, Sobycor, Sobyc, Zonsiloc | |
| bisoprolol/amlodipine | Sobycombi, Niperten Combi, Bisodipin | |
| candesartan | Karbis, Candecor, Canocord | |
| candesartan/amlodipine | Camlocor, Candecam | |
| candesartan/hydrochlorothiazide | Karbicombi, Cancombino, Canocombi | |
| capecitabine | Ecansya, Cansata | |
| cefuroxime | Furocef, Ricefan | |
| celecoxib | Aclexa, Dilaxa | |
| clopidogrel | Zyllt, Kardogrel | |
| diclofenac | Naklofen Duo, Naklofen | |
| donepezil | Yasnal, Yasnoro | |
| duloxetine | Dulsevia, Duloxalta, Dulovesic, Loxentia | |
| dutasteride | Dutrys, Dutascar, Dortilla | |
| dutasteride/tamsulosin | Tadusta, Dutastam, Dutamyz, Tadustix | |
| enalapril/hydrochlorothiazide | Enap-H, Enap-HL, Enap-HL 20 | |
| enalapril/lercanidipine | Elernap, Elyrno, EnaCanpin | |
| eplerenone | Apleria, Enplerasa |
| escitalopram | Elicea, Ecytara, Escitalex, Anxila |
|---|---|
| esomeprazole | Emanera, Emozul, Escadra |
| etoricoxib | Roticox, Bericox, Etoxib, Etoriax |
| exemestane | Escepran, Etadron |
| ezetimibe | Ezoleta, Ezetad |
| ezetimibe/simvastatin | Ezesimin, Vasitimb |
| finasteride | Finpros, Finascar TAD |
| galantamine | Galsya SR, Galnora |
| gliclazide | Gliclada, Glyclada |
| imatinib | Meaxin, Neopax, Meapax, Itivas, Yntam |
| irbesartan | Ifirmasta, Irabel, Firmasta, Iracor, Irbecor |
| irbesartan/hydrochlorothiazide | Ifirmacombi, Co-Irabel, Firmasta H, Firmasta HD, Irbecor Comp |
| ivabradine | Bravadin, Bixebra, Brivecor, Ivabalan |
| lacosamide | Lacosabil, Lydraso |
| lansoprazole | Lanzul, Lansoptol |
| letrozole | Lortanda, Likarda |
| levofloxacin | Levalox, Levnibiot, Leviaben, Levaxela |
| losartan | Lorista, Lavestra |
| losartan/amlodipine | Tenloris, Alortia, Lortenza, Losamlo |
| losartan/hydrochlorothiazide | Lorista H, Lavestra H, Lorista HL, Lavestra HL, Lorista HD, Lavestra HD |
| memantine | Marixino, Memando, Maruxa, Memaxa, Mentixa, Maryzola |
| metoprolol | Bloxazoc, Metazero |
| moxifloxacin | Moloxin, Moflaxa, Moxibiot, Moflaxya |
| naproxen | Nalgesin, Analgesin, Naldorex |
| olanzapine | Zalasta, Zolrix |
| olmesartan | Olimestra, Olmecor |
| olmesartan/amlodipine | Olssa, Olmeamlo, Olmira |
| olmesartan/amlodipine/hydrochlorothiazide | Olsitri, OlmeAmlo HCT |
| oxycodone/naloxone | Adolax, Oxycaloxon, Oxynador |
|---|---|
| paliperidone | Parnido, Inpalix |
| pantoprazole | Nolpaza, Appryo |
| perindopril | Prenessa, Perineva |
| perindopril/amlodipine | Amlessa, Dalnessa, Tonarssa, Dalneva |
| perindopril/amlodipine/indapamide | Co-Amlessa, Co-Dalnessa, Co-Dalneva, Amlewel, Dalnecombi, Tonanda |
| perindopril/indapamide | Co-Prenessa, Co-Perineva, Prenewel |
| perindopril/indapamide/rosuvastatin | Roxiper, Triemma |
| prasugrel | Eliskardia, Prasillt, Sigrada |
| pregabalin | Pragiola, Pregabador, Pregabio |
| quetiapine | Kventiax, Quentiax |
| rabeprazole | Gelbra, Zulbex |
| ramipril | Ampril, Amprilan |
| ramipril/amlodipine | Rameam, Ramidipin |
| ramipril/hydrochlorothiazide | Ampril HL, Amprilan HL, Ampril HD, Amprilan HD |
| rasagiline | Rasagea, Ralago, Raglysa |
| risperidone | Torendo, Rorendo |
| rivaroxaban | Xerdoxo, Rivaroxia, Rivarolto |
| ropinirole | Rolpryna SR, Ralnea SR |
| rosuvastatin | Roswera, Rosuvador, Roxera, Sorvasta |
| rosuvastatin/ezetimibe | Co-Roswera, Coroswera, Sorvasta Plus |
| sertraline | Asentra, Sertrone, Sertra TAD |
| sildenafil | Vizarsin, Sildegra |
| silodosin | Sidarso, Silbesan |
| sitagliptin | Asiglia, Maysiglu, Sitagavia |
| sitagliptin/metformin | Asiglia-Met, Maymetsi, Sitagavia-Met |
| solifenacin | Asolfena, Solifemin |
| tadalafil | Tadilecto, Tadagis |
Tanyz, Tadin
Tolura, Telmista
Telassmo, Tamloset, Teldipin
Tolucombi, Telmista H
Doreta, Tramabian
Valsacor, Valsareta
Valsacombi, Co-Valsacor, Valsacor H, Valsacor HD, Valsaden, Janartan, Co-Valsareta
Valarox, Ravalsyo
Viavardis, Vardegin
Alventa, Olwexya
Glypvilo, Vildabetes
Vildakombi, Vimetso
Zypsilan, Zypsila, Ypsila
Septolete, Septabene, Septafar
Flebaven, Fladios, Flebazol, Flabien
Emanera, Escadra, Emozul, Esozoll
Bilobil, Gingonin
Herbion Iceland Moss, Herbisland
Herbion Ivy Syrup, Herbihelix
Magnezij Krka, Magnesol
Nalgesin, Analgesin, Nalgedol, Ilgesin
Nolpaza Control, Sedipanto, Panto TAD
Septanazal, Septanasal
Enroxil, Enrox, Enroxal
Dehinel Plus, Anthelmin Plus, Wormscreen
Research and development is part of our vertically integrated business model and a key element in designing and maintaining a competitive portfolio of products. Vertical integration and connectivity of development and production know-how are essential advantages of our development strategy. As we manage the entire process, we can introduce high-quality, safe, and effective medicines in more than 70 markets on time.
We have adopted a development strategy and project approach to manage products in all life-cycle phases and for all our markets. Research-and-development results and a hands-on understanding of regional and local legislative requirements enable us to draft and manage complex registration documentation and processes efficiently and thus obtain timely product marketing authorisations. We anticipate the necessary market-specific characteristic of a product and adapt our development work and studies in the earliest phases of its development. By doing so, we can put our social responsibility first and ensure a contemporary portfolio of medicines in all Krka’s markets, including the financially disadvantaged regions or countries (low- or medium-income), in the shortest possible time. We currently market more than 40 medicines from the WHO Essential medicine list 2021 in middle- and low-income countries.
By monitoring trends and scientific advancements in various areas of expertise, particularly medicine, the pharmaceutical industry, and chemistry, we can respond quickly and appropriately to development challenges, marketing requirements, potentials, and opportunities. Increasingly complex regulatory requirements push us to introduce new, additional and improved approaches and methods in development, and conduct new studies. We also cooperate with external partners, including specialised companies, educational and R&D institutions in Slovenia and abroad, and in this way constantly enhance know-how and improve development results.
Research-and-development processes involve comprehensive and complex technological, analytical, preclinical, and clinical studies that enable us to develop complex products in innovative pharmaceutical forms. We focus on medicines comprising a combination of two or more active substances that provide double or triple therapy to our patients in a single pill. In addition to generics, we also develop novel innovative fixed-dose combinations of established active substances. The surge in new combination products led us to expand our portfolio of bilayer tablets, given their ability to combine two or more otherwise incompatible active substances.
Studies, mostly bioequivalence studies, demonstrate the safety and efficacy of all new products. All clinical trials are conducted in line with the applicable legal requirements, good practice guidelines, the Helsinki Declaration, and European Regulation 2016/679 (General Data Protection Regulation). This ensures safety for the subjects, transparency, ethics, and quality research, which is also approved by regulatory and inspection bodies.
Quality is imperative for our products from early development stages onward and is therefore an integral part of each our product from the start. We also ensure compliance of all development activities with established quality systems. We continuously enhance and upgrade all those systems, and improve standard procedures and good practices. Regulatory bodies conduct periodic audits and inspections to review compliance with the relevant standards.
develop our products in compliance with our environmental policy and the ISO 14001 standard. We ensure that technological procedures have a minimal environmental impact through measures to reduce our carbon footprint, water consumption and organic solvent volumes, and by doing so, approach circular economy objectives.
Rapid scientific and technological progress and increasing market complexity require constant investments in know-how and the latest equipment. They are essential for innovative approaches and the timely rollout of new products while maintaining high quality and competitiveness in all markets. To that end, Krka allocates 10% of its annual revenue to research and development.
By the end of 2022, our portfolio comprised 450 authorised products in a variety of pharmaceutical forms. We now have approximately 170 projects at different development stages in the pipeline. They will add to our range of medicines for the most common lifestyle diseases and include innovative combination medicines for high blood pressure, blood clotting disorders, diabetes and cancer. This will further contribute to attaining the most important United Nations’ sustainable development goals (SDG).
Krka respects the intellectual property of its competitors; therefore, innovative R&D solutions drive the development of new products. Our innovative approaches helped us to circumvent many patents and made it possible to develop new products. In addition to innovative technological approaches, we develop innovative complex dosage forms with added value for patients. In 2022, we filed 14 patent applications for new product solutions.
Also, in 2022, we invested in laboratory equipment, physico-chemical analytics know-how, and cell tests to develop in-house analytical methods related to complex products, including peptides. We expanded our know-how and competences by collaborating with various partners and verified our key development stages during expert consultations with regulatory agencies.
We continued to digitalise data collection, processing and reporting in the R&D segment. We also continued with the digitalisation of information and data obtained in project and regulatory processes. This ensures our compliance with production processes, while we can actively adapt to changes in regulatory guidelines and other requirements set by external stakeholders.
We continued with the robotisation of individual analytical and finishing processes. This improved the repeatability of performance, operation, and execution, while in the next phase, we also plan on optimising costs. Last year, we obtained regulatory approval for five analytical procedures supported by automated sample preparation.
Continuing our entry into the new strategic market of China and with a view to obtaining approvals for two new products in 2022, we employed extensive development studies on established products, properly adjusted development activities, linked our development and manufacturing operations, all based on know-how about regulatory and marketing requirements.
In 2022, we filed 14 patent applications for new technological solutions we had developed and evaluated as inventions at the global ranking level. Based on priority applications from 2021, we submitted nine international patent applications. We were granted three patents in different countries. Over 200 valid patents protect Krka’s technological solutions.
We filed 79 applications for Krka trademarks in Slovenia. We also filed 43 international and 10 national trademark applications. In total, we have registered more than 1,100 trademarks in various countries.
In 2022, marketing authorisations were granted for 11 new products, including for products containing new active substances teriflunomide and ranolazine approved in EU markets, and dabigatran etexilate and dapagliflozin in the Russian market. In the cardiovascular therapeutic area, the single-pill combination of perindopril arginine and amlodipine was granted marketing authorisation in the EU, and a combination of perindopril tert-butylamine and indapamide in China. In China, we also received approval for a medicine containing valsartan. We also added new products to the range of self-medication products.
As for APIs, we obtained a new Certificate of Suitability to the monograph of the European Pharmacopoeia (CEP) for our losartan and rivaroxaban.
In 2022, we again devoted special attention to our well-established products and their evaluation, complementing and adjusting them with the latest scientific findings and with regulatory and marketing requirements. We submitted registration documentation and received marketing authorisations for more than 28,000 regulatory variations, ensuring quality and aiding the uninterrupted supply of our products for all markets.
We obtained marketing authorisations for nine new prescription pharmaceuticals.
Aregalu/Teriflago (teriflunomide) film-coated tablets, the drug of choice for most patients with relapsing-remitting multiple sclerosis, were granted marketing authorisation via a decentralised procedure (DCP).
We added Dapaforse (dapagliflozin) film-coated tablets to our range of medicines for diabetes available on the Russian market. Dapagliflozin is a sodium-glucose cotransporter-2 inhibitor (SGLT-2) and belongs to a group of most advanced medicines indicated for treating type 2 diabetes. In addition to treating diabetes, dapagliflozin has a beneficial effect on the kidneys and the cardiovascular system.
We developed a new synthesis process for the API tapentadol that is integrated in Apeneta/Adoben/Tapendolor (tapentadol) prolonged-release tablets, all supported with new scientific studies in the field of synthesis and analytical methods. The medicine is used to relieve moderate to severe chronic pain in adults.
We added a new product, Tezulix (ranolazine) prolonged-release tablets to our portfolio of cardiovascular agents. Atherosclerosis remains a leading cause of cardiovascular morbidity and mortality. Ranolazine is used with other medications to treat patients with chronic stable angina and progressed atherosclerosis.
A marketing authorisation was granted for Dabixom (dabigatran etexilate) hard capsules. This antithrombotic agent is used for the treatment and prevention of atherothrombotic and thromboembolic events in adults with cardiovascular diseases. Dabixom was granted approval in the Russian Federation. The vertical integration model was used in this product’s manufacture. API synthesis and formulation development were the results of our know-how.
A new perindopril arginine-based product was granted a marketing authorisation. Last year, we obtained the first marketing authorisations for products based on this new perindopril salt. This year, we added to the product group a combination of perindopril arginine and amlodipine in a single pill, available on markets as Neoamlessini/Amlessa/Amlessa NEO/Aramlessa/Tonarssa NEO/Dalnessaneo/Dalnessa AS/Aperneva. The perindopril arginine product is developed and produced using our vertical integration model. It results from our know-how and is manufactured in our own facilities. The new form of active ingredient allows for adjustments to the needs of each market.
We continued obtaining new marketing authorisations for our products in China. Based on the results of additional research and bioequivalence studies consistent with the requirements of Chinese regulators, we obtained approvals to market our valsartan film-coated tablets and our perindopril tert-butylamine/indapamide fixed-dose combination tablets. Both are used to treat cardiovascular diseases.
We developed and obtained marketing authorisations for Vitamin D3 Krka (cholecalciferol) tablets in the new strength of 7,000 IU that allows the vitamin to be taken once a week.
Our medicines from important established and promising areas, particularly for antidiabetics, antithrombotics and cardiovascular agents were granted new marketing authorisations in additional markets.
We received approval to extend marketing authorisations in European markets for the medicine for the treatment of resistant hyperlipidemias, the fixed-dose combination Rosazimib/Co-Rosuvador (rosuvastatin/ezetimibe) film-coated tablets.
We obtained additional marketing authorisations via the decentralised procedure for Asigefort film-coated tablets, a fixed-dose combination of sitagliptin and metformin.
The oncology agent Imatinib Krka (imatinib) in film-coated tablets was granted additional marketing authorisations. Additional marketing authorisations were granted for the antipsychotic Arisppa (aripiprazole) tablets. We also concluded registration procedures for:
In eastern Europe, the most important approvals were those for agents from key therapeutic areas, particularly antithrombotics, antidiabetics, cardiovascular and oncology agents, and agents from other established therapeutic classes.
We obtained a new marketing authorisation for the antithrombotic agent Rivaroxia (rivaroxaban) film-coated tablets.
We extended our range of antidiabetics by marketing authorisations granted for Asiglia (sitagliptin) film-coated tablets; the single-pill combination Asiglia-Met (sitagliptin/metformin) film-coated tablets; and Glipvilo (vildagliptin) tablets.
Extended after new marketing authorisations were granted for Roxatenz-Amlo (rosuvastatin/perindopril/amlodipine), Roxera Plus/Sorvitimb (rosuvastatin/ezetimibe) film-coated tablets, and Ravalsyo (valsartan, rosuvastatin) film-coated tablets. In eastern European countries, we received marketing authorisation for Teldipin (telmisartan/amlodipine) tablets, extending our telmisartan product range. Marketing authorisations were granted for the single-pill combination Ramladio (ramipril/amlodipine) capsules. We also obtained marketing authorisation for Bisoprolol Krka (bisoprolol) film-coated tablets.
We added to our oncology range Lenalidomide Krka (lenalidomide) hard capsules indicated for treating the rare condition of multiple myeloma in cancer patients, and Erlotinib Krka (erlotinib) and Ecansya (capecitabine) film-coated tablets. In the analgesics group, we received marketing authorisations for Dexiax (dexketoprofen), Etoriax (etoricoxib) and Doreta (tramadol/paracetamol) film-coated tablets.
Medicines for the treatment of central nervous system diseases, Pregabio (pregabalin) hard capsules and Dulsevia (duloxetine) gastro-resistant capsules, were granted new marketing authorisations. We extended our range of antibiotics by obtaining approvals for Linezolid Krka (linezolid) film-coated tablets and solutions for infusion.
We added products containing new APIs from several important therapeutic categories to expand our portfolio in south-eastern Europe. Marketing authorisations were granted for Maysiglu (sitagliptin) and Maymetsi (sitagliptin/metformin), both film-coated tablets, and Gliclada (gliclazide) prolonged-release tablets, all medicines to treat diabetes.
By receiving marketing authorisation for Aryzalera (aripiprazole) tablets, we expanded our range of central nervous system agents. Marketing authorisations for single-pill combinations Valtricom (amlodipine/valsartan/hydrochlorothiazide), Roxampex (perindopril/amlodipine/rosuvastatin) and Co-Roswera/Roswera combi (rosuvastatin/ezetimibe), all film-coated tablets, extended the group of fixed-dose combinations for the treatment of cardiovascular diseases.
We received marketing authorisations for advanced antithrombotics Aboxoma (apixaban), Xerdoxo (rivaroxaban) and Atixarso (ticagrelor) film-coated tablets. Additionally, we obtained a marketing authorisation for our analgesic Apeneta (tapentadol) prolonged-release tablets. Marketing authorisations were also granted for the two oncological agents Bortezomib Krka (bortezomib) powder for solution for injection and Abiraterone Krka (abiraterone) film-coated tablets.
Marketing authorisation for dexamethasone solution for injection in Australia made it possible to enter this overseas market for the first time. Dexamethasone is a well-established medicine, now becoming increasingly important in the treatment of various autoimmune diseases. It alleviates cancer symptoms, has an antiemetic action, and has, in recent years, been included as part of COVID-19 therapies.
In the group of medicines for treating cardiovascular diseases, we received marketing authorisations for Olimestra (olmesartan) and Ifirmasta (irbesartan), both film-coated tablets. Single-pill combinations Amaloris (amlodipine/atorvastatin) film-coated tablets, Vasitimib (ezetimibe/simvastatin) tablets, Tolucombi (telmisartan/hydrochlorothiazide) tablets, Telassmo (telmisartan/amlodipine) tablets, Wamlox (amlodipine/valsartan) film-coated tablets, Ifirmacombi (irbesartan/hydrochlorothiazide) film-coated tablets, and Tenloris (losartan/amlodipine) film-coated tablets. New marketing authorisations were granted for Ezoleta (ezetimibe) tablets, Roswera (rosuvastatin) film-coated tablets, Nolpaza (pantoprazole) gastro-resistant tablets and powder for solution for injection, Emanera (esomeprazole) gastro-resistant capsules, Monkasta/Montelukast TAD (montelukast) film-coated tablets and chewable tablets, Mirzaten (mirtazapine) and Torendo Q-Tab (risperidone) orodispersible tablets, and Oprymea (pramipexole) prolonged-release tablets.
We obtained new marketing authorisations for Linezolid Krka (linezolid) film-coated tablets, Tadilas (tadalafil) film-coated tablets, and Doreta (tramadol/paracetamol) film-coated tablets. We obtained new Certificates of Suitability to the monographs of the European Pharmacopoeia (CEP) for our losartan and rivaroxaban APIs that comply with the strictest quality criteria.
We added two new products to the group of self-medication products and extended marketing authorisations for our established products to additional markets. Marketing approval was granted for Magnezij Krka 400 water-soluble granules. The new product is a food supplement containing magnesium citrate and vitamin B2. Both active substances help reduce fatigue and exhaustion, and support normal functioning of the nervous system. Magnesium citrate is also vital for proper muscle function. Our product does not contain preservatives, artificial colouring agents, flavours, sweeteners, gluten, or lactose.
We increased the availability of our well-established brands in the EU. The non-prescription product Dasselta control (desloratadine) film-coated tablets was granted a marketing authorisation in Slovenia. In selected markets we received marketing authorisations for Esozoll (esomeprazole) hard gastro-resistant capsules and Dekenor (dexketoprofen) film-coated tablets. We introduced Magnesol 300 water-soluble granules on a new market.
Relevant studies confirmed the antiviral activity of Septabene/Septolete total (benzydamine hydrochloride/cetylpyridinium chloride) lozenges against various viruses, including Coronaviruses.
An important approval in eastern European countries was that of Herbion Iceland moss syrup in the Russian Federation. It is our first marketing authorisation obtained via the Mutual Recognition Procedure (MRP) in the Eurasian Economic Union (EAEU).
We obtained marketing authorisations in new markets of eastern Europe for Vitamin D3 Krka (cholecalciferol) tablets and Pikovit syrup. Marketing authorisations were also granted for Desloratadine Krka (desloratadine) and Sleepzone (doxylamine) film-coated tablets, and two analgesics: Dexiax (dexketoprofen) film-coated tablets and Nalgesin (naproxen) 220 mg film-coated tablets.
Our herbal syrup Herbion Iceland Moss was granted marketing authorisations in new markets in south-eastern Europe.
New approvals for Septanazal (xylometazoline/dexpanthenol) nasal spray and Septolete total (benzydamine hydrochloride/cetylpyridinium chloride) oral spray and lozenges were granted in Region Overseas Markets.
In 2022, we expanded the range of our key animal health product brands and introduced them to new markets. We extended our portfolio of products for farm animals by obtaining new marketing authorisations for Tuloxxin (tulathromycin) solution for injection for cattle and pigs indicated for treating bovine respiratory disease and Catobevit (butafosfan/cyanocobalamin) solution for injection, vitamin and minerals indicated for the supportive treatment of metabolic or reproductive disorders in cattle, pigs, horses and sheep, and goats. We expanded marketing opportunities for the Doxatib (doxycycline) powder for the preparation of medicated drinking water, indicated for treating infections in pigs and broilers, and for the Floron (florfenicol) solution for injection, indicated for the treatment of respiratory tract infections in cattle and pigs.
We obtained new marketing authorisations for companion animal products in additional markets. The fixed-dose combination Cladaxxa (amoxicillin/clavulanic acid) chewable tablets in three strengths was added to our product range marketed in the EU and Region East Europe. The product is used to treat bacterial infections of the skin, gums, respiratory tract, urinary tract, and intestines in cats and dogs.
Additional marketing authorisations for Ataxxa/Damtix/Daclotrix (imidacloprid/permethrin) spot-on solution in four filling volumes were granted in the EU. The product is indicated for the preventing and treating flea, tick and sand fly infestations in dogs.
The marketing authorisation procedure was completed in Region East Europe for Enroxil (enrofloxacin) tablets for treating infections in dogs; Dehinel Plus (febantel/pyrantel/praziquantel) tablets in two strengths indicated for deworming dogs; Dehinel (pyrantel/praziquantel) film-coated tablets, a cat dewormer; Selafort (selamectin) spot-on solution for preventing and treating of infestations of certain species of inner and outer parasites in dogs and cats; and Fypryst Combo (fipronil/S-methoprene) spot-on solution for preventing and treating infestations of outer parasites in dogs and cats.
Amflee Combo (fipronil/S-methoprene) spot-on solution for preventing and treating infestations of outer parasites in dogs and Enroxil (enrofloxacin) tablets for treating infections in dogs were added to our product portfolio in Region Overseas Markets. A marketing authorisation was also granted for Floron Minidose (florfenicol) solution for injection, to treat bacterial respiratory tract infections in cattle and pigs.
The key objective of the production and supply chain is to satisfy market demand by providing sufficient quantities of quality products in a timely and cost-effective manner. To meet this objective, we rapidly respond to changing market demands, continuously improve processes to reduce lead time along the entire supply chain, and integrate supply processes in all Krka Group subsidiaries and other contractual production sites.
We comply with new product manufacturing requirements and relevant laws by promptly introducing advanced technological processes in producing active pharmaceutical ingredients and finished products. We have been increasing production capacities and improving the cost-effectiveness of processes in Slovenia and at our subsidiaries abroad. By controlling all product life cycle stages, we can adapt to market challenges more readily and effectively.
production and long-term volume growth. The COVID-19 pandemic continued to pose major challenges. However, effective work organisation, the prompt rollout of numerous preventive measures and our focus on key tasks and products helped us keep our capacities at pre-pandemic levels.
By implementing continuous process improvements, we considerably reduced the average lead time from an order to delivery and, consequently, increased our responsiveness and process flexibility throughout the supply chain. We continue to optimise inventories of raw materials and finished products.
Through the optimal use of available resources in the controlling company and subsidiaries and through cooperation with contractors, we manufactured and packed 16.8 billion tablets and other pharmaceutical forms in 2022. By achieving 4% annual growth on 2021, we continued our long-term trend and pursued our strategic objective of volume growth. Actual product manufacturing was in line with planned market needs.
Bulk and finished product numbers rose on the back of: the increasing number of products and production sites; changing market requirements; requirements for package labelling in national languages; and other demands. Careful planning and efficient production allowed us to meet diverse customer demands.
| 2018 | 2019 | 2020 | 2021 | 2022 |
|---|---|---|---|---|
| 14.3 | 15.2 | 16.5 | 16.2 | 16.8 |
We continuously improved post-registration procedures for preparing packaging materials and technological documents for production in Slovenia, at our subsidiaries abroad and contract manufacturers to ensure the timely provision of products and prompt response to sales requirements.
We continued to upgrade the IT support for process management, monitoring and control, standardisation of production processes, and optimisation of the production documentation system and process controls. In 2022, we increased the use of production documentation in e-format and improved process digitalisation.
We mainly use self-produced raw materials for our products but also buy some in the market. In 2022, the number of raw material manufacturers further decreased, primarily due to environmental and financial reasons and those related to good manufacturing practices. Raw material shortage and disruption of transport routes also affected our business. Despite the unstable situation, significant shortages of incoming materials, lower manufacturing output at our partners due to soaring energy prices, and transport issues, we provided enough raw materials for uninterrupted manufacturing of finished products at the same prices.
We improved the transparency of purchasing raw and packaging materials and upgraded the system for managing purchase agreements and coordinating raw material specifications with suppliers. Despite price hikes in the market for purchasing raw materials, we managed to maintain price increases below those announced by the suppliers. We continued introducing alternative sources of active pharmaceutical ingredients, excipients, and packaging materials of equal quality at better prices. This helped mitigate risks posed by changing circumstances that affect supply.
We improved the integration of our subsidiaries and optimised purchasing processes. We also strengthened established supplier partnerships.
A high level of vertical integration in the production process generates high added value. Vertical integration means that we produce and technologically control a large proportion of the active ingredients that we incorporate into our products at various production sites in Slovenia and abroad. Doing so reduces our dependency on external suppliers in this key supply chain segment.
We improve the cost-effectiveness of producing key intermediates and raw materials by optimising production processes at all production sites. We transferred additional technologies (products) to increase capacity at our Sinteza 1 plant in Krško in Slovenia. In turn, we considerably expanded active ingredients production capacity for our vertically integrated products. We plan to expand our capacities even further. Intensive production of active ingredients and intermediates continued at our production sites in Novo mesto and Krško in Slovenia. Production plans for 2022 were implemented.
We have been introducing additional equipment and advanced high-tech solutions into pharmaceutical production. The Notol 2 plant started operating at the end of 2015 and accounts for a significant share of production capacities. The plant utilises cutting-edge technology, a high level of automation and robotisation supported by advanced computerised systems. In 2022, upgrades to the plant included: several packaging lines; a 1,200-litre granulation line; a tablet press; a coating pan and a crusher; rendering the plant fully operational. This approach helps us reinforce our competitive edge in demanding global markets. In 2022, over 35% of total Krka Group products were manufactured at the Notol 2 plant.
We increased production at our production sites abroad. This further consolidated our position as a local manufacturer and allowed us to supply all necessary products to local markets to benefit local stakeholders.
In addition to significant investments in new equipment and technology, which provide additional production capacities, we upgraded existing machines and production lines. Upgrades and refurbishments resulted in adequate production process cost-effectiveness and augmented digitalisation. In 2022, many production sites were heavily involved in introducing production documentation in e-format, adding to automation and paperless operation.
To respond faster to rising product demand, strengthen our presence in international markets, and reduce production process risks, we continued activities related to transfers of production technologies to contractual partners and expanded the contract manufacturer network.
To raise awareness and work quality, we upgraded the Pharmaceutical Production training centre, where our employees receive training on equipment used in all key production processes. Participants learn through the experience and expertise of their mentors, selected from the best performing Krka employees, and modern methods for knowledge transfer, i.e. video lessons and training in a real-life work setting. The system proved very useful as the introduction process is faster and more efficient. At the same time, the quality of regular work improves.
We improved warehouse capacity utilisation through process optimisation, new computer system options, and inventory optimisation in conjunction with other organisational units. The new multipurpose warehouse served its purpose well.
We increased the number of environmentally friendly cargo vehicles to distribute our products and reduced average fuel consumption. We augmented temperature-controlled sea transport. Due to the challenging operating climate in 2022, we looked for new transport options and efficiently transported products by road. Road transport is an alternative to established transport routes. We effectively arranged all necessary means of transport to accommodate increasing sales volumes.
We are approved as an authorised economic operator (AEO) in customs clearance procedures. This allows for a faster flow of goods and facilitates simplified declaration authorisation procedures.
In line with legislative changes, our transit guarantee now also applies to transit operations with Ukraine.
Our long-standing relations with business partners, including suppliers of equipment, raw and base materials, contractors, and partners, are forged through mutual respect, trust, honesty, integrity, and fairness.
At all stages of the purchasing process, employees must comply with the procedures defined in internal guidelines, international agreements, and local regulations. Purchasing roles and responsibilities are precisely specified, from identifying user needs, preparing tenders, and selecting suppliers, to contracting and placing orders.
In line with our long-term objectives, sustainability goals, and main principles, we select potential suppliers by considering their:
• Number of key employees and respective qualifications; and
• Financial stability and relation to sub-suppliers or sub-contractors.
We conduct supplier audits in accordance with quality standards and Krka guidelines and consider suppliers’ prices, quality, delivery terms, reliability, regulatory compliance, compliance with our guidelines, and their social responsibility. We pursue a policy and practice of engaging local suppliers and contractors especially when – besides acceptable prices – responsiveness, flexibility and the frequent or constant involvement of suppliers and contractors in investment and service processes also matter. In 2022, spending on suppliers of goods and services in Slovenia accounted for 15% of the total Krka procurement budget.
36
35
GRI 2-6, 3-3
36
GRI 204-1, SDG 8
In 2022, the Krka Group allocated €106.0 million to investments, of that €79.5 million to the controlling company and €26.5 million to subsidiaries. We primarily invested in our production and development plants to extend facilities and upgrade technologies, quality management, and our production and distribution centres worldwide.
In Slovenia and abroad, we made multiple investments in new production equipment and upgraded systems and instruments, increasing our production capacities and enhancing product quality. Lengthy permit procedures stalled funding; hence 2022 investments were lower than planned. The slow-down in investments was partly caused by a shortage of electronic components on the global markets, extending delivery terms for certain machines and equipment.
We place a strong emphasis on the values of sustainable development and factor in environmental standards, and indirect and direct environmental impacts, as part of all investment projects. The approved equipment complies with the best available technology for environmental protection and energy efficiency, and guarantees safe and efficient operations.
In 2022, we invested primarily in finished product manufacturing, information and documentation management systems, intangible assets, and infrastructure. The investments contribute to the coordinated functioning of our research and development, production and control, which embody the essential advantages of our vertically integrated business model. Investments accounted for 6.2% of sales revenue generated in 2022.
37
GRI 2-6, SDG 9
| 2018 | 2019 | 2020 | 2021 | 2022 |
|---|---|---|---|---|
| 0 | 2 | 4 | 6 | 8 |
| 10 | 12 | 0 | 20 | 40 |
| 60 | 80 | 100 | 120 | |
| Investments in € million | % of sales value |
After more than 20 years of continued operations, we upgraded water supply systems and automated washing systems in the oldest section of the Notol plant in compliance with cGMP guidelines. We renovated the format tool washing room, where we plan to replace two worn-out washers in 2023. We invested €2.4 million in installing a thermal oxidiser for waste gas treatment. In line with our strategy, we allocated €38.2 million to replace and overhaul worn-out packaging lines over the next two years. We plan to invest €6.1 million in increasing production line capacity and €11.3 million in upgrading and increasing granulation capacity at the plant. We also plan to upgrade the logistics system. The two-year investment is estimated at €12 million.
In the Solid Dosage Products plant (Novo mesto, Slovenia), we are investing €26 million in additional capacities for compression mixture preparation and granulation in the tablet compression process, and in logistic capacities. We spent €17 million on room refurbishment and procurement of technological equipment.
We finished several investments to upgrade the capacities for research, development and analyses in our development-and-control laboratories. They totalled €8.3 million.
We increased production capacities for granulation and packaging at the Ljutomer plant (Slovenia). We have started installing personnel and material airlocks at the old section of the plant. The investment is estimated at €16.4 million.
At our Slovenian Beta Šentjernej plant, we upgraded the systems and equipment in compliance with ATEX standards and increased the production capacity for the preparation of dry granules. The investment totalled €2.4 million.
Preparation works started in April for the construction of Paviljon 3 in Novo mesto (Slovenia). The multi-purpose building will house an extension for our microbiology laboratory and additional rooms for Supply Chain Management and other organisational units. Construction of the six-storey building is estimated at €19.3 million.
We plan to build new facilities for developing and producing active pharmaceutical ingredients (APIs) in Krško, Slovenia. Based on project documentation and an IED OVD environmental impact assessment, we obtained the integral building permit for the Sinteza 2 plant and laboratories for chemical analyses (Slovene: Kemijsko-analitski center). The environmental permit has also been granted, and construction works are scheduled to start after the permit becomes final. The Sinteza 2 plant will be our second plant for API production in Krško. We plan to build other small technology and infrastructure facilities required for uninterrupted production processes. The investment estimated at €163 million pursues our strategy of vertical integration from product development to their production.
The installation of the secondary packaging line in the production and distribution centre in Jastrebarsko (Croatia) is set to increase production capacities for solid forms of animal health products. The investment into modernising the facilities and systems will allow us to set up additional facilities for Quality Management and Information Technology. The investment is estimated at €3.5 million.
At TAD Pharma (Germany), we plan to refurbish the old section of the office building to increase its energy efficiency, and revamp the conference hall and the reception room. We apportioned €1.7 million to the investment.
Project design is being drafted for a €29 million investment in a new production line for sterile solutions. We plan to extend the Sterile Products plant. The extension will house a new line, doubling production capacity for animal health products.
We completed a full-scale renovation of the accommodation block at the Laguna Hotel in Strunjan, including reconstruction of the building, refurbishment of the restaurant and reception area, and conversion of six rooms above the restaurant into apartments and the conference hall into a premium-rate accommodation block. The investment totalled €3.2 million.
At Hotel Svoboda, we are completely renovating the indoor aquatic therapy pool, the outdoor pool, and the terrace, with further plans to modernise and expand the hotel restaurant. The investment was estimated at €2.1 million.
There are plans for a €2.5 million reconstruction of the 4th and 5th floor of Hotel Vital at the Dolenjske Toplice health resort, and a €6 million renovation of the new Vitarium hotel and refurbishment of pools at the Šmarješke Toplice health resort. In 2022, the subsidiary Terme Krka earmarked €5.2 million for investments.
Our fundamental strategic orientation in terms of quality is to ensure quality by continuously improving our products, processes and services. To this end, we pursue effective quality system performance, which requires responsible management of safety, health, the environment, information security and personal data protection, data integrity, and business continuity. We maintain flexibility, react quickly to new developments, market needs and legal requirements, make investments, and roll out advanced work systems and suitable control methods to meet various client requirements.
In addition, we demonstrate the continued suitability of products, processes, and services. We systematically address quality-related risks and opportunities to achieve sustainable development. Meticulous planning, employee quality culture and continuous development pave the way for further improvements.
Various aspects of our operations are managed uniformly to achieve optimal business targets and implement services effectively. This demonstrates our attitude to quality, environment, safety and health, information security, personal data protection, and business continuity. The quality system complies with the principles of good pharmaceutical practices (GxP), requirements of ISO 9001, ISO 14001, ISO 45001, ISO/IEC 27001 and ISO 22301 standards, HACCP principles, and MDR (Medical Device Regulation). The system is implemented to ensure product quality, safety and efficacy.
Regulatory inspections, partner audits and regular certification of our systems by SIQ (Slovenian Institute of Quality and Metrology) enhance corporate credibility and strengthen customer trust. In 2022, we again upgraded the system in line with the relevant legislation and guidelines. Testament to the system’s compliance is the renewal of relevant certificates.
A centralised information and document management system supports the quality system. The system is regularly upgraded through digitalisation and other measures, ensuring data in documents and electronic records are credible, easily accessible and protected, lending transparency to our processes and products. We use this approach to conduct analyses and observe trends to ensure sound support for improving process and service efficiency and product quality.
Our data management system embodies the ethical principles of personal integrity and staff responsibility to perform their work diligently and on framework quality guidelines, operating procedures and controls integrated into IT systems and organisational processes.
Continuous improvements dictated by principles, standards, quality guidelines, and the PDCA (Plan-Do-Check-Act) approach drive progress and upgrades in all areas of the company’s operations. We systematically manage processes from purchasing, research and development, production of active ingredients and finished products, distribution, marketing.
GRI 3-3, 416-2
GXP
ISO 9001
ISO 45001
ISO/IEC 27001
HACCP
MDR
ISO 22301
and sales to monitoring customer satisfaction by employing the vertical integration business model. Customer satisfaction and sustained business success remain our key objectives going forward. Quality is a cornerstone of all our products and services throughout their life cycles and all Krka employees’ work attitude. This is our key advantage and the foundation for ensuring product quality, safety and efficacy.
The baselines for establishing and developing the quality system are defined in Krka Group’s Quality Policy, our framework document on quality, and Krka Group’s guidelines and instructions in line with legislation, good practices and standards. We monitor all related developments and systematically roll them out across our processes. We are committed to continuously upgrading the quality system to enhance process and service efficiency.
The established key processes with suitable resources help us deliver on our quality objectives. Our most important resources are our employees, who understand the importance of quality. They undergo continuous training and constantly upgrade their qualifications in quality management. This fosters a strong awareness of the importance of quality in all processes. We cooperate with experts from various fields to identify improvement opportunities, develop innovative approaches, and introduce new developments.
Processes can only be implemented correctly in buildings and facilities fit for purpose. Before a new investment project is launched or a reconstructed building is made operational, the new or reconstructed building is checked for compliance with all applicable good practice requirements. The Agency for Medicinal Products and Medical Devices of the Republic of Slovenia (JAZMP) must verify new investment projects, some major reconstructions and similar projects before being green-lighted. The vast number of projects demonstrates large-scale investment in new plants and departments, new or reconstructed rooms, new production and laboratory equipment, etc. Major projects in 2022 included establishing the packaging room in the Notol 2 plant, moving the small-scale production and increasing production capacity for bulk products in the Notol 2 plant, and setting up new laboratories for GC/TLC analysis.
We ensure suitable conditions in all processes by qualifications and validations of investment and computer projects, technological and laboratory equipment, utilities, air-conditioning systems, technological procedures, cleaning procedures, and transport conditions and by equipment calibrations and maintenance.
We maintain data integrity, especially regarding completeness, persistence, availability, legibility, accuracy, origin and descriptiveness, and ensure regulatory compliance. There is considerable emphasis on developing and deploying information systems and installing and managing laboratory and production equipment. We ensure source data integrity through validations and qualifications of equipment, change control and deviation management.
Quality is integrated at the earliest stages of research and development to produce a quality, safe and effective product. We promptly incorporate legislative amendments in our work processes to follow good practices from the product development phase onwards. When producing medicines for clinical studies, we use new tools and apply expertise to ensure the level of patient and volunteer safety required by law. We employ new technologies in product development to gain a competitive edge on the market and increase the acceptance of our medicines among users and their adherence.
We set up a system for ensuring the quality of clinical studies and the safety of patients and volunteers participating in studies. We ensure quality through: highly qualified personnel, use of adequate equipment and computer systems, risk management, careful screening of contractual partners, clinical study performance monitoring, reporting on patient safety and safety of all other participants in clinical studies, and the deviation investigation system.
The pharmacovigilance system ensures the safety of medicinal products for use in human and veterinary medicine by complying with the requirements of the EU and third countries, and the internal quality system requirements. We carefully record and medically review all adverse events claimed to be related to our medicines in all countries where we hold marketing authorisations and where our investigational medicinal products are used. We regularly analyse data and assess the benefit-risk ratio for our medicines used in therapy. We incorporate new findings important for the safe administration of medicines in product information leaflets, or take other risk mitigation steps. We present data and findings to regulatory authorities.
Our quality system for active ingredients and other incoming materials complies with good practice standards. We ensure compliance of incoming materials through registration documents, internal regulations, and chemical production procedures. Our systematic approach to quality management at our suppliers contributes to the marginal number of incoming material batches with complaints. Despite the volatile situation around the supply of incoming materials, supply reliability remained unchanged.
Organisational units involved in research and development, procurement, production, control, product distribution and quality assurance cooperate in quality assurance processes. Process, packaging and cleaning validations ensure the compliance of technological procedures applied in bulk product manufacturing, finished product packaging, and production equipment cleaning. We develop product control strategies that include quality attributes to ensure the adequate and reproducible quality of our products. We closely follow and assess the quality attributes to identify any risks. Assessments of production processes and quality attributes are the basis for preparing annual Product Quality Reviews (PQR) and reports on continuous process verification. We prepare them in compliance with the latest standards and guidelines on pharmaceutical production using advanced statistical tools and report systems.
Safety of medicinal products is a key feature, which we deliver by ensuring quality of active pharmaceutical ingredients and finished products. Regulatory bodies, particularly those in the EU, closely examine safety issues. They have recently been focusing on impurities with carcinogenic potential. They also issue guidelines and adopt measures related to certain active pharmaceutical ingredients and products. We apply all their guidelines and measures to ensure compliance of our products.
By February 2019, we had implemented measures to prevent falsified medicinal products from entering the legal supply chain. Our medicines have safety features placed on their packaging. They consist of a unique identifier (serialization), which prevents a falsified medicinal product from being dispensed, and an anti-tampering device, which allows the verification of whether the product’s packaging has been tampered with. In addition to serialization, products intended for certain countries must be shipped in labelled transport boxes and pallets (aggregation) for improved medicinal product traceability and control from the producer to the user.
In 2022, we introduced a safety feature system for medicinal products for the markets of Uzbekistan, Bahrain, and the United Arab Emirates. Kazakhstan, Kyrgyzstan, Kuwait, the Russian Federation (for animal health products and food supplements), and India (for APIs) have also announced requirements to introduce the system in the year ahead. In 2022, there were no reports about falsification or safety feature non-compliance. In 2023, we plan to start manufacturing medicinal products for the Chinese market, which also requires safety features on medicinal products, product serialization, and aggregation.
Before a material or finished product batch can be certified and/or released, a batch sample undergoes laboratory quality control. Our qualified personnel analyses samples in regular quality control using calibrated or qualified laboratory equipment and validated or verified analytical methods. This ensures the integrity and completeness of results, which we confirm through internal verification procedures. The number of samples analysed annually corresponds to the production plans, which depend on market demand. In 2022, the number of samples increased year over year.
Regarding sales and production requirements, we carefully plan and coordinate activities for the timely certification of materials and finished products. The person responsible for releasing medicinal products authorised by JAZMP certifies each batch before its market release. We also continually monitor the stability of APIs and marketed products and guarantee their compliance with the specifications throughout their shelf lives.
We measure our work performance by regularly monitoring quality indicators. Feedback from our customers and users is a critical indicator. We track and thoroughly investigate their complaints, opinions and suggestions and respond to them as soon as possible. The ratio of batches with complaints lodged over the last five years as a total of all released finished product batches is marginal, with no upward trend despite rising production volumes.
There has been no upward trend in recalls over the past five years. In 2022, we made three recalls. Even where the impact of defects on product quality, safety, and efficacy was minimal, we implemented the recalls in line with our responsibility to always deliver high-quality medicinal products to our users. Recalls are made in collaboration with marketing authorisation holders (MAHs) and competent authorities for medicinal products in individual countries. We test the effectiveness of the recall procedure in mock recalls.
We constantly monitor the quality of our products on the market, collecting and evaluating data on a medicine’s safety throughout its life cycle, before and after obtaining marketing authorisation, and during its daily use. We continuously manage risks and provide the correct information to healthcare providers and users of our medicines.
In 2022, the Krka Group passed all inspections and audits and was granted all relevant authorisations and certificates. Competent authorities for medicinal products also conduct quality control of marketed products. Every year, a certain number of products is subject to their control procedures to verify product quality. The results of all controls in 2022 were compliant and confirmed the efficiency of internal controls within the quality system.
Our information security management system (ISMS) is ISO/IEC 27001 certified and regularly reviewed by way of self-inspections, audits, and inspections. In 2022, we passed the system recertification audit, with the certificate now valid until 2025. We regularly assess risks related to information sources and employ state-of-the-art technologies to protect our systems from external attacks. Krka subsidiaries actively pursue the guidelines of the controlling company set out in the Information Security Policy and Rules on Personal Data Protection. This ensures a uniform ISMS across all Krka Group companies.
We regularly monitor certain personal data processing procedures and align them with the latest practices of supervisory bodies in Slovenia, EU member states, and non-EU states. For example, regular personal data updates in databases maintained by all Krka subsidiaries in the EU, processing geolocation data for certain employee groups, and using cookies on websites. We established and rolled out an internal General Data Protection Regulation (GDPR) compliance system. We aim to minimise the risk of violations and ensure compliance with applicable legislation and practice.
Key elements for successful implementation of the ISMS include regular and continuous employee training and awareness campaigns. In 2022, we focused on raising awareness among all Krka Group employees about phishing attacks through demonstrations of simulated attacks to mimic real-life situations.
The business continuity management system (BCMS) complies with the ISO 22301 standard. Its purpose is to prepare and implement measures and procedures for uninterrupted production and sales of our flagship products in the event of major incidents and disasters. The BCMS operates according to the adopted strategy and policy and is regularly updated. Essential parts of the BCMS include procedures for optimising our resilience to damaging incidents, incident management procedures, and business continuity plans for crisis management. The BCMS forms an integral part of comprehensive risk management at the Company. In 2022, we rolled out the system at our production subsidiaries. We regularly control it through internal audits and inspections.
In 2022, we checked the implementation of the BCMS strategy, focusing on the reliability of external resources at our remote plants. We arranged regular drills and comprehensive training courses to verify the feasibility and efficiency of planned business continuity measures in the nine critical processes identified in the Business Impact Analysis. This honed the skills of employees tasked with managing emergencies, directing damage limitation activities, and rapidly getting processes back online. We made the requisite improvements to business continuity plans or confirmed the suitability of planned measures following training.
Environmental, social and corporate governance (ESG) is a significant element of Krka’s ability for long-term value creation and effective implementation of business strategy. Sustainability governance, achievement of sustainability goals, and transparent reporting are becoming increasingly important for Krka Group stakeholders. Hence, they are gradually and comprehensively finding their way into our business strategy and operations.
We carefully plan the development of our products and all processes that affect lives and the environment in which we operate. We build the trust of our patients and partners through our know-how, professional and ethical approach, and high-quality standards in all spheres of our operations. Sustainable development principles guide us in our efforts to further improve our performance regarding nature conservation, health and safety, and to co-design our social environment.
We build the trust of stakeholders by engaging them, understanding their viewpoints and addressing their expectations, and acting on their feedback and initiatives. We consider these in our strategic directions and day-to-day business operations, geared towards creating lasting value for our stakeholders.
We determine materiality by applying an integrated approach to Krka Group risk management and strategic planning. Many experts in finance, investor relations, compliance, quality management, health and safety at work, environmental protection, public relations, human resources, marketing, sales, pharmaceutical R&D, corporate performance management, purchasing, information technology, internal audit, and electric power supply are involved in the process.
In 2021, we conducted a thorough materiality assessment for the first time to identify topics particularly relevant for Krka, its stakeholders and the wider community. An interdisciplinary sustainability project team led the process of updating the list of our main stakeholders and identifying material ESG topics relevant for the Krka Group. Their boundaries and stakeholders’ expectations were verified in in-depth discussions with 17 experts representing our stakeholder groups. This added a new dimension to the systematic consideration of their interests and allowed us to anticipate future trends and topics from the perspective of external stakeholders. We conducted analyses and identified seven groups of 33 material ESG topics. The Management Board of Krka considered and approved all the aspects mentioned above. The results are presented in the Krka Group materiality matrix below.
processes and business decisions is to heighten awareness of sustainability-related risks and opportunities that could help improve their management and the success of our business operations going forward.
The adopted ESG Policy of the Krka Group refers to the controlling company and all our subsidiaries and identifies our priority areas and management approaches. It demonstrates our commitment to applying sustainability principles and encouraging their integration in business processes across Krka’s value chain. The Policy was discussed and adopted by Krka’s Supervisory Board and Management Board and published on SEOnet of the Ljubljana Stock Exchange, ESPI of the Warsaw Stock Exchange, and Krka’s website.
Dynamics in our environment and our effort to promote sustainability culture saw us update the assessment of key environmental, social and governance impacts that Krka has on its stakeholders and the assessment of external impacts on Krka business operations. We conducted a qualitative survey among financial analysts and a quantitative survey within the Krka Group, which involved more than 1,200 employees. The assessment also considered the results of regular satisfaction surveys among end users and interactions with key stakeholders. Our sustainability project team conducted an internal assessment of external impacts in collaboration with 20 experts in our key business areas. On the initiative of the Management Board member responsible for sustainability issues, the Management Board discussed and adopted the process and the revised materiality assessment in terms of external impacts on our business operations and our impacts on key stakeholders after obtaining consent from the interdisciplinary sustainability project team.
We identified two new material topics and repositioned certain ESG perspectives due to changes in the environment. The materiality matrix presents impact assessments in terms of double materiality and the position of material ESG topics. We also considered material topics in aligning the scope and content of disclosures.
Disclosures in the Annual Report fully apply indicators of GRI (Global Reporting Initiative) Standards and certain indicators of SASB (Sustainability Accounting Standards Board) Standards for the pharmaceutical industry. They are disclosed in relevant sections of the Annual Report, as indicated in the footnotes and the GRI content index. We also identified the major sustainable development goals of the United Nations that we help to achieve through our operations. Goal 3 ‘Good health and well-being’ is the most important because our core business can contribute to it significantly.
Relevant departments prepare the contents of the comprehensive Annual Report, while Finance, Corporate Performance Management and Public Relations are responsible for preparing the Report. GRI sustainability indicators generally apply to Krka d. d., Novo mesto (also referred to as Krka or the Company). If they apply to all Krka Group subsidiaries, reference to the Group is made in the text. The indicators will be upgraded and further applied to other Group subsidiaries. The reporting period covers one calendar year. There have been no significant changes in data from the previous reports, and any specific changes and deviations are clarified in relevant sections of the Annual Report.
Any queries regarding the Annual Report can be sent to [email protected].
| Stakeholder group | Engagement modality |
|---|---|
| Patients | • Responsible, professional communication about products through various media, including social networks and digital channels |
| Health professionals, healthcare providers and direct customers | • Long-term partnerships • Annual online survey on satisfaction with core aspects of business operations (general satisfaction, satisfaction with products, sales personnel, order processing and fulfilment, and complaint procedures) |
ESG topics are divided into six groups. Their significance for stakeholders and impact on the Krka Group operations are presented on the left. Individual ESG topics most relevant for stakeholders or considered to have a major impact on Krka Group operations are presented on the right.
A responsible attitude to employees entails sound and professional employee management throughout their employment at the Krka Group. We foster a stimulating working environment in which the goals and needs of individuals may be linked to the Group’s objectives and contribute to the development of our employees’ skills, competencies and careers. Special emphasis is placed on attracting and retaining talent to ensure that the company remains successful going forward.
Krka received the 2022 MEGAAcceleration (MEGA pospešek 2022) Award, the highest recognition for remarkable achievements in intergenerational activities, cooperation and integration at workplace in the Slovenian competition recognising employers who are actively working towards intergenerational cooperation. Our project on the wide-ranging programme for promoting intergenerational cooperation made us the worthy winner of the award.
Planet GV and the Slovenian institute for knowledge management and talent development Sofos presented us with the TOP Education Management certificate acknowledging our above-average investment in employee education and development.
New hires continued, as we recruited over 1,600 new employees. We intensified educational activities and increased the number of hours of training per employee. Despite our comprehensive health and safety at work system, the workplace injury rate slightly increased, yet the injuries were mainly minor.
employees regardless of gender, race, religion, sexual orientation, nationality or other cultural differences. We build our common culture on the principles of diversity, inclusion and participation. We respect human rights as enshrined in internationally recognised principles and guidelines, including the United Nations’ Universal Declaration of Human Rights. We abide by statutory regulations and standards related to human rights wherever we operate. We are committed to high ethical standards, hence all employees receive training on Krka’s Code of Conduct. The Code defines the principles and rules for ethical conduct, good business practice and standards of conduct, which are binding for all employees of the Company and its subsidiaries. Clear rules and procedures ensure a quick response to any identified inappropriate conduct in interpersonal relations and prevent any forms of mobbing.
Highly dedicated and engaged employees shape a positive working environment and organisational climate and thus contribute to business results. We regularly gauge the organisational climate to learn how our employees feel about their work at the Company. Analyses of the findings are helpful in preparing improvements, which contribute to an efficient and creative environment. The most recent organisational climate survey showed that Krka employees have a sense of loyalty to the Company and are eager to achieve the set goals, and confirmed Krka’s corporate social responsibility and adherence to high ethical standards. We used the survey findings to make improvements, which will contribute to an even more efficient and creative environment.
| 31 Dec 2022 | Number of regular employees | 11,598 of which 54.8% in Slovenia |
|---|---|---|
| Number of agency workers | 994 (7.9% of total personnel) | |
| Employees covered by collective bargaining agreements | 62% | |
| Average age | 39.1 years | |
| Female employees | 60.1% | |
| Female employees in management positions | 50.8% | |
| Permanent employees | 88.1% (women 87.4% and men 89.2%) | |
| 2022 employment index | ||
| Index 2022/21 | Krka in Slovenia | 101 |
| Krka’s representative offices abroad | 104 | |
| Company | 101 | |
| Subsidiaries abroad | 99 | |
| Terme Krka | 108 | |
| Krka Group | 101 | |
| Agency workers | 105 |
We hired 1,639 new employees, accounting for 13% of total Krka Group headcount. Employee turnover of the Krka Group was 11%.
| Rate of new employee hires | Age groups | Under 30 years old |
|---|---|---|
| Age Group | Percentage |
|---|---|
| 30–50 years old | 47.5% |
| Over 50 years old | 48.9% |
| Gender | Percentage |
|---|---|
| Male | 38% |
| Female | 62% |
| Region | Percentage |
|---|---|
| Slovenia (including Terme Krka) | 32.3% |
| South-East Europe | 10.9% |
| East Europe | 30.5% |
| Central Europe | 18.6% |
| West Europe | 7.4% |
| Overseas Markets | 0.3% |
The Krka Group employs 200 persons holding a doctoral degree, and 389 persons holding a master’s degree or specialisation. In total, 5,944 employees, or 51% of Krka employees, have at least university-level qualifications. One of the pillars of Krka’s human resource policy is continuous work to improve educational structure. We are aware that only our experts’ high level of qualifications allows us to respond to the demands of a highly competitive market quickly and effectively.
| Education Level | Percentage |
|---|---|
| Higher professional, university degree or higher (level VII or higher) | 66.7% |
| Vocational college degree (level VI) | 2.6% |
| Secondary school education (level V) | 22.5% |
| Other (less than level V) | 8.2% |
Development requirements inform our know-how development and upskilling programmes. We identify them through our competency-based system for various work areas. Competencies are a good starting point for recruiting new employees and for designing training and skills development programmes, and evaluating them. We provide our employees with various opportunities to participate in continuing educational and training programmes in various specialised fields such as management, quality management, modern information technologies, personal growth, and foreign languages, especially English and Russian. We encourage lifelong education, which contributes to successful work, career advancement, professional development, and personal growth. We plan our educational and training programmes and implement them systematically.
We are the only company in Slovenia to offer six national vocational qualification programmes for the pharmaceutical industry. These programmes are also available to employees of pharmacies and other pharmaceutical companies. In 2022, as many as 127 Krka employees completed the training programme (level IV). In total, 1,827 certificates have been awarded since 2004: 1,685 to Krka employees and 142 to employees of other companies and pharmacies.
The Krka appraisal interview is an important tool enabling effective leadership, identification of potentials, motivation and development of employees. Managers and employees use it to exchange information and share knowledge, review goals, openly discuss the main tasks and expectations relating to work and career development, and plan future work and professional development.
Krka has more than 60 in-house trainers in its marketing and sales network. Their task is to implement Krka strategy and ensure that good practices are transferred in the market. Trainers support employees and managers at regular training sessions and individually in the field. We place a considerable emphasis on designing training programmes on people management, conflict resolution, and effective and respectful communication.
A combination of traditional forms of training and e-learning and e-testing has played a crucial role given Krka’s widely dispersed international organisation. Our employees have access to a web video library with various professional and personal development resources, including language courses, courses on time management, priority setting, project management, resilience and other topics.
| 2022 | Average training hours per employee | 44.8 |
|---|---|---|
| Proportion of revenue allocated for education | 0.40% | |
| Average cost of training per employee (€) | 588 | |
| Hours of training on human rights | 1,787 | |
| Proportion of employees trained on human rights | 28% |
We offer scholarships to those students who demonstrate interest, talent and high competence for working in the Krka Group. We systematically work with them and provide them with the opportunity to gain experience. They can learn about Krka and the company’s working processes and also prove and develop their skills and competencies during their internship. We assist students and junior researchers with their theses. Our employees run courses in undergraduate and master’s study programmes and help design their content. At the end of 2022, Krka had 68 scholarship students, 27 of whom graduated in 2022 and started working at Krka. We also work with secondary schools and faculties in providing obligatory work placements. By working with faculties and schools and offering scholarships, we can identify potential new hires and talents and manage risks related to the lack of experts on the labour market more easily.
At the Group level, we also run a programme for expert and project teams focused on communication skills, teamwork and project work, learning about and exchanging Krka’s good practices, networking between employees from various backgrounds, and employees’ personal development. New employees and employees who take on roles carrying greater responsibility learn about their tasks through mentoring. A special form of international mentorship is used to systematically develop promising employees.
All Krka Group employees are included in reward and recognition systems, which we use to systematically recognise good work and strong performance. They encourage dedication and motivation and praise excellence and loyalty.
We organise the Krka Awards Day, our traditional event where our best employees receive recognitions and awards and our most loyal employees are presented with long-service awards and special recognition awards. After two years of social restrictions, we held the 2022 Krka Award ceremony for all recipients again. We awarded the best employees and the best managers in organisational units and the Krka Group as a whole, and the best employees in the sales and marketing network, in regulatory affairs, and other fields.
In 2022, as many as 380 useful proposals and improvements were submitted, and we awarded 373 proposals put forward by 365 employees.
Useful proposals and improvements lead to continuous improvement of the quality system and hence the integrated management system, generate savings, and improve efficiency. We try to inspire our employees to resolve issues related to the economy, production, logistics, technology, engineering, administration, environment, business, information science, quality, and health and safety at work. Useful proposals that are easy to implement, and complex improvements with notable effects, matter.
We encourage inventive work through campaigns, meetings, recognitions, and awards. The most useful proposals and improvements are also recognised at the Krka Awards Day.
We upgrade our human resource information system by introducing new solutions. In 2022, we optimised and digitalised our human resource processes, mainly those that are uniform in the entire Krka Group.
Key and promising employees – 14.3% of all Krka Group employees
Potential identification
- List of potentials identified
- Key and promising employee development programmes
- HDM Academy
We ensure a safe and healthy work environment for all our employees and contractors of the Krka Group. Every new project and technological solution incorporates the latest health and safety at work and fire prevention developments.
internal audits of the system. At the Company level, we have a health and safety at work team responsible for preparing, implementing, and executing key objectives and programmes approved by the Management Board, and for reporting to the Management Board regularly. Health and safety at work workgroups operate in organisational units and production sites and comprise an authorised certified HSW officer from Safety and Health.
We continuously adopt safety measures to manage workplace risks and improve the working environment. We prepare risk assessments for all new or modified technological procedures. More information about risks related to health and safety at work is available in ‘Risk management’, subsection ‘Employee risks’.
We organise regular occupational health and safety training, which is mandatory for all employees. The training is conducted during working hours and fully compensated by Krka. Related information is published in internal media and accessible to all employees. The programme and duration of training depend on risk assessments and identification of hazards that employees are or might be exposed to. We provide training for high-risk positions at least every two years. It is delivered by internal authorised certified health and safety officers and mentors responsible for introducing employees to correct and safe working practices. We conduct written and/or oral exams to verify the level of acquired knowledge and skills. All training courses are provided in languages that employees easily understand.
Training effectiveness is assessed in regular safety audits in all organisational units and production sites. We also gather information by managing safety incidents, near misses and accidents and take all necessary corrective and preventive actions if any deviations are identified.
| 2018 | 2019 | 2020 | 2021 | 2022 |
|---|---|---|---|---|
| 5,017 | 5,407 | 5,702 | 5,715 | 5,789 |
| 1,200 | 1,114 | 973 | 952 | 1,017 |
| 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 |
Employees Agency workers, students
Workplace accident and safety incident management complies with internal instructions for handling dangerous events and workplace accidents. All employees, agency workers and student workers are informed about the instructions. Contractors at Krka receive a summary of key information from internal documents on safety.
Care for health is a common task of all employees, managers, professional services, and occupational medicine doctors. The Works Council and both trade unions are also incorporated into the system. We update our Health Promotion Plan every year and prepare it dynamically considering proposals and initiatives put forward by all employees, agency and student workers. They can also voluntarily participate in sporting activities organised by Trim Klub Krka, healthy diet campaigns, satisfaction surveys, and other activities. Certain Krka departments or external providers conduct them during or outside regular work hours.
Various activities that help reduce sick leave have been in place in the Krka Group. We adopted many sanitary, health and organisational measures to prevent the introduction and spread of viral infections and to ensure uninterrupted work processes. In 2022, the sick leave rate was 7.8%, up 0.9 percentage points on 2021. The number of sick days and childcare leave days increased. There were 5.1% of Krka employees on parental leave, which they can take in compliance with their national legislation.
At the Company, 5.0% of employees have a registered work-related disability. We adjust their workplaces to enable them to do their jobs in line with laws and regulations governing persons with disabilities. We apply various preventive measures to reduce the risk of additional health issues and disabilities. Employees who can no longer work in their current positions are included in appropriate re-qualification programmes.
In 2022, we recorded no major safety incidents that might cause a fire or a major spillage of hazardous chemicals or impact manufacturing processes.
| 2018 | 3.06 |
|---|---|
| 2019 | 3.91 |
| 2020 | 3.27 |
| 2021 | 3.41 |
| 2022 | 4.06 |
Our employees undergo regular trainings on fire protection. We conducted 65 fire drills, five of which were full scale. We worked hand-in-hand with the Novo Mesto Professional Fire and Rescue Brigade, local external fire services, and emergency medical service teams. We assessed and presented the risks and realistic emergency scenarios and their impact on the stability and continuity of our business operations. We also tested the coordination and efficiency of internal and external intervention teams and Krka first aid and medical teams. The Fire Safety Unit and the Industrial Fire Brigade mobilise if any incident occurs.
Health and safety at work systems in our subsidiaries abroad conform to relevant national laws; however, we have been gradually streamlining them by introducing internal instructions, safety documents and policy on health and safety at work.
Inclusive communication leads to regular information exchange and contributes to a productive business environment, a strong organisational culture, and employee loyalty.
The members of the Works Council, who represent all organisational units, are a link between employees and the management team. Employees can put their initiatives and questions forward through their Council representatives, the President of the Works Council, or the Worker Director. At annual worker assemblies, the President of the Management Board, Management Board members and Works Council representatives brief employees about the past year’s operating results, plans for the current year, development strategy, and other news. Employees can ask questions and give proposals.
If employees wish to speak with the President of the Management Board, they can do so by sending an e-mail or making an appointment to see him in person.
Employees learn about important corporate guidelines at internal events and in communication campaigns. The campaign Your Effectiveness Counts encourages employees to find ways to be more effective at work, and Krka’s Mobility Plan promotes the use of alternative and less environmentally harmful means of transport. We have recently added Krka’s official social media profiles to our corporate communication tools. We use them to post key information and information about our operations’ impacts on society.
Internal communication tools abroad include local issues of the Utrip (Puls) and Bilten (Bulletin) in national languages, and the KRKA Bulletin, our quarterly e-newsletter in English and Russian for our markets without local publications in national languages. We inform our employees about local and important corporate news and campaigns via e-mailings and Krkanet. Employees in key markets use intranet portals (Krkanet) in their national languages. Communication with employees in minor markets is the responsibility of directors of subsidiaries and representative offices abroad, while marketing communication managers are responsible for good communication practices in key markets.
The quality of active ingredients, excipients, incoming materials and finished products is laboratory tested using state-of-the-art and validated analytical methods, devices and procedures. All our prescription pharmaceuticals and non-prescription products are tested and compliant with all regulations. We market only products that have been approved and comply with relevant requirements and regulations.
We recognise the major importance of clinically proven medicines and monitor their efficacy, safety, and quality during registration procedures and after obtaining relevant marketing authorisations. To that end, we conduct bioequivalence studies and research in pre-authorisation phases and support post-authorisation clinical research. Clinical research with Krka medicines helps health professionals make the right and reliable decisions and contributes to treatment success and medical advances. We ensure high quality, transparency and ethics in clinical research by complying with legal regulations, good clinical practice guidelines and the Helsinki Declaration.
We differentiate two groups of users of our products: patients and other end users; and health professionals, healthcare providers and direct customers. Their trust is built on responsible and professional communication and providing all necessary information about our products in compliance with the relevant legislation.
Detailed information about Krka products is regularly published on our product, corporate, and thematic web pages in more than 30 languages. We are developing digital media and tools in certain therapeutic areas to help users alleviate symptoms. We are optimising digital communication channels and improving information to address the concerns and needs of our end users. We also create digital content to promote healthy lifestyles. All our product information complies with relevant regulations and is pre-approved by the competent regulatory body in each country, e.g. in Slovenia, the Agency for Medicinal Products and Medical Devices of the Republic of Slovenia. No incidents of non-compliance concerning product information were identified in 2022.
We implement health protection, safety, and patient and other end-user protection systems according to clear guidelines.
57
GRI 3-3
58
GRI 417-1, 417-2, SDG 3
Annual Report 2022 – Sustainable Development
incorporated into our operations. Our risk management system related to these aspects complies with legal requirements and regulations.
Our system for collecting information about risks to the health of patients or public health related to prescription pharmaceuticals and non-prescription products, scientific data evaluation, assessment of potentials for risk reduction and prevention, and the adoption of appropriate measures for the safe use of medicines comply with European legislation and regulations in other countries where Krka holds marketing authorisations.
In 2022, we launched an entirely redesigned and updated corporate website with a new section Health Matters and additional information on our products, their development and production, and quality assurance. Our eZdravje portal is an important source of diverse and credible information on health in Slovenia. We also support certain web portals set up by professional associations to provide health-related information to the general public.
Patients can only be included in clinical research after expressing their willingness to participate freely and voluntarily. Investigators inform them about the course of the research and any risks involved. Our main concerns are patient safety, privacy, and data confidentiality. We pursue them in line with Regulation (EU) 2016/679 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data. We identified no personal data breaches in 2022. We apply good pharmacovigilance practices in monitoring and reporting adverse events. Results of clinical trials are published in the EU Clinical Trials Register to support their transparency.
Over 350,000 patients from 27 countries have participated in over 150 post-authorisation clinical studies with our key medicinal products from the main therapeutic classes. In 2022, the final report was prepared for Blossom, the international randomised clinical trial with pregabalin (Pragiola) and duloxetine (Dulsevia). The trial took place in five countries and included 254 patients with painful diabetic peripheral neuropathy. The trial findings confirmed that Pragiola and Dulsevia relieve pain in patients with neuropathic pain and help reduce symptoms of insomnia and related stress. The trial also confirmed the good tolerability of both medications.
We cooperate with various institutions, health insurance companies and other bodies dealing with medicinal and other Krka products in product development, production, sales and marketing. We adhere to all prescribed procedures and ensure our documents are up to date and reliable. To this end, we carry out our procedures properly and make sure our documentation is systematically organised, transparent and complete. Advertising of pharmaceutical products is subject to strict regulation and control. No complaints about non-compliance of marketing activities with regulations and ethical standards were received in 2022.
Direct customers include distributors, pharmacy chains, hospitals, and pharmaceutical companies. We regularly conduct online satisfaction surveys among our direct customers to determine their general level of satisfaction, their satisfaction with our products, sales personnel, order processing and fulfilment, and complaint procedures. After thoroughly analysing their reviews and proposals, we set measurable goals, adopt relevant actions, and monitor their performance in the next survey.
In 2022, the response rate was 83%, down 3 percentage points compared to the year before. The satisfaction index of slightly less than 93% was the highest over the last five years. The respondents attached the highest importance to order fulfilment, actual delivery times, and complaint response times. Other aspects of customer satisfaction also recorded high average scores.
59 GRI 418-1
60 GRI 417-3
61 GRI 2-29
Indirect customers or health professionals, i.e. doctors, veterinarians and pharmacists, prescribe, recommend, and dispense our products representing a crucial link with patients and other end users. We regularly inform them about our products, enabling them to make informed decisions about which product is most suitable for their patients and users. We maintain direct contact with them in 42 countries, and provide them with information in printed or electronic form. Whenever we communicate with health professionals, we act responsibly and in accordance with the applicable laws and other regulations on business operations, including regulations on product marketing and personal data protection. We comply with good business practices, recommendations of the Medicines for Europe, and an ethical code of promotion.
We contribute to the professional development of doctors, pharmacists and veterinarians by organising and supporting professional and educational meetings where they can build on their know-how, learn about new guidelines, exchange opinions and experiences, and network. Meetings take place in various countries where Krka is present with its products. In 2022, most took place in person, and only some were organised as online or hybrid meetings.
We are aware of our operations’ impacts on the society as we are an international pharmaceutical group and one of the largest companies in Slovenia. We manage them responsibly, adhering to our strategic guidelines and policies. We foster integrated and responsible social development, scientific research, intergenerational and interdisciplinary cooperation, adherence to diversity principles, and healthy lifestyles. We support projects related to health and the quality of life. We maintain long-term partnerships through sports, culture, healthcare, science, education, and humanitarian actions.
We identify the needs of the community through regular contacts, long-term partnerships, annual meetings with our partners, and the process of preparing new sponsorship and donation contracts. Our sponsorship and donation committee examines sponsorship and donation applications. In 2022, we fulfilled all agreed obligations.
We allocated 0.20% of our sales revenue to sponsorships and donations and helped more than 450 institutions, associations, and organisations achieve their goals.As many as 17 sports and cultural clubs and associations appeared under the Krka banner, and Krka supported another seven clubs and associations as their main sponsor.Three outstanding young people were given the Talent-of-the-Year Award and 15 were recognised for their achievements.We expressed our appreciation to nine representatives of clubs, associations and institutions for their invaluable contribution.
We support projects that advance the work of various educational and scientific institutions and deepen the expertise of highly skilled professionals. They are designed to upgrade infrastructure and provide scholarships, above-standard educational activities, research work, and participation at national and international competitions.
We attract young talent in research through Krka Prizes. Over the past 52 years, we have awarded 3,044 Krka Prizes. The Krka Prizes Council has played a prominent role in making research work popular among students, pupils and mentors in educational institutions. In the call for secondary school research papers, pupils handed in 43 research papers. We awarded 19 Krka Prizes and 23 recognitions for their research work. In the call for graduate and post-graduate research papers, we received 101 research papers and awarded Krka Prizes to 31 young researchers. Five of them received Krka Grand Prizes for their exceptional research work. We also presented the students with 35 special commendations and 35 recognitions. Among the recipients, 20 held doctoral degrees. The research papers covering theoretical and experimental issues and employing a multidisciplinary approach have been constantly improving in terms of quality and variety.
In 2022, we supported major projects at ten primary schools and kindergartens and contributed to school funds for talented pupils. We also supported several end-of-year celebrations at primary and secondary schools. Our contribution to the Janez Drnovšek Scholarship Fund, named after a prominent Slovenian politician, showed our support for the Fund’s activities for the fifth consecutive time.
In 2022, the Slovene Science Foundation, our long-time sponsorship recipient, organised the 24th Slovene Science Festival, which attracted participants from around the world.
Volunteering and charity have become inseparable parts of our organisational culture. In 2012, all our charity and volunteering actions were united under Krka’s Week of Charity and Volunteering. This campaign is organised in all countries where Krka has its subsidiaries and representative offices. In 2022, 850 Krka employees volunteered to participate in the campaign.
We helped prepare more than 6,900 food packages (or 54 tonnes of food) and sort 6 tonnes of clothes at the Red Cross and the Karitas charity.
We collected almost 3.7 tonnes of pet food and helped at pet shelters and the Ljubljana ZOO.
We hosted almost 19,000 visitors and Krka employees at Krka.
We encourage our employees to volunteer through sponsorship boards of non-profit institutions and by providing supplies.
In 2022, we supported two particular institutions: the retirement home in Novo mesto and the Novo mesto Dragotin Kette Primary School for children with special needs. We have supported the retirement home since its establishment 42 years ago and the school since the establishment of the Krka sponsorship board 45 years ago.
In 2022, we presented the 11th consecutive Volunteer of the Year Award and thanked 152 Krka employees who donated blood 10 to 100 times.
64
GRI 203-1, 203-2, SDG 4, SDG 8
Providing medicines to treat modern-day common diseases is one of our top goals. We continuously complement and upgrade our product range to respond to other needs of patients and challenges in their treatment.
In line with our goal to provide affordable treatment, we donate to healthcare institutions while complying with applicable laws. Our donations towards the purchase of modern medical devices help improve the quality of health care services, diagnostics, and patient treatment.
In 2022, we donated 32 portable bedside ultrasound machines to general medical clinics in Slovenia, bringing the total to 82 bedside ultrasound machines over the last two years. The donation also included necessary training for the doctors.
We donated two incubators to the Division of Gynaecology and Obstetrics at the University Medical Centre Ljubljana. The two state-of-the-art machines ensure that premature babies and sick newborns get the best possible care and the medical staff the support they need. The donation exceeded €100,000.
We work with patient associations and societies because we appreciate their contribution to the quality of treatment and patient safety. Among others, we supported two projects: What Does Your Heart Beat for?, a campaign run by the Slovenian Hypertension Society and the Slovenian Society of Cardiology, and Neuropathic Pain, a project managed by the Slovenian Association for Pain Management.
We promote many sporting activities to foster healthy lifestyles. We primarily support local clubs and associations encouraging young people to take up recreational or professional sports. We donate funds to purchase sports equipment for schools and other organisations that promote a healthy lifestyle.
Our long-term partners in sports are Krka Athletic Club Novo mesto, Gymnastics Society Novo mesto, Golf Club Grad Otočec, Krka Bowling Society Novo mesto, Adria Mobil Cycling Club Novo mesto, Krka Equestrian Club - Grm Novo mesto, Krka Basketball Club, Krka Men’s Volleyball Club Novo mesto, Krka Men’s Handball Club, Krka Table Tennis Club Novo mesto, Krka Football Club, TPV Volley Club Novo mesto, Krka Mountaineering Society Novo mesto, Krka Rog Ski Society, Krka Chess Society Novo mesto, Krka Otočec Tennis Club, Krka Women’s Basketball Club Novo mesto, and Krka Women’s Handball Club. We have also supported recreational and sporting activities under Krka Retirees Society since its establishment in 2000.
Through our campaign Caring for Your Health – Together We Scale the Heights, we carried out maintenance work on 17 signposted Krka hiking trails and contributed to safety in the Slovenian mountains together with the Alpine Association of Slovenia.
Our sponsorship of the Ski Flying World Championship in Planica was an acknowledgement of a 37-year-long collaboration. In 2022, we arranged the fifth consecutive trip to Planica for 443 children and their mentors from five primary special education schools and four primary school branches to see the qualifications for the final competition.
We also supported the Women FIS Ski Jumping World Cup in Ljubno in Slovenia, events organised by the Slovenian Tennis Association and the Slovenian Gymnastics Federation, and the biggest amateur cycling event in Slovenia, Maraton Franja BTC City.
We strive to bring culture closer to our employees and the local and wider community.
65
SDG 3, SDG 5
66
SDG 4
In 2022, we supported the publication of 10 books and hosted four cultural evenings. We staged the Krka Cultural Evening at the church housing the Galerija Božidar Jakac gallery in Kostanjevica na Krki for the sixteenth year running.
congress centre in Ljubljana led to the performance by the Berliner Philharmoniker, one of the world’s best orchestras, at the centre.
We supported other cultural societies, institutions and events, among them the Galerija Božidar Jakac gallery in Kostanjevica na Krki, Pihalni orkester Krka brass band, the Novo mesto Anton Podbevšek Teater theatre, Festival Ljubljana cultural and art institution, the Slovenian Reading Badge Society, the Slavic Society of Dolenjska and Bela krajina, the 54th international PEN Writers’ Meeting organised by the Slovene PEN Centre, and the Cankar Award for the best original literary work. Krka’s Culture and Arts Society has a prominent role in fostering culture. To mark its 50th anniversary, the Society organised a performance by Krka’s mixed choir and Krka Octet. The Society also arranged the 43rd Dolenjska Book Fair, 18 exhibitions of works by Slovenian and foreign artists, and eight Theatre Club meetings.
Every year, we support several non-profit, non-governmental and non-political organisations and their initiatives, particularly those by the Red Cross and the Slovenian Karitas charity.
We responded to the Karitas charity’s call to help Ukraine and made two donations of our medicines worth €200,000 in March.
Krka has been the main sponsor of the People in Need Fund of the Regional Branch of the Red Cross in Novo mesto for several years. We worked with humanitarian organisations and made several substantial donations to help 15 families and individuals in need. Our executive managers also made a contribution to the Regional Branch of the Red Cross in Novo mesto to help a family with three children from Novo mesto.
Together with the local Association of Friends of Youth Mojca in Novo mesto, we gave presents to more than 2,500 children from three municipalities in the Dolenjska region and children of Krka employees.
We maintained our association with the Chain of Good People project launched by the Association of Friends of Youth Ljubljana Moste-Polje. The association helps families in need in Slovenia. We have been working together with the Novo mesto Occupational Activity Centre for several years. The centre’s residents also prepared New Year gifts for our company in 2022.
We provided material and financial support to firefighting departments. We contributed towards the purchase of new fire engines and equipment and the renovation of fire stations of 16 fire departments and firefighting agencies in Slovenia. We also helped 46 fire departments to raise funds by preparing promotional material. We sponsored the 100th anniversary of Ljubljana Fire Brigade, the largest and the oldest professional fire brigade in Slovenia, and were a silver sponsor of the Fire Fighter’s Olympic in Celje, organised by the Slovenian Firefighters Association. Our male and female firefighting teams took part in the event and achieved good results.
In July, more than 10 Krka Volunteer Industrial Fire Service members helped fight wildfires in Slovenia’s Carst region. They joined their colleagues from local volunteer fire departments. Eight professional Krka Industrial Fire Brigade firefighters also helped in this major operation.
If you need further information on social responsibility projects, please e-mail us at [email protected] or contact us by regular post at Krka, tovarna zdravil, d. d., Novo mesto, Public Relations, Šmarješka cesta 6, 8501 Novo mesto, Slovenia.
We reduce the environmental impacts of our operations by introducing sustainable solutions, something we factor in throughout the product life cycle. We are committed to climate change mitigation and adaptation, rational use of energy and all natural resources, transition to the circular economy, emission and waste reduction, and biodiversity conservation. Bearing this in mind, we ensure healthy working conditions for our employees and the wider community. We took a step forward as regards the environmental dimension of sustainability in 2022. We optimised paper use by improving patient information leaflet design, setting up a renewable energy supply, improving separate waste collection systems, reducing waste volume in collaboration with a major supplier, and setting up a returnable packaging system. We follow the guidelines on environmentally sound management in the entire Krka Group.
We maintained total water consumption at the 2021 level. Year on year, drinking water consumption increased by 4.8% to 676,482 m3, while river water consumption decreased by 3.9% to 785,135 m3. The production increased, so total wastewater generated increased by 3%, while total environmental load units (ELUs) for wastewater treatment increased by 13.5% on 2021.
The updated 2022–2026 business strategy and ESG Policy of the Krka Group adopted in 2022 restated the close connection between our operations and sustainable development. Responsible environmental management adds to our long-term competitiveness and helps us achieve strict environmental standards. Our stakeholders also rely on us to mitigate environmental risks. We set up our comprehensive environmental management system in compliance with the ISO 14001 standard 21 years ago. The Environmental Management System (EMS) certificate committed us to reducing all our environmental impacts, while the revised edition of the ISO 14001:2015 standard committed us to integrating environmental care in the earliest development stages and projects. Successful audits confirm that we have made improvements in all areas that impact the environment.
All employees are included in the comprehensive environmental management system, which is specified in the internal document Environmental Management System. Employees of Environmental Protection carry out tasks at the operational level. The system’s goals are: a high level of environmental protection throughout the product life cycle; constant reduction of our environmental impact; compliance; and attainment of the corporate environmental objectives. We manage by best available techniques (BAT) waste that remains after certain processes and must not be reused according to strict requirements applicable to the pharmaceutical industry. We apply the precautionary principle when a risk assessment, a hazard assessment for the water environment, or a feasibility study shows that a new technology, a production process or a product might lead to a significant environmental burden. If a risk of this kind is identified for a product in the pre-development phase, the product is discontinued. For products in the development phase, we consider options to replace substances posing major environmental hazards, while for products in the production phase, we adopt additional measures to mitigate their environmental impacts.
We collect and analyse data about the environmental management system using various methodological tools. We use all available resources, such as monitoring results for our processes or activities that can significantly impact the environment, findings of self-inspections and audits, internal audits, security checks, inspections, customer claims, and risk analyses. They confirm the system’s suitability and efficiency and highlight improvement opportunities.
We report environmental data to our management, national authorities (reports on monitoring environmental emissions submitted to the Slovenian Environment Agency (ARSO)), the Association of Chemical Industries at the Chamber of Commerce and Industry of Slovenia (Responsible Care Reports – RC), and other stakeholders. Environmental data in the Annual Report are compiled according to GRI Standards and will be further aligned with the Standards in the future.
The environmental policy and ESG Policy of the Krka Group also commit us to responsible environmental operations. To monitor progress, we have set measurable strategic goals. The two policies and strategic ESG goals, which include environmental goals, are available on the company website www.krka.si.
All our activities comply with the requirements of the Environmental Protection Act and implementing regulations. They serve as the basis for environmental protection permits issued for individual production sites. We regularly account for environmental taxes and submit them to competent institutions in conformity with relevant legislation. Environmental legislation composes an extensive part of the European acquis. We have collected a compendium for our own use listing 21 legal areas. They are revised at least two times each year. All lists are published on our internal web pages. The Committee for Monitoring Environmental Aspects periodically reviews compliance with legal and other requirements adopted by Krka. It appoints responsible persons and sets deadlines to implement any additional activities that could be required due to legal amendments. A management review deals with the achievement of goals and the implementation of programmes. The Committee is also responsible for the periodic identification of environmental aspects. These include the impacts of our products and services throughout their life cycles. Environmental Protection and the Committee assess identified environmental risks within environmental planning, which are also integrated into business continuity, quality, and risk assessments of contractual partners.
We control compliance with legislative and regulatory requirements and environmental protection permits by regularly monitoring air, water, soil and noise emissions and electromagnetic radiation, waste assessments, and regular checks of reservoirs, equipment, and transport of hazardous substances. We manage any deviations in compliance with internal standards and introduce necessary corrective measures.
Local community members and other stakeholders can use the complaint system to file a complaint, a question or a suggestion relating to environmental protection. Publicly available information on environmental protection and contact details are published on www.krka.si, which was completely updated and extended with ESG topics.
All our activities comply with environmental laws, permits, ISO 14001, guidelines and EU directives. We control environmental compliance by regularly monitoring all environmental impacts. We recorded five deviations from legal threshold values in wastewater discharge in 2022. We properly examined them in compliance with the environmental programme and internal standards and carried out relevant corrective measures, reducing the load units below threshold values.
The Inspectorate of the Republic of Slovenia for the Environment and Spatial Planning inspected our production plant in Krško, Slovenia. They established no irregularities or regulatory non-compliance. Based on wastewater monitoring results from Ločna (Novo mesto, Slovenia) and Ljutomer (Slovenia), the Inspectorate requested an explanation about permanent flow monitoring and the number of conducted measurements. Following our explanation, the Inspectorate issued decisions to discontinue the proceedings. We received no improvement notices after the inspection procedure and incurred no costs.
The Inspectorate issued a decision in 2019 ordering us to take wastewater treatment measures at our Krško plant. We have been implementing the remedial actions as part of our Sinteza 2 project. The project is at the final environmental protection permit stage.
We recorded a noise complaint at Dunajska 65 in Ljubljana, Slovenia. We discovered a generator set, which was in operation occasionally, to be the noise source. We installed silencers, reducing noise to acceptable levels. We informed the petitioner accordingly.
We received a decision about a change in the environmental protection permit for our Šentjernej (Slovenia) plant, which sets down the conditions for wastewater discharge into the public sewer system. We are managing the environmental procedures for changing the environmental permit for our Ločna (Novo mesto, Slovenia) plant in accordance with the Slovenian Environmental Protection Act (ZVO-2).
Over the last five years, we have allocated more than €48 million to environmental protection, of that €12 million in 2022. Direct costs amounted to €7.7 million and included costs of wastewater discharge and treatment, waste management, waste air treatment, noise reduction, monitoring costs, environmental levies and other direct environmental protection costs. We invested €4.3 million in environmental protection programmes to further reduce environmental impacts.
Clean drinking water, which must meet strict chemical and microbiological quality requirements, is essential for the pharmaceutical industry. We devote much effort to preserving the quality of water bodies at our production sites. Drinking water quality also depends on seasonal fluctuations and precipitation. We closely monitor gage height in order to ensure optimal performance of pharmaceutical water preparation machines and that drinking water quality remains within the threshold values. All water systems at Krka are managed in compliance with Good Manufacturing Practice (GMP) and the HACCP system. We reduce system failures by planned preventive maintenance in accordance with equipment manufacturers’ recommendations, our experience, legislative requirements, and standards.
Wastewater that comes from rinsing the machines for preparation of pharmaceutical water and does not contain chemicals is reused to prepare water for energy supply. Two separate supply systems deliver water to the central distribution system and ensure that pharmaceutical water is continuously supplied to production. If the water supply is disrupted, the system reduces the quantity of water from the public supply network. We replace the missing quantities with pharmaceutical water stored in reservoirs for that purpose.
Our main water sources are:
Drinking water consumption is monitored by a computerised control system, which records the flow rate total and consumption total at the plant input and main user points. We can immediately identify any increase or deviation in drinking water consumption, investigate the underlying reasons, and take all necessary measures. We draw up monthly drinking water consumption reports. We encourage our employees to drink tap water or from drinking fountains. We save on average 10% of drinking water by tap jet regulators.
We comply with stringent requirements of pharmacopoeias regarding water preparation in the pharmaceutical industry. We strictly use drinking water of officially controlled quality from the water supply utility. Water is additionally purified depending on its purported use, most commonly using sophisticated membrane technologies. Preventive maintenance, machine operation monitoring, and technological improvements ensure consistent water quality, extended useful life of the equipment, decreased water and chemical consumption, and reduced waste generation.
River water consumption declined by 3.9% compared to 2021. Approximately 50% is used for cooling through various heat exchangers, especially in API production, while the rest is used for preparing technological waters to meet the demands of energy supply and production. We replaced 6,955 m3 or 4.3% of river water for cooling systems with rainwater, a 1.3% year-on-year increase.
Our main energy resources are:
The electric power supply comes from the public utility electricity grid, in-house generators powered by renewable sources such as the solar power station, and the natural gas-fired cogeneration plant.
Energy management strategy is incorporated into Krka’s integrated management system and drafted in accordance with the principles of ISO 50001 Energy Management System. It is integrated into the corporate strategy and comprises various activities and actions for achieving cost-related and environmental objectives. The Committee for Monitoring Environmental Aspects is responsible for the periodic identification of energy-related aspects in accordance with ISO 14001, bye-laws and policies. In this way, we manage and upgrade our processes based on sustainable development and circular economy principles to maintain a high level of environmental protection.
Energy management system incorporates:
The energy management control system is the key information tool for supporting the energy management system and supplementing the computer system for monitoring and control. In 2022, we started upgrading it to the latest version, including machine learning. Please see the ‘Energy efficiency projects’ section for more information.
In accounting for an average simple payback period, we consider only measures taken exclusively for economic viability.
| 2018 | 2019 | 2020 | 2021 | 2022 |
|---|---|---|---|---|
| 685 | 785 | 938 | 817 | 785 |
| 656 | 614 | 685 | 644 | 676 |
| 0 | 100 | 200 | 300 | 400 |
| 500 | 600 | 700 | 800 | 900 |
| 1,000 |
Simple payback periods significantly decreased in 2022 compared to the past five-year period.
Specific use of energy portrays production costs in consideration of the physical volume of production. We reduced specific energy use in correlation to production costs by 10% year over year thanks to many activities geared towards efficient energy use, energy efficiency investment, and energy-efficient maintenance.
We reduced specific energy use in correlation to production volume by 2% year over year thanks to many activities geared towards efficient energy use, energy efficiency investment, and energy-efficient maintenance.
| GRI 302-4 | GRI 302-3 |
|---|---|
| 2018 | 2019 | 2020 | 2021 | 2022 |
|---|---|---|---|---|
| 2,814 | 2,310 | 1,490 | 2,583 | 2,360 |
| 627 | 1,145 | 1,530 | 820 | 705 |
| 0 | 1 | 2 | 3 | 4 | 5 | 6 |
|---|---|---|---|---|---|---|
| 0 | 500 | 1,000 | 1,500 | 2,000 | 2,500 | 3,000 |
| Average annual savings (MWh) | Total investment (€ thousand) | Average simple payback period (years) |
|---|---|---|
| 1.80 | 1.60 | 1.55 |
| 1.55 | 1.41 | 1.88 |
| 1.66 | 1.62 | 1.62 |
| 1.52 |
| 0.0 | 0.2 | 0.4 | 0.6 | 0.8 | 1.0 | 1.2 | 1.4 | 1.6 | 1.8 | 2.0 |
|---|---|---|---|---|---|---|---|---|---|---|
| 2018 | 2019 | 2020 | 2021 | 2022 |
|---|---|---|---|---|
| MJ/€ of production costs | Specific use of energy/Production cost (LHV) | Specific use of energy/Production cost (HHV) |
We pay special attention to energy efficiency, which is reflected in the continuous improvement of specific use of energy. In recent years, systematic measures and investments have returned average electricity and natural gas savings of more than 50 GWh or emission savings of 17,000 t CO2-eq per year. In 2022, all energy efficiency projects generated savings of 2,360 MWh and reduced our emissions by 320 t CO2.
We completed the introduction of a new regenerative thermal oxidation system by using waste heat from flue gases for the first time, which proved to be fine. According to our estimates, this additional system will save 1,500 MWh of natural gas per year.
We started upgrading our energy management information system, which will support even more advanced analyses and accurate monitoring of our environmental goal achievements. One of the key objectives is the introduction of machine learning into energy processes. This advanced technological solution allows easy control over the efficiency of production, processes, energy and other media consumption in a large system, which includes 2,000 measurement points. It allows for energy efficiency screening of individual processes, speeding up our response in case of unexpected changes.
We use waste heat as a by-product from various processes, e.g. from the compressor station, flue gases from steam boilers, vapours from the steam boiler system, and condensed heat from cooling units, and cogeneration, to prepare heating water. Thanks to this, natural gas for heat generation decreased by 54% or 24 GWh. We recorded an unexpected failure of the cogeneration system, increasing the electricity consumption from the power grid, while the proportion of recovered waste heat declined.
We drew up an internal strategy for the Krka Group for transition to LED lamps. We replaced either a part of or all fluorescent lamps with LED lamps. This upgrade improved the illumination of rooms and work surfaces at Ločna (Novo mesto, Slovenia). Annual electricity savings are estimated at 300 MWh.
Biodiversity in Slovenia is among the greatest in the European Union. Slovenia covers only 0.004% of the Earth’s total surface area. However, it is home to more than one per cent of all known species and more than two per cent of terrestrial species.
All Krka production sites comply with and implement all guidelines and requirements of the European and national legislation on biodiversity to preserve the natural world’s ecological, biotic and landscape features.
reports issued by the Slovenian Environment Agency, the Institute of the Republic of Slovenia for Nature Conservation, the Statistical Office of the Republic of Slovenia, and other professional institutions.
The area around the Krka River is an ecologically important area (EIA) and protected as a Natura 2000 site because it is an important natural habitat of several water and riparian plant and animal species, especially fish, amphibians and birds. According to the Nature Conservation Act, an EIA is an important contributor to biodiversity, while Natura 2000 demonstrates our commitment to preserving natural heritage important for Slovenia and Europe. Responsibilities are clearly defined in the European Birds Directive and the Habitats Directive. The Krka River is a habitat for several threatened species. These include fish species such as the asp, huchen, and cactus roach, thick-shelled river mussel, olm, and the European otter and beaver. The river water collection and discharge of treated wastewater from our wastewater treatment plant do not threaten the preservation of water and riparian areas or the conditions for connecting these areas.
All Krka production facilities are concentrated within their respective sites and do not sprawl into ecologically sensitive areas. The areas of our Ljutomer, Šentjernej, Bršljin, and Krško plants (all Slovenia) are not included in the Natura 2000 network. All wastewater is treated appropriately at the municipal wastewater treatment plants in Ljutomer, Šentjernej, Novo mesto, and the Vipap (all Slovenia) wastewater treatment plant in Krško so that we do not endanger biodiversity with our emissions.
In 2022, we organised transport for over 11,000 shipments of finished products, raw materials and packaging materials. Total mileage by our own vehicles surpassed 2.1 million km, and fuel consumption totalled 585,000 litres. We continued to modernise our fleet of vehicles and organised training for drivers.
We use state-of-the-art vehicles for road transport with environmentally sound engines. We supply products to distant markets primarily by sea or by air. Transport is organised through our in-house transport department. We use our own vehicles or employ contractual carriers. Most of our products are delivered to European and Asian markets. To ensure uninterrupted supplies of medicines, we continued transporting goods by road between Shanghai (China) and Novo mesto (Slovenia), which proved to be an excellent alternative to transport by air. Despite additional restrictions in the transit countries and air and maritime transport difficulties, transport went unhindered. Towards the end of the year, we changed to maritime transport when circumstances permitted.
We closely and regularly follow and comply with the requirements of the laws governing the transport of pharmaceutical products and ensure we duly inform all our contractual carriers and their drivers about the requirements and other specificities. Last year, the competent national bodies for transport control found no violations of the legislation.
We select our transport contractors carefully and encourage them to use modern vehicles that comply with the highest environmental standards. Their fleet includes vehicles running on liquefied natural gas.
Our fleet comprises 19 vehicles. We modernised it in 2022 by adding three new full trailers and ordered another three semi-trailers. They are scheduled for delivery in the first half of 2023. All vehicles satisfy relevant requirements regarding drivers, safety, and environmental standards. New vehicles are equipped with state-of-the-art accessories (e.g. adaptive cruise control systems, ESP/ESC emergency braking, traction control system, and blind-spot detection system) that enhance traffic safety. We have 14 electric and two hybrid vehicles in our carpool. Based on our vehicle acquisition strategy, we plan to replace at least 20 used diesel and petrol vehicles with electric ones by 2025. We have eight charging stations at two sites. When possible, we substitute business travel with teleconferencing or video conferencing to minimise fuel consumption and air pollution.
We participated in the European Mobility Week with our Krka Car-Free Day campaign for the seventh consecutive year. In 2022, the campaign ran in 11 subsidiaries. Sustainable commuting has become a habit of Krka employees. Many of our employees in Slovenia, 40% of them, live more than 40 km away from the company. The number of employees who carshare is rising, which helps reduce the environmental impact, increases traffic safety, and improves air quality. Green mobility should be safe, so we regularly inform our employees of health and safety recommendations and campaigns, and encourage them to follow them on their way to work. To encourage our employees to commute by bike, we set up bicycle parking lots for at our facilities in Slovenia. We have 50 bicycle parking lots in Ločna (Novo mesto, Slovenia) and plan to build a new bicycle parking station. The bicycle parking capacity will increase by more than 40% and provide more secure bicycle parking. We also encourage using alternative and less environmentally harmful modes of commuting as part of Krka’s Mobility Plan.
We use various physical, chemical and biological processes to completely and effectively remove pollutants from wastewater. We comply with the Decree on the Emission of Substances and Heat in the Discharge of Wastewater from Installations for the Production of Pharmaceutical Products and Active Substances, which serves as the basis for environmental protection permits issued for individual Krka production sites. At all our sites, an authorised contractor carries out wastewater monitoring. Its frequency and scope are set down in individual permits.
industry is lower than the proportion of these substances released into the water by end users. Nevertheless, we supplemented this well-managed aspect of wastewater treatment with hazard assessments for the water environment for individual active pharmaceutical ingredients and other substances. Hazard assessment for the water environment is a part of a broad risk assessment. The method of treating wastewater, any additional measures and the procedure for handling waste are prescribed according to the calculated risks based on physico-chemical, ecotoxicological and toxicological data for each active pharmaceutical ingredient and data on the familiar water environment. We regularly control and update the calculations and use the most recent research findings and other credible technical information in wastewater and waste management. Complex analytical methods for monitoring wastewater residue concentrations were developed with our external partners for several active pharmaceutical ingredients that pose an increased environmental risk.
We reduce industrial wastewater quantities and pollution at all stages of the production process. We consider requirements of environmental protection permits and legislative requirements already at the development stage of a product and opt for technologies that use the lowest quantities of water possible. Advanced water preparation technologies, closed cooling systems, and other methods are used to save production water. Whenever possible, we use raw materials and excipients less harmful to water. We minimise the quantity of detergents used in washing procedures in production. At all our production sites, wastewater is treated in compliance with all legislative parameters for effluents before discharging into surface water. Wastewater in Ločna, Novo mesto (Slovenia), is treated at our advanced in-house industrial wastewater treatment plant using the best available technologies to meet the requirements. Wastewater from off-site plants is treated at highly efficient municipal wastewater treatment plants.
The Ločna plant generates industrial and municipal wastewater, which we treat at the in-house biological wastewater treatment plant. Unpolluted cooling water is discharged into the Krka River through a cooling and rainwater discharge system. Over the past few years, the biological wastewater treatment plant was upgraded, and technology professionally managed, so the quality of effluents is high and in compliance with all legal requirements. In 2022, we treated 790,548 m3 of wastewater, or 11,730 m3 more than the year before. Organic pollution expressed by chemical oxygen demand was cleaned in 92.6%, while removal of organic pollution expressed by biochemical oxygen demand within 5 days reached 99%. Cooling wastewater volume totalled 422,761 m3, up 16,454 m3 on 2021.
Our Bršljin (Slovenia) plant generates industrial and municipal wastewater, which is discharged by the public sewerage system and treated at the municipal wastewater treatment plant in Novo mesto. In 2022, we generated a total of 22,092 m3 of wastewater.
Our plant in Šentjernej (Slovenia) generates industrial and municipal wastewater. Effluents are discharged by the public sewerage system and treated at the common municipal wastewater treatment plant in Šentjernej. In 2022, we generated a total of 16,250 m3 of wastewater.
Our plant in Ljutomer generates industrial, municipal, and cooling wastewater. Effluents are discharged by the public sewerage system and treated at the common municipal wastewater treatment plant in Ljutomer. In 2022, we generated a total of 22,057 m3 of wastewater.
Our plant in Krško generates industrial, municipal and energy supply wastewater. Effluents are discharged by the public sewerage system and treated at the Vipap wastewater treatment plant in Krško. In 2022, we generated a total of 30,411 m3 of wastewater. Construction of an in-house water treatment plant is planned at the site, and we have already prepared project design documents. The project is at its final stage of obtaining a final environmental protection permit. Construction work can start only after the permit has been obtained.
Total environmental load units (ELU) increased by 213 ELU or 13.5% on 2021 due to higher production volume and therefore greater wastewater load at wastewater treatment plants.
Environmental load units (ELU) represent the prescribed mathematical calculation of pollution from all wastewater outlets in Slovenia (Ločna, Šentjernej, Bršljin, Ljutomer, and Krško). The calculation takes into account the annual wastewater rate of discharge; organic pollution; nitrogen, phosphorous, and suspended solids load; and the impact of wastewater treatment.
| 1,286 | 1,737 | 1,241 | 1,371 | 1,584 |
|---|---|---|---|---|
| 0 | 200 | 400 | 600 |
Waste management complies with the waste management plan and instructions, which consider legal requirements and set out technical and organisational measures and waste management goals. We factor in extended producer responsibility in common plans for managing waste medicines and packaging waste. We ensure the collection and appropriate processing of packaging materials and the safe disposal of unused medicines by end users.
We comply with the legally prescribed waste management classification and consider the commitment to reduce environmental impacts, as set out in the environmental standard ISO 14001:2015. Our priority is to prevent waste generation through:
We reduced paper use in 2022 by 9 tonnes by optimising the patient information leaflet design, decreasing emissions by 2.6 t CO2-eq. We constantly optimise pack sizes and packaging material weight to reduce purchasing costs and waste packaging volume. We set up a returnable packaging system with our supplier in 2022. This allows us to reuse 42 tonnes of packaging materials and reduce emissions by 111 t CO2-eq through reuse in line with circular economy principles.
We manage unavoidable waste comprehensively. We prioritise their preparation for reuse. Waste is an important source of raw materials and energy, so special attention is paid to separating waste at source, i.e. at the point where it is generated, and preparing it for reuse. This is another way in which we contribute to the circular economy principles. We have set up a separate waste collection system. All employees take part in the process. Our system relies on advanced equipment for separated collection, pressing and waste transportation. In 2022, we collected 492 tonnes of waste composites in total, from which an approved contractor recovered 206 tonnes of aluminium and 255 tonnes of plastics and handed them over for recycling. We handed over 108 t of organic waste to obtain renewable energy sources, reducing emissions by almost 1 t CO2-eq.
Year on year, we reduced the volume of disposable waste by 13% or 98 tonnes, notwithstanding the increase in production, and increased the proportion of waste handed over to recycling by 6% or 151 tonnes.
Risks related to the reception and removal of certain types of waste in Slovenia persisted in 2022. We diversified our waste management channels and extended cooperation to several waste collection and removal companies in Slovenia and abroad to manage the risks.
Good results can only be achieved if all employees work responsibly. To accomplish this, we provided our employees with regular waste management training.
2,422 2,422
GRI 3-3, 306-1, 306-2, SDG 12
GRI 306-4
| 2018 | 2,327 |
|---|---|
| 2019 | 2,381 |
| 2020 | 2,532 |
| 2021 | 0 |
| 2022 | 500 |
| 2018 | 1,187 |
|---|---|
| 2019 | 1,308 |
| 2020 | 1,618 |
| 2021 | 1,231 |
| 2022 | 1,447 |
We minimise noise emissions using suitable equipment, installing the equipment in closed rooms, setting up noise barriers, fitting cargo vehicles with electrical cooling units, and moving cargo vehicle docks to the inner areas of production sites. In compliance with the regulation on environmental noise indicators, we measure noise levels every three years and when an alteration is made that could increase them. Results of monitoring conducted by authorised contractors in 2022 confirm that all implemented measures were effective and noise levels complied with legislative requirements. We received a single complaint about noise at our site in Ljubljana. Please see the subsection ‘Environmental compliance’ for details.
Effective reduction of air emissions is one of our priorities in environmental protection and climate change mitigation. We comply with the EU actions to implement the European Green Deal, legal requirements, and the pharmaceutical industry's.
| 2018 | 824 |
|---|---|
| 2019 | 802 |
| 2020 | 791 |
| 2021 | 763 |
| 2022 | 665 |
| Tonnes | 5,491 | 6,047 | 7,329 | 6,480 | 6,786 |
|---|---|---|---|---|---|
| 0 | 2,000 | 4,000 | 6,000 | 8,000 | |
| 2018 | 2019 | 2020 | 2021 | 2022 |
Strict requirements to prevent cross-contamination. We reduce air emissions with treatment systems fitted to all outlets that constitute a potential source of pollution. We use effective de-dusting systems, filters, wet-type filtration systems, condenser columns, and thermal oxidisers to keep air emissions below the legal threshold or the levels best available technology allows.
We remove organic compounds from waste air using advanced thermal oxidisers. The fourth thermal oxidation device was put to use in 2022 at our production site in Ločna (Novo mesto, Slovenia). At our plant in Krško, we replaced an obsolete thermal oxidiser with an advanced high-capacity thermal oxidiser and upgraded the waste-air distribution system.
Slovenia has a problem with occasional excessive air pollution with harmful PM10 particles and certain other pollutants, for example, PM2.5 particles, nitrogen dioxide, ozone, and benzo(a)pyrene, which cause many health issues. At Krka, absolute air filtration is applied to all airborne particle emissions to remove over 99.7% of all particulate matter.
For the first time in 2022, we calculated, according to Greenhouse Gas Protocol (GHG) Scope 1 and Scope 2, the carbon footprint for the Krka Group from 1 January 2019 until 31 December 2021 inclusive.
In 2019 and 2020, indirect emissions from the electricity consumption from the power grid accounted for the largest proportion of greenhouse gases (53.4% in 2019 and 53.1% in 2020). Greenhouse emissions from fuel combustion in stationary machines owned by the Krka Group were at 31.7% in 2019 and 34.4% in 2020, the next biggest pollutant. The third biggest pollution source was at 12.9% in 2019 and 9.8% in 2020 – engine combustion generated by means of transport (trucks, vans, cars) owned by the Krka Group. We recorded a significant drop in total greenhouse gas emissions, primarily from Scope 2. This resulted from our transition to zero carbon electricity sources in 2021, which reduced our annual CO2-eq on average by 45,000 tonnes. Direct emissions from burning fuel and harmful substances from cooling devices (Scope 2) accounted for most of the CO2-eq emissions in 2022. They fell 9% short of the 2021 values despite increased production.
Since 2021, all our energy consumers in Slovenia have been using exclusively zero-carbon energy sources. We aim to reduce further total CO2 emissions (Scope 1 and Scope 2 under the GHG Protocol) and maximise the carbon neutrality of our processes.
As our production site in Ločna (Novo mesto, Slovenia) is included in the EU emissions trading scheme, we report on our emissions to the Ministry of the Environment and Spatial Planning in accordance with the relevant legislation.
In 2022, the Krka Group as a whole recorded a 49% decrease in CO2 emissions on the reference year 2019. We reduced year-on-year Scope 1 emissions by 11% and Scope 2 emissions by 2% according to GHG.
| 2022 | 2021 | 2020 | 2019 | |
|---|---|---|---|---|
| Carbon footprint/Revenue (kg CO2-eq/€) | 0.042 | 0.051 | 0.089 | 0.096 |
| Carbon footprint/Employee total (t CO2-eq/Employee) | 6.28 | 6.90 | 11.78 | 12.48 |
| Carbon footprint/Physical production volume (t CO2-eq/billion units) | 4,326.5 | 4,930.9 | 8,304.1 | 9,428.4 |
We calculated our Scope 1 and Scope 2 carbon footprints and prepared the Krka Group’s action plan for the reduction of GHG emissions by 2025, 2030, and 2050 accordingly to reduce CO2 emissions and for the EU to become climate neutral by 2050.
The Krka Group’s objective by 2050 is to decarbonise transport vehicles and transport in general and become a carbon neutral business in terms of electricity and natural gas supplies. We intend to adjust the action plan to reduce the total Krka Group carbon footprint to develop new technologies and energy sources (RES, helium, etc.).
GRI 305-1, 305-2, SDG 12
| 2019 | 2020 | 2021 | 2022 | |
|---|---|---|---|---|
| Total emissions | 66,225 | 63,672 | 64,192 | 57,059 |
| Other emissions | 77,067 | 73,345 | 15,688 | 15,625 |
Carbon footprint reduction by 71% until 2030 on 2019 reference year
| 2019 | 143,312 t CO2-eq |
|---|---|
| 2022 | 72,686 t CO2-eq |
| Reduction by | 1,290 t CO2-eq |
| Reduction by | 11,270 t CO2-eq |
| Year | Scope 1 | Scope 2 |
|---|---|---|
| 2019 | 143,312 | 79,880 |
| 2020 | 137,017 | 72,684 |
| 2021 | ||
| 2022 |
We identified high- and low-frequency electromagnetic radiation at Ločna, our main Slovenian facility in Novo mesto, as follows:
The results of initial measurements indicate that radiation burdens of identified sources were below thresholds set by laws. There are no mobile phone base stations at our other production and business sites in Slovenia, making them less intense energy-wise.
Parking areas, traffic routes (i.e. roads and pedestrian areas), transport and warehousing facilities at our production and business sites in Slovenia are lit with outdoor lighting. Our signboards and billboards are also illuminated. The astronomical clock regulates the automatic switching on and off of outdoor lighting, signage, and billboards. We separately measure electric power consumption for outdoor lighting at our major sites.
We are aware of the impact of light pollution. To address it, we responsibly started upgrading outdoor lighting seven years ago and have essentially reduced total rated electric power over that time. In 2022, total rated power for all sites in Slovenia amounted to 25 kW or 17% less than in 2014 in Ločna alone.
We transfer good environmental protection guidelines and practices to all subsidiaries through permanent cooperation, information exchange, and investment. We consider national legislation in the process. We have set up efficient separate waste collection systems and handed waste over exclusively to authorised waste collection and treatment companies.
Wastewater generated in the production of highly potent active ingredients at our plant in Jastrebarsko, Croatia, is treated at the in-house wastewater treatment plant using advanced oxidation processes with a 99.9% degradation of active substances. Wastewater at Krka-Rus in the Russian Federation is treated at the in-house wastewater membrane biological wastewater treatment plant, which is due for upgrading in 2023. Wastewater from other production plants and companies is discharged to modern municipal wastewater treatment plants.
To reduce emissions, we install highly efficient absolute filtration devices on units emitting particulate matter. We transfer good practices in rational energy and water use to subsidiaries. We conducted a detailed energy audit at our subsidiary Terme Krka, which determined the savings potential of 1,579 MWh, a total annual emission reduction by 599 t CO2-eq. The average simple payback period of the proposed investment is three years.
We know that each employee can contribute to good environmental protection results. We, therefore, encourage them to constantly upgrade their knowledge and handle the environment with a high level of awareness. Our internal communication campaign Your Care for the Environment Counts promotes saving energy, paper, and separate waste collection.
Responsible environmental management forms a part of the induction seminar for newly recruited employees and in the national vocational qualification programmes. We included courses on comprehensive environmental management in the Catalogue of Training Programmes and courses on waste, wastewater, noise, air emissions, and light pollution, as well as environmental sustainability topics. In 2022, 2,801 employees from Krka in Slovenia attended environment-related training courses. We arranged a special training course for 74 experts from pharmaceutical development, because best effects can be achieved at the product development stage by selecting raw materials with the lowest environmental load, and in production.
We had to make all the related content available online due to the COVID-19 pandemic. We also intend to include employees from abroad in the education about environmental protection and sustainable development. In 2022, we drew up various language versions of the content in e-format.
We inform the public about our environmental activities via public announcements in the media and at various seminars, symposia, and round tables. We actively engage in drafting environmental legislation and are co-founders and active members of the Environment and Energy Section of the Dolenjska and Bela Krajina Chamber of Commerce and Industry. We work hand in hand with professional and scientific organisations in Slovenia and abroad.
Responsible care for society and the environment calls for good relationships with local community stakeholders, especially with our immediate neighbours, because we impact their living space and quality of life. We maintain an ongoing open dialogue with them, resulting in good relations. Every other year we organise a traditional meeting with them, informing them of our actions, results and environmental protection plans. We learn what the locals think and consider this when planning environmental goals and programmes. The most recent meeting took place in 2019. The COVID-19 pandemic prevented us from organising the traditional meeting in 2021. Instead, we prepared an informative booklet Utrip okolja. We plan to hold a meeting in 2023.
173
The Krka Group has reported in accordance with the GRI Standards for the period from 1 January 2022 to 31 December 2022.
GRI 1 used
GRI 1: Foundation 2021
Applicable sector standards
No applicable sector standards were available when the Annual Report was drafted.
| GRI standard | Disclosure | Page | Chapter | Omissions and notes |
|---|---|---|---|---|
| GRI 2: General Disclosures 2021 | The organization and its reporting practices | 2-1 | Organizational details | 10, 13, 80 |
| Entities included in the organization’s sustainability reporting | 2-2 | 140 | ||
| Reporting period, frequency and contact point | 2-3 | 140 | ||
| Restatements of information | 2-4 | 140 | ||
| External assurance | 2-5 | Krka has not yet decided on external assurance in line with the GRI Standards. | ||
| Activities, value chain and other business relationships | 2-6 | Activities and workers | 7, 80–81, 88, 101–120, 122, 128, 129, 130 | |
| Employees | 2-7 | 145-146 |
145 Employees
17
32
34
Corporate governance statement
Composition of Supervisory Board of Krka as at 31 December 2022
Composition of Management Board as at 31 December 2022
17
32
34
Corporate governance statement
Composition of Supervisory Board of Krka as at 31 December 2022
Composition of Management Board as at 31 December 2022
32
34
Composition of Supervisory Board of Krka as at 31 December 2022
Composition of Management Board as at 31 December 2022
34
Composition of Management Board as at 31 December 2022
54
Sustainability management of the Krka Group
38
Non-financial statement
34
Composition of Management Board as at 31 December 2022
28
Corporate compliance and integrity
34
Published on the Krka website.
Published on the Krka website.
Published on the Krka website.
In line with the remuneration policy, fixed remuneration is determined as a multiple of the average salary of Krka employees in the last three months. These multiples are determined by the Supervisory Board upon the appointment of the Management Board and differ based on the extent of areas of work that each member of the Management Board covers. Multiple ten (10) is applied for the President of the Management Board.
Corporate compliance and integrity
Human rights in business operations
Krka Group development strategy
Natural environment
Corporate compliance and integrity
Human rights in business operations
Natural environment
Natural environment
Corporate compliance and integrity
2-28
30
2-29
81
141
153
2-30
145
54
140
140
140
142
50
7
154, 157
210
210
152
155, 157
155
Data capturing does not include the number of hours.
Data capturing includes reported suspected incidents.
Data capturing includes effective tax rate.
| 302-1 | Energy consumption within the organization | 8 |
|---|---|---|
| 302-3 | Energy intensity | 162 |
| 302-4 | Reduction of energy consumption | 162 |
| Energy management system |
| 303-1 | Interactions with water as a shared resource | 160 |
|---|---|---|
| 303-2 | Management of water discharge-related impacts | 160 |
| 303-3 | Water withdrawal | 161 |
| 303-4 | Water discharge | 155 |
| 303-5 | Water consumption | 161 |
| 304-2 | Significant impacts of activities, products, and services on biodiversity | 164 |
|---|---|---|
| 304-4 | IUCN Red List species and national conservation list species with habitats in areas affected by operations | 164 |
| 305-1 | Direct (Scope 1) GHG emissions | 170–171 |
|---|---|---|
| 305-2 | Energy indirect (Scope 2) GHG emissions | 170–171 |
| 305-4 | GHG emissions intensity (emissions per unit produced) | 170 |
| 305-5 | Reduction of GHG emissions | 170 |
| 305-6 | Emissions of ozone-depleting substances (ODS) | 9 |
| 305-7 | Nitrogen oxides (NOX), sulfur oxides (SOX), and other significant air emissions | 9 |
| 306-1 | Waste generation and significant waste-related impacts | 167 |
|---|---|---|
| 306-2 | Management of significant waste-related impacts | 167 |
| 306-3 | Waste generated | 8 |
| 306-4 | Waste diverted from disposal | 168 |
| 306-5 | Waste directed to disposal | 169 |
| 308-1 | New suppliers that were screened using environmental criteria | 128 |
|---|---|---|
Data capturing includes employee turnover at the Krka Group level.
Health and safety at work
Data capturing includes the share of employees who took parental leave.
Health and safety at work
Health and safety at work
Health and safety at work
Health and safety at work
Health and safety at work
Health and safety at work
Health and safety at work
Health and safety at work
| 404-1 | Average hours of training per year per employee |
|---|---|
| Data capturing does not include breakdown by gender and employee category. | |
| 404-3 | Percentage of employees receiving regular performance and career development reviews |
| 405-1 | Diversity of governance bodies and employees (gender, age group, minority, other indicators of diversity) | |||
|---|---|---|---|---|
| 32 | 34 | 145 | ||
| Composition of Supervisory Board of Krka as at 31 December 2022 | ||||
| Composition of Management Board as at 31 December 2022 | ||||
| Data capturing includes categorisation by gender and education. |
| 406-1 | Incidents of discrimination and corrective actions taken |
|---|---|
| 413-1 | Operations with local community engagement, impact assessments, and development programs |
|---|---|
| 414-1 | New suppliers that were screened using social criteria |
|---|---|
| Data capturing includes the number of screenings using all criteria. |
30 Contributions and other spending
180
133 Quality
152–153 Patients
152–153 Patients
153 Patients
153 Patients
181
182
Introduction to Financial Statements .......................................................................................................... 183
Statement of Compliance ............................................................................................................................. 184
Consolidated Financial Statements of the Krka Group ............................................................................. 185
Consolidated Statement of Financial Position ........................................................................................................... 185
Consolidated Income Statement ............................................................................................................................... 186
The financial statements consist of two separate sections. The first section illustrates the consolidated financial statements and related Notes of the Krka Group, whereas the second section encompasses the financial statements and related Notes of Krka, d.d., Novo mesto (hereinafter referred to as: ‘the Company’). The financial statements have been prepared in compliance with the International Financial Reporting Standards (hereinafter referred to as: ‘IFRS’) as adopted by the European Union, which is in compliance with the resolution adopted at the 11th Annual General Meeting held on 6 July 2006.
The financial statements of the Company and the Krka Group are presented in euros, rounded to the nearest thousand. They are an integral part of the 2022 Annual Report, which is published via the SEOnet electronic announcement system of the Ljubljana Stock Exchange, the ESPI system of the Warsaw Stock Exchange, and on the Krka website (https://www.krka.biz/en/for-investors/financial-reports/).
Each section of the financial statements was audited by KPMG Slovenija, d.o.o., and two separate reports as individual sections have been prepared accordingly.
The Management Board of Krka, d.d., Novo mesto is responsible for the preparation of the Annual Report of the Company and of the Krka Group including the financial statements in a manner that gives the interested public a true and fair view of the financial position and the results of operations of the Company and its subsidiaries in 2022.
The Management Board hereby acknowledges as follows:
The Management Board is responsible for taking the measures required to preserve the assets of the Company and the Krka Group and to prevent and detect fraud and other forms of misconduct.
The tax authorities may, at any time within a period of five years after the end of the year for which tax assessment was due, carry out the audit of the Company operations, which may lead to assessment of additional tax liabilities, default interest, and penalties with regard to corporate income tax or other taxes and levies. The Management Board is not aware of any circumstances that may result in a significant tax liability.
Novo mesto, 28 March 2023
Jože Colarič
President of the Management Board and CEO
dr. Aleš Rotar
Member of the Management Board
dr. Vinko Zupančič
Member of the Management Board
David Bratož
Member of the Management Board
Milena Kastelic
Member of the Management Board – Worker Director
| € thousand | Notes | 31 Dec 2022 | 31 Dec 2021 | Index 2022/21 |
|---|---|---|---|---|
| Assets | ||||
| Property, plant and equipment | 11 | 779,336 | 773,657 | 101 |
| Intangible assets | 12 | 102,550 | 104,301 | 98 |
| Loans | 13 | 77,539 | 40,300 | 192 |
| Investments | 14 | 110,770 | 108,883 | 102 |
| Deferred tax assets | 15 | 53,770 | 46,883 | 115 |
| Other non-current assets | 1,060 | 1,028 | 103 | |
| Total non-current assets | 1,125,025 | 1,075,052 | 105 | |
| Assets held for sale | 41 | 41 | 100 | |
| Inventories | 16 | 553,332 | 455,707 | 121 |
| Contract assets | 946 | 1,214 | 78 | |
| Trade receivables | 17 | 402,730 | 467,764 | 86 |
| Other receivables | 17 | 27,728 | 29,564 | 94 |
| Loans | 13 |
| 6,327 | 192,360 | 3 | |||
|---|---|---|---|---|---|
| Cash and cash equivalents | 14 | 52,437 | 155,448 | 34 | |
| Total current assets | 18 | 518,934 | 159,838 | 325 | |
| Total assets | 1,562,475 | 1,461,936 | 107 | ||
| Equity | Share capital | 19 | 54,732 | 54,732 | 100 |
| Treasury shares | 19 | -124,566 | -114,541 | 109 | |
| Reserves | 19 | 192,204 | 145,077 | 132 | |
| Retained earnings | 19 | 1,996,246 | 1,819,937 | 110 | |
| Total equity holders of the controlling company | 2,118,616 | 1,905,205 | 111 | ||
| Non-controlling interests | 19 | 19,893 | 13,880 | 143 | |
| Total equity | 2,138,509 | 1,919,085 | 111 | ||
| Liabilities | Provisions | 21 | 107,235 | 126,153 | 85 |
| Deferred income | 22 | 6,048 | 6,875 | 88 |
| € thousand | Notes | 2022 | 2021 | Index | 2022/21 |
|---|---|---|---|---|---|
| Trade payables | 23 | 0 | 10,000 | ||
| Lease liabilities | 27 | 8,089 | 8,724 | 93 | |
| Deferred tax liabilities | 15 | 10,758 | 10,922 | 98 | |
| Total non-current liabilities | 132,130 | 162,674 | 81 | ||
| Trade payables | 23 | 140,837 | 130,011 | 108 | |
| Lease liabilities | 27 | 3,752 | 3,433 | 109 | |
| Income tax payables | 28 | 194 | 7,023 | 401 | |
| Contract liabilities | 24 | 157,710 | 124,730 | 126 | |
| Other current liabilities | 25 | 86,368 | 190,032 | 45 | |
| Total current liabilities | 416,861 | 455,229 | 92 | ||
| Total liabilities | 548,991 | 617,903 | 89 | ||
| Total equity and liabilities | 2,687,500 | 2,536,988 | 106 |
The accompanying Notes form an integral part of the consolidated financial statements and are to be read in conjunction with them.
| 1,717,453 | 1,565,802 | 110 | ||
|---|---|---|---|---|
| - Revenue from contracts with customers | 4 | 1,712,530 | 1,562,266 | 110 |
| - Other revenue | 4,923 | 3,536 | 139 | |
| Cost of goods sold | -743,060 | -674,594 | 110 | |
| Gross profit | 974,393 | 891,208 | 109 | |
| Other operating income | 5 | 9,197 | 11,376 | 81 |
| Selling and distribution expenses | -349,111 | -305,870 | 114 | |
| - Whereof net impairments and write-offs of receivables | -1,875 | -1,048 | 179 | |
| R\&D expenses | -162,580 | -154,559 | 105 | |
| General and administrative expenses | -90,688 | -87,367 | 104 | |
| Operating profit | 381,211 | 354,788 | 107 | |
| Financial income | 9 | 57,668 | 19,711 | 293 |
| Financial expenses | 9 | -5,806 | -12,082 | 48 |
| Net financial result | 51,862 | 7,629 | 680 | |
| Profit before tax | 433,073 | 362,417 | 119 | |
| Income tax expense | 10 |
| € thousand | Notes | 2022 | 2021 | Index | 2022/21 |
|---|---|---|---|---|---|
| Net profit | 363,662 | 308,150 | 118 | ||
| Other comprehensive income for the year | |||||
| Other comprehensive income reclassified to profit or loss at a future date | |||||
| Translation reserve | 19 | 11,850 | 14,503 | 82 | |
| Net other comprehensive income reclassified to profit or loss at a future date | 11,850 | 14,503 | 82 | ||
| Other comprehensive income that will not be reclassified to profit or loss at a future date | |||||
| Change in fair value of financial assets | 14 | 128 | 5,441 | 2 | |
| Restatement of post-employment benefits | 21 | 26,099 | 6,759 | 386 | |
| Deferred tax effect | 15 | -3,417 | -1,622 |
| Net other comprehensive income that will not be reclassified to profit or loss at a future date | 22,810 | 10,578 | |
|---|---|---|---|
| Total other comprehensive income for the year (net of tax) | 34,660 | 25,081 | |
| Total comprehensive income for the year (net of tax) | 398,322 | 333,231 | |
| Attributable to: | - Equity holders of the controlling company | 398,461 | 333,030 |
| - Non-controlling interests | -139 | 201 |
The accompanying Notes form an integral part of the consolidated financial statements and are to be read in conjunction with them.
| € thousand | Share capital | Treasury shares | Reserves | Retained earnings | Total equity holders of the controlling company | Non-controlling interests | Total equity |
|---|---|---|---|---|---|---|---|
| Reserves for treasury shares | |||||||
| Share premium | |||||||
| Legal reserves | |||||||
| Statutory reserves | |||||||
| Fair value reserve | |||||||
| Translation reserve | |||||||
| Other profit reserves | |||||||
| Retained earnings | |||||||
| Profit for the year |
| 54,732 | -114,541 | 114,541 | 105,897 | 14,990 | 30,000 | -22,077 | -98,274 | 1,370,902 | 155,083 | 293,952 | 1,905,205 | 13,880 | 1,919,085 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 363,296 | 363,296 | 366 | 363,662 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 0 | 0 | 0 | 0 | 0 | 0 | 24,747 | 12,355 | 0 | -1,937 | 0 | 35,165 | -505 | 34,660 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 0 | 0 | 0 | 0 | 0 | 0 | 24,747 | 12,355 | 0 | -1,937 | 363,296 | 398,461 | -139 | 398,322 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Transfer of previous periods' profit to retained earnings | 71,800 | -71,800 | 0 | 0 | 0 | 0 |
|---|---|---|---|---|---|---|
| Repurchase of treasury shares | 0 | -10,025 | 0 | 0 | 0 | 0 |
| Formation of reserves for treasury shares | 0 | 0 | 10,025 | 0 | 0 | 0 |
| Dividends paid | 0 | 0 | 0 | 0 | 0 | 0 |
| Share capital | € thousand |
|---|---|
| -175,025 | Acquisition of non-controlling interests |
| 0 | 0 |
| 0 | 0 |
| 0 | 0 |
| 0 | 0 |
| 6,152 | Total transactions with owners, recognised in equity |
| 0 | -10,025 |
| 10,025 | 0 |
| 0 | 0 |
| 71,800 | 47,127 |
| -303,977 | -185,050 |
| 6,152 | -178,898 |
| Balance at 31 Dec 2022 | |
| 54,732 | -124,566 |
| 124,566 | 105,897 |
| 14,990 | 30,000 |
| 2,670 | -85,919 |
| 1,442,702 | 200,273 |
| 353,271 | 2,118,616 |
| 19,893 | 2,138,509 |
| Total equity holders of the controlling company | Non-controlling interests | Total equity | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Reserves for treasury shares | Share premium | Legal reserves | Statutory reserves | Fair value reserve | Translation reserve | Other profit reserves | Retained earnings | Profit for the year | ||||||
| Balance at 1 Jan 2021 | 54,732 | -99,279 | 99,279 | 105,897 | 14,990 | 30,000 | -35,059 | -111,512 | 1,280,090 | 138,705 | 265,490 | 1,743,333 | 8,479 | 1,751,812 |
| Net profit | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 309,214 | 309,214 | -1,064 | 308,150 | ||
| Total other comprehensive income for the year (net of tax) | 0 |
| Total comprehensive income for the year (net of tax) | 0 | 0 | 0 | 0 | 0 | 12,982 | 13,238 | 0 | -2,404 | 0 | 23,816 | 1,265 | 25,081 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Total transactions with owners, recognised in equity | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 90,812 | -90,812 | 0 | 0 | 0 | 0 |
| Formation of other profit reserves under the resolution of the AGM | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 265,490 | -265,490 | 0 | 0 | 0 |
| Repurchase of treasury shares | 0 | -15,262 |
| -15,262 | 0 | -15,262 |
|---|---|---|
| -155,896 | 0 | -155,896 |
|---|---|---|
| 0 | 0 | 0 |
|---|---|---|
| 0 | -15,262 | 15,262 | 0 | 0 | 0 | 0 |
|---|---|---|---|---|---|---|
| € thousand | Notes | 2022 | 2021 |
|---|---|---|---|
| CASH FLOWS FROM OPERATING ACTIVITIES | |||
| Net profit | 363,662 | 308,150 | |
| Adjustments for: | |||
| - Amortisation/Depreciation | 11,12 | 107,684 | 108,837 |
| - Net foreign exchange differences | -224 | 4,828 | |
| - Net write-offs and allowances for inventories | 20,321 | 20,738 | |
| - Net impairments and write-offs of receivables | 1,875 | 1,048 | |
| - Investment income | -15,817 | -5,699 | |
| - Investment expenses | 89 | 13,199 | |
| - Income on financing activities | 0 | -39 | |
| - Interest expenses and other financial expenses | 5,279 | 1,532 | |
| - Income tax expense | 10 | 69,411 |
| 552,280 | 506,861 | ||
|---|---|---|---|
| Change in trade receivables | 63,898 | -84,752 | |
| Change in inventories | 16 | -117,946 | |
| Change in trade payables | 23 | 32,820 | 45,164 |
| Change in provisions | 21 | -4,272 | -2,647 |
| Change in deferred income | 22 | -827 | -929 |
| Change in other current liabilities | -1,410 | 9,484 | |
| Income tax paid | -56,892 | -64,329 | |
| Net cash flow from operating activities | 467,651 | 386,097 |
| Interest received | 3,115 | 718 | |
|---|---|---|---|
| Dividends received | 631 | 668 | |
| Proceeds from sale of property, plant and equipment | 4,949 | 3,700 | |
| Purchase of property, plant and equipment | 11 | -87,905 | -65,914 |
| Purchase of intangible assets | 12 | -6,827 | -6,213 |
| Proceeds from non-current loans | 2,542 | 1,439 | |
| Payments for non-current loans | -42,690 | -26,674 | |
| Net proceeds from/payments for current loans | 189,589 | -137,277 | |
| Proceeds from sale of non-current investments | 4,950 | 24 | |
| Payments for acquiring non-current investments | -32,970 | -92,138 | |
| Proceeds from sale of current investments |
Krka, d. d., Novo mesto is the controlling company in the Krka Group with its registered seat at Šmarješka cesta 6, 8501 Novo mesto, Slovenia. The Company was registered at the District Court of Novo mesto on 13 July 1989, registration number: 1/00097/00. Company registration number: 5043611000.
The consolidated financial statements for the year ended 31 December 2022 refer to the Krka Group consisting of the controlling company and its subsidiaries in Slovenia and abroad. A list of subsidiaries, members of the Krka Group, is included in Note 31 ‘Profile of the Krka Group’.
The Krka Group is engaged in the development, production, marketing and sale of human health products (prescription pharmaceuticals, non-prescription products), animal health products, and health resorts and tourist services.
| Payments for acquiring current investments | -121,621 | -144,805 |
|---|---|---|
| Proceeds from derivatives | 8,847 | 2,002 |
| Payments for derivatives | 0 | -10,459 |
| Net cash flows from investing activities | 76,414 | -372,637 |
| CASH FLOWS FROM FINANCING ACTIVITIES | ||
| Interest paid | -4,179 | -366 |
| Lease liabilities paid | 27 | -3,926 |
| Dividends and other profit shares paid | -3,515 | -175,044 |
| Repurchase of treasury shares | -10,025 | -15,262 |
| Proceeds from payment of non-controlling interests | 6,152 | 5,200 |
| Net cash flow from financing activities | -187,022 | -169,850 |
| Net increase/decrease in cash and cash equivalents | 357,043 | -156,390 |
| Cash and cash equivalents at beginning of year | 159,838 | 313,568 |
| Effect of foreign exchange rate fluctuations on cash held | 2,053 | 2,660 |
| Closing balance of cash and cash equivalents | 518,934 | 159,838 |
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (‘IFRS’), and interpretations issued by the International Financial Reporting Interpretations Committee of the IASB (‘IFRIC’) adopted by the European Union, and in compliance with additional provisions required by the Companies Act (ZGD-1). The consolidated financial statements were approved by the Company Management Board on 28 March 2023.
The consolidated financial statements have been prepared on the historical cost basis, with the exception of derivatives, financial instruments at fair value through profit or loss and financial instruments at fair value through other comprehensive income (OCI) for which fair value was used. Methods applied in the measurement of fair value are presented in Note 2 ‘Fair Value’.
The consolidated financial statements are presented in the euro, which is the Company’s functional currency. All financial information presented in the euro has been rounded to the nearest thousand.
The preparation of financial statements requires the Management Board of the controlling company to make judgements, estimates and assumptions that affect the carrying amounts of assets and liabilities of the Krka Group, as well as the reported income and expenses for the period.
Management estimates include among others: determination of the useful life and residual value of property, plant and equipment, as well as intangible assets; revenue from contracts with customers, allowances made for inventories and receivables; assumptions material to the actuarial calculation of defined employee benefits; assumptions used in the calculation of provisions for lawsuits, as well as assumptions and estimates relating to impairment of goodwill and TAD Pharma trademark, the assumptions and estimates for the impairment testing of the Terme Krka cash-generating unit, and the estimate of the lease term and the interest rate used. Regardless of the fact that the Management Board of the controlling company duly considers all factors that may impact the preparation of these assumptions, the actual consequences of business events may differ from those estimates. In the process of making accounting estimates, management makes judgements while considering potential changes in the business environment, new business events, new and additional information that may be available, as well as experience. Each year the Krka Group verifies the need for impairment of the goodwill that arose on the takeover of TAD Pharma.
Information on significant estimates about uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements is presented in the following notes:
The controlling company checks for each cash generating unit whether there are any indicators of impairment at least once a year. The recoverable amount of non-financial assets determined as the present value of future cash flows is based on an estimate of expected cash flows from the cash generating unit and on determination of the appropriate discount rate.
Revenue from contracts with customers is recognised when control of the goods and services is transferred to the customer at an amount that reflects the consideration to which the Krka Group expects to be entitled in exchange for those goods or services, while considering specific terms and conditions of an individual contract. In assessing variable compensation, the Krka Group specifically addresses returns, while considering specific terms and conditions of an individual contract for the sale of products and services to customers, statutory provisions and business practices in a given environment. When assessing variable compensation, the Krka Group applies either the expected value method or the most likely amount method, whichever better predicts the amount of consideration to which the Krka Group will be entitled.
Given the large number of contracts with customers, the Krka Group determined the expected value method as the most appropriate for estimating variable consideration for the sale of products with a right of return. Prior to including any variable consideration in the transaction price, the Krka Group assesses whether there is a constraint on variable consideration. Based on past experience, business forecasts, and current economic conditions, the Krka Group has determined that there are no constraints on variable consideration.
The Krka Group is a seller of products that may be subject to payment terms in excess of one year in certain markets. Krka Group recognises financial income and expenses on these sales using the appropriate discount rate.
allowances (impairment) of those receivables for which it is assumed that will not be settled in full or not at all. Allowances are recognised using uniform methodology applicable to the Krka Group and in consideration of the probability or assessed probability of receivable settlement by the debtors. The methodology includes quantitative and qualitative criteria grouped into the following four sets: an analysis of the existing business dealings with the customer, an analysis of the customer's financial statements, a qualitative assessment of the customer by the sales personnel, and an assessment of the customer's country risk. For all customers whose receivables are insured by an insurance company or other first-class insurance, insurance is taken into account when assessing the amount of impairments. Hence, allowances of receivables due from individual customer are calculated by means of an algorithm that includes all the above criteria.
Defined post-employment benefit obligations include the present value of termination benefits on retirement. They are recognised on the basis of the actuarial calculation using assumptions and estimates effective at the time of the calculation, and which may, as a result of future changes, differ from actual assumptions applicable at that future time. This applies primarily to determination of a discount rate, assessment of employee turnover, mortality assessment, and assessment of an increase in salaries. Due to the complexity of the actuarial calculation and the long-term nature of the item, defined benefit obligations are sensitive to changes in the above estimates and assessments.
Lawsuits and claims may be brought against individual companies in the Krka Group for alleged breaches of intellectual property (patent rights or competition law) and those referring to other civil law areas. A provision is recognised when a Krka Group company has present obligations (legal or constructive) as a result of past events, a reliable estimate can be made of the amount of obligation, and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation. Contingent liabilities are not recognised in the financial statements as their actual existence will be confirmed only upon the occurrence or non-occurrence of one or more uncertain future events not entirely within the control of the Krka Group. The Management Board of the controlling company continually assesses contingent liabilities to determine whether an outflow of resources embodying economic benefits has become probable. If this is the case, a provision is recognised in the financial statements of the period in which the change in probability occurs.
The Krka Group applied the same accounting policies in all periods presented in the accompanying consolidated financial statements. Accounting policies applied by subsidiaries have been changed where necessary and adjusted with policies applied by the Krka Group. The accounting policies and the calculation methods used are the same as for the last annual reporting, except for the newly adopted standards and interpretations. which are noted below and were applied if relevant events occurred in the Krka Group in the reporting period.
Amendments to IFRS 3 – Business Combinations, IAS 16 – Property, Plant and Equipment, IAS 37 – Provisions, Contingent Liabilities and Contingent Assets and Annual Improvements 2018-2020. The amendments are effective for annual periods beginning on or after 1 January 2022. Early application is permitted. IASB has published the following limited amendments to IFRSs.
Subsidiaries are entities controlled by the controlling company. Control exists when the controlling company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that are currently exercisable or exchangeable are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.
Intra-group balances and transactions, and any unrealised gains and losses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements of the Krka Group. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.
Transactions and balances in foreign currencies are translated to the respective functional currencies of Krka Group entities at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated to the functional currency at the prevailing exchange rate at that date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are translated to the functional currency at the exchange rate at the date when the fair value was determined. Foreign currency differences are recognised in profit or loss, except for differences arising on the translation of equity instruments, which are recognised directly in other comprehensive income. Non-cash items measured at historical cost in foreign currency are translated to the functional currency by applying the exchange rate valid at the date of the transaction.
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation, are translated to the euro at exchange rates prevailing at the reporting date. The income and expenses of foreign operations are translated to the euro. Foreign exchange differences arising on translation are recognised directly in other comprehensive income as a translation reserve. When a foreign operation is disposed of, in part or in full, the relevant amount in the translation reserve is transferred to profit or loss.
Operating profit comprises profit before tax and financial items. Financial items include interest on bank balances, deposits, investments held for sale, interest paid on borrowings, profit or loss from the sale of financial assets at fair value through other comprehensive income, and foreign exchange gains or losses from the translation of all monetary assets and liabilities to foreign currency.
A number of the Krka Group's accounting policies and disclosures require the determination of fair value for both, financial and non-financial assets and liabilities.
Fair value is the amount for which an asset could be sold or a liability exchanged in a regular transaction between market participants. All assets and liabilities measured and disclosed at their fair value in financial statements are classified in the fair value hierarchy on the basis of lowest level of input data significant for measurements of total fair value:
Fair values have been determined for measurement and/or disclosure purposes based on the methods presented below. Where applicable, further information about the assumptions made in determining fair values is disclosed in the Notes specific to that asset or liability of the Krka Group.
The fair value of financial assets at fair value through profit or loss and at fair value through OCI is determined by reference to their quoted closing bid price. For investment in debt securities at amortised cost, for reporting purposes the fair value is calculated on the basis of the closing rate, which is increased by accrued interest on the reporting date.
Fair value of trade and other receivables is estimated at the present value of future cash flows discounted at the market rate of interest effective at the reporting date.
Fair value is determined based on the present value of future principal and interest payments discounted at the market rate of interest prevailing at the reporting date.
Financial assets of the Krka Group include cash and cash equivalents, receivables, derivatives, loans and investments.
Krka Group's financial assets are upon initial recognition classified as subsequently measured at amortised cost, fair value through other comprehensive income (OCI), and fair value through profit or loss.
The classification of financial assets at initial recognition depends on the financial assets’ contractual cash flow characteristics and the Group's business model for managing them. With the exception of trade receivables that do not contain a significant financing component or for which the Krka Group has applied the practical expedient, the Group initially measures a financial asset at fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do not contain a significant financing component or for which the Krka Group has applied the practical expedient are measured at the transaction price determined under IFRS 15 (refer to accounting policies Revenue from contracts with customers).
In order for financial assets to be classified and measured at amortised cost or fair value through other comprehensive income, they need to give rise to cash flows that are ‘solely payments of principal and interest (SPPI)’ on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at the level of an individual instrument.
The Krka Group's business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both.
If the Group selects a business model that aims to collect contractual cash flows, it values its financial assets (debt instruments) at amortised cost. If the Krka Group acquires financial assets (debt instruments) with the objective of collecting contractual cash flows and for sale, then they are measured at fair value through other comprehensive income by recycling cumulative gains and losses. If the Krka Group does not choose any of these business models, it measures its financial assets (debt instruments) at fair value through profit or loss. Financial assets that are in accordance with IAS 32 – Financial Instruments and are not held for trading purposes, are classified as equity instruments at fair value through other comprehensive income without recycling cumulative gains and losses after derecognition.
Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace (regular way trades) are recognised on the trade date, i.e. the date that the Krka Group commits to purchase or sell the asset.
The Krka Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire or when it transfers the rights to the contractual cash flows from the financial asset in a transaction that transfers all the risks and rewards of ownership of the financial asset.
For purposes of subsequent measurement, financial assets are classified into four categories:
Cash and cash equivalents comprise cash, bank deposits up to three months, and other current, highly realisable investments with an original maturity of three months or less. The latter can be easily converted into known amounts of cash and for which the risk of changes in value is insignificant. The cash flows derived from these assets are solely payments of the principal and interest are therefore classified as financial assets at amortised cost.
According to the SSPI test, loans issued by the Krka Group are classified as financial assets at amortised cost, since the cash flows derived from these assets are solely payments of the principal and interest on the principal amount outstanding. Krka Group's investments in debt securities, which include only low credit risk government bonds, are classified as financial assets at amortised cost.
The Krka Group's financial assets at amortised cost also include trade receivables. After initial recognition, these investments are measured using the effective interest method and are subject to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.
Subsequent to initial recognition, they are measured at fair value. Changes in fair value are recognised directly in other comprehensive income. When an investment is derecognised, the cumulative gain or loss in equity is not transferred to profit or loss.
Financial assets at fair value through profit or loss include financial assets held for trading, financial assets designated upon initial recognition at fair value through profit or loss, or financial assets mandatorily required to be measured at fair value. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. Derivatives, including separated embedded derivatives, are also classified as held for trading unless they are designated as effective hedging instruments. Financial assets with cash flows that are not solely payments of principal and interest are classified and measured at fair value through profit or loss, irrespective of the business model. Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value with net changes in fair value recognised in the statement of profit or loss.
Impairment of financial assets is described in the section ‘Impairment – financial assets’.
Financial liabilities consist mainly of loans, payables to suppliers and other liabilities. Lease liabilities and employee benefits are treated separately (refer to accounting policies in the Leases and Employee benefits expense sections). All other financial liabilities are initially recognised on the trade date or when the Krka Group becomes a contracting party in relation to the instrument. On initial recognition, the Krka Group classifies non-derivative financial liabilities as subsequently measured at amortised cost and derivative financial liabilities as at fair value through profit or loss. After initial recognition, financial liabilities arising from loans are measured using the effective interest method. Gains and losses are recognised in profit or loss when these liabilities are discharged or modified. The Krka Group derecognises a financial liability if the obligations set out in the contract are fulfilled, cancelled or expired.
The items of property, plant and equipment are measured at cost less accumulated depreciation and impairment losses (refer to the accounting policy Impairment). Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, any other directly attributable cost of making the asset ready for its intended use, and (if applicable) costs of dismantling and removing the items and restoring the site on which they are located, as well as capitalised borrowing costs. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment. Gains and losses on disposal of an item of property, plant and equipment are determined as the difference between proceeds from disposal and the carrying amount of property, plant and equipment and are recognised within ‘Other operating income’ or ‘Other operating expenses’ in profit or loss.
The Krka Group includes in the cost of property, plant and equipment also borrowing costs that are directly attributable to the acquisition, construction or production of the asset under construction. Borrowing costs related to the acquisition or construction of the relevant assets are capitalised if they relate to the acquisition of a significant asset and the construction or preparation for use of the relevant assets takes more than six months.
The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Krka Group and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. All other costs are recognised in profit or loss as an expense when incurred.
Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each item of property, plant and equipment or its individual parts. Land and assets being acquired are not depreciated.
The estimated useful lives are as follows:
At contract conclusion, the Krka Group assesses whether a contract is, or contains a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
The Krka Group determines the lease term as the period during which the lease cannot be terminated, inclusive of:
At the commencement date of the lease, the Krka Group recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid by the Krka Group under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Krka Group and payments of penalties for terminating the lease if the lease term reflects the Krka Group exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognised in profit or loss as expenses in the period in which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Krka Group uses its incremental borrowing rate based on estimated bond returns if it were to incur debt on the financial markets, while considering their maturity if the interest rate implicit in the lease is not readily determinable.
Upon initial recognition, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made.
The carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g. change of future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.
For short-term leases and leases where the leased asset is of low value, the Krka Group applies the practical expedient allowed by the standard and recognises lease payments as an expense on a straight-line basis over the lease term. The practical expedient is applied to leases with a lease term of less than one year and leases where the cost of the new leased asset is less than €5,000.
The Krka Group recognises a right-of-use property, plant and equipment asset and a lease liability at the inception of the lease (i.e. the date the leased asset is available for use).
Right-of-use assets are measured at cost less any accumulated depreciation and impairment losses and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received, as well as an assessment of costs that will be incurred in dismantling or removing the leased asset, restoring the site to its original condition, or returning the asset to a condition as required in the lease terms.
The right-of-use assets are depreciated by the Krka Group on a straight-line basis over the shorter of the estimated lease term or the estimated useful lives of the assets.
Leases in which the Krka Group does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. Rental income arising is accounted for on a straight-line basis over the lease terms and is included in revenue in the statement of profit or loss. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income.
Goodwill, which arose on the acquisition of the subsidiary, represents the excess of the cost of the acquisition over the Krka Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the acquiree. Goodwill is measured at cost less accumulated impairment losses and is tested for impairment once a year.
The TAD Pharma trademark is treated by the Krka Group as an intangible asset with a useful life of 50 years and is reviewed annually for impairment.
Other intangible assets that are acquired by the Krka Group, which have finite useful lives, are measured at cost less accumulated amortisation and accumulated impairment losses (refer to the accounting policy Impairment).
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and trademarks, is recognised in profit or loss as incurred.
Amortisation is recognised on a straight-line basis over the estimated useful lives of intangible assets (except of goodwill) from the date that they are available for use. The estimated useful lives of software, licences and other rights range from 2 to 10 years, and 50 years for TAD Pharma trademark.
In the statement of financial position, inventories are measured at the lower of cost and net realisable value. Net realisable value is the estimated selling price at the reporting date less selling expenses. The Krka Group reviews the net realisable value of inventories once a year at the financial position date. If the carrying amount of inventories exceeds their net realisable value, inventories are written-down through profit and loss.
An inventory unit of raw materials and materials, auxiliary and packaging materials is valued at cost including all direct costs of purchase. Inventories of material are carried at weighted average cost. Inventories of finished products and work in progress are carried at standard cost, which in addition to direct cost of material includes also cost of production, such as: direct labour cost, direct cost of depreciation, direct cost of services, energy, maintenance, and quality management. Fixed price variances are determined in accordance with the current valuation of inventories using production costs. A quantity unit of merchandise is valued at cost including cost of purchase, import duties, and all costs directly attributable to the acquisition decreased by discounts. Inventories of merchandise are carried at moving average prices.
The Krka Group recognises an allowance for the expected credit losses (ECLs) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Krka Group expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.
Expected credit losses are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12 months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since the initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).
For trade receivables and contract assets, the Krka Group applies a simplified approach in calculating ECLs. Trade receivables that do not have a significant financing component or for which the Krka Group applies a practical expedient (contracts with a term of one year or less) are measured at the transaction price determined in accordance with IFRS 15, less the amount of any impairment losses.
The Krka Group does not track changes in credit risk, but instead recognises a loss allowance based on a lifetime ECL at each reporting date. The Krka Group has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment. Allowances are recognised using uniform methodology applicable to the Krka Group and in consideration of the probability or assessed probability of receivable settlement by the debtors.
• debt securities that are determined to have low credit risk at the reporting date; and debt securities that are determined to have low credit risk at the reporting date; and
• other debt securities and bank balances for which the credit risk (i.e. the risk of default in the expected life of the financial instrument) has not increased significantly since initial recognition.
The Krka Group considers a debt security to have low credit risk if its credit risk rating is equivalent to the globally understood definition of ‘investment grade’ or equivalent to a rating of Baa2 or above by Moody's or BBB- or above by Standard & Poor's.
The Krka Group monitors changes in credit risk by tracking published external credit ratings. The probabilities of default (PD), both 12-month and over the life of the financial instrument, are based on information provided by the external credit rating agency. The loss given default (LGD) ratios, which reflect the assumed recovery rate, are also provided by the external credit rating agencies.
The carrying amounts of the Krka Group’s non-financial assets are reassessed at each reporting date to determine whether there is any indication of impairment. If such indications exist, the asset’s recoverable amount is assessed.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets are grouped into the smallest cash-generating units, which are the smallest groups of assets that generate cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets. For the purpose of impairment testing, the goodwill acquired in a business combination is allocated to cash-generating units that are expected to benefit from the synergies of the combination.
An impairment of an asset or a cash-generating unit is recognised when its carrying amount exceeds its recoverable amount. Impairment is recognised in the income statement. A loss recognised in a cash-generating unit as a result of impairment is allocated by first reducing the carrying amount of goodwill allocated to the cash-generating unit and then to the other assets of the unit (group of units) in proportion to the carrying amount of each asset in the unit.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in previous periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount of the asset. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised in the previous periods.
When treasury shares recognised as a part of share equity are repurchased, the amount of the consideration paid, including directly attributable costs, is recognised as a deduction from equity. Repurchased shares are classified as treasury shares and are presented as a deduction from total equity.
Dividends are recognised in the Krka Group’s consolidated financial statements in the period in which they are declared by the Annual General Meeting.
Current employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided.
Pursuant to the local legislation of countries where the controlling company and subsidiaries are located, the Krka Group is liable to pay to its employees’ anniversary bonuses and termination benefits upon retirement. Provisions are set aside for these obligations.
Provisions are determined by discounting, at the reporting date, the estimated future benefits in respect of retirement benefits and anniversary bonuses paid to employees in those countries where this legal obligation exists. The obligation is calculated by estimating the costs of retirement benefits upon retirement and the costs of all expected anniversary bonuses until retirement. The calculation is performed using the projected unit credit method. Employee benefit costs, as well as cost of interest, are recognised in profit or loss, whereas restatement of post-employment benefits or unrealised actuarial profit or loss is recognised in other comprehensive income.
A provision is recognised if, as a result of a past event, the Krka Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation.
formed in terms of a favourable or unfavourable outcome of the lawsuit is assessed on an annual basis. The amounts of provisions are defined on the basis of the noted amount of the indemnification claim, or on the basis of anticipated potential amount, if the indemnification claim is not yet disclosed.
The Krka Group is engaged in the development, production, marketing and sale of human health products (prescription pharmaceuticals, non-prescription products), animal health products, and health resorts and tourist services. Revenue from contracts with customers is recognised when control of the goods and services is transferred to the customer at an amount that reflects the consideration to which the Krka Group expects to be entitled in exchange for those goods or services while considering specific terms and conditions of an individual contract.
Transfer of control over those goods and services depends on terms and conditions of the contract. In general, control is transferred when goods are accepted by the customer or services are rendered. The normal credit term ranges from 30 to 120 days.
If the consideration in a contract includes a variable amount, the Krka Group estimates the amount of consideration to which it will be entitled in exchange for transferring the goods or services to the customer. The variable consideration is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognised will not occur when the associated uncertainty with the variable consideration is subsequently resolved. Some contracts for the sale of products provide customers with a right of return, bonuses, and volume rebates. The rights of return, bonuses, and volume rebates give rise to variable consideration.
Certain contracts provide a customer with a right to return goods that are past the expiry date. The Krka Group uses the expected value method to estimate the goods that will not be returned because this method best predicts the amount of variable consideration to which the Krka Group will be entitled. The requirements of IFRS 15 on constraining estimates of variable consideration are also applied in order to determine the amount of variable consideration that can be included in the transaction price. For the goods expected to be returned instead of revenue, the Krka Group recognises a refund liability. A right-of-return asset (and corresponding adjustment to cost of products sold) is also recognised for the right to recover products from a customer.
The Krka Group provides retrospective bonuses and volume rebates to certain customers once the quantity or value of products or services purchased during the period exceeds a threshold specified in the contract. Rebates are offset against amounts payable by the customer. To estimate the variable consideration for the expected future rebates, the Krka Group considers the terms and conditions of the contract, including criteria and elements that provide the basis for the recognition of bonuses and volume rebates.
For valuation, Krka Group uses the most probable value method or the expected value method. The method chosen, which best predicts the value of the rebates and volume discounts, is based on the number of thresholds in the contract. In addition to discounts available to end customers, the Krka Group also grants discounts for public procurement to countries, ministries, or insurance companies in individual countries, based on the agreed tender conditions or contractual provisions and the actual sales orders realised.
Disclosures about the use of estimates and judgements in estimating variable consideration are provided in the Basis for compiling the financial statements of the financial statements section.
In some cases, the Krka Group receives current advances from its customers. Using the practical expedient in IFRS 15.63, the Krka Group does not adjust the promised amount of consideration for the effects of a significant financing component if it expects, at contract inception, that the period between the transfer of the promised goods or services to the customer and when the customer pays for those goods or services will be one year or less.
A receivable represents the Krka Group's right to an amount of consideration that is unconditional, i.e. only the passage of time is required before payment of consideration is due (refer to the accounting policy Recognition of financial instruments).
A contract liability is the obligation to transfer goods or services to a customer for which the Krka Group has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the goods or services are transferred to the customer, a contract liability is recognised when the payment is made, or the payment is due (whichever is earlier). Contract liabilities are recognised as revenue when the Krka Group performs under the contract.
Right-of-return assets represent the Krka Group's right to recover the goods expected to be returned by customers. The asset is measured at the former carrying amount of the inventory, less any expected costs to recover the goods, including any potential decreases in the value of returned goods. The Krka Group regularly updates the measurement of the asset recorded for any revisions to its expected level of returns, as well as any additional decreases in the value of the returned products.
A refund liability is the obligation to refund some or all of the consideration received (or receivable from the customer). It is measured at the amount the Krka Group ultimately expects it will have to return to the customer. The Krka Group updates its estimates of refund liabilities (and the corresponding change in the transaction price) at the end of each reporting period. Refer to above accounting policy on variable consideration.
Income from government grants is initially recognised when there is reasonable assurance that the grant will be received and that the Krka Group will comply with the attached conditions. Income that compensates the expenses incurred is recognised in profit or loss on a systematic basis in the same periods in which the costs are recognised. Income that compensates an entity for the cost of an asset is recognised in profit or loss on a systematic basis over the useful life of the asset.
Financial income comprises interest income on funds invested, dividend income, gains on the disposal of financial assets, changes in the fair value of financial assets at fair value through profit or loss, foreign exchange gains and gains on hedging instruments that are recognised in profit or loss. Interest income is recognised as it accrues in profit or loss, using the effective interest method. Dividend income is recognised on the date that the shareholder's right to receive payment is established, which in the case of quoted securities is the ex-dividend date.
Financial expenses comprise interest expense on borrowings, foreign exchange losses, changes in the fair value of financial assets at fair value through profit or loss, impairment losses recognised on financial assets, and losses on hedging instruments that are recognised in profit or loss. All borrowing costs are recognised in profit or loss using the effective interest method, except those that are attributable to property, plant and equipment under construction.
Income tax expense comprises current and deferred tax. Income tax expense is recognised in profit or loss except to the extent that it relates to items recognised directly in other comprehensive income.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted at the reporting date, and any adjustment to tax payable in respect of previous financial years.
Deferred tax is recognised using the balance sheet liability approach 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: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit, and differences relating to investments in subsidiaries and jointly controlled entities to the extent that it is probable that they will not reverse in the foreseeable future. Also, deferred tax is not recognised for taxable temporary differences arising on the initial recognition of goodwill. The amount of deferred tax is based on the expected manner of settling the carrying amount of assets and liabilities using tax rates enacted at the reporting date. Deferred tax assets are offset against deferred tax liabilities when an entity has a legal right to offset current assets and liabilities, and deferred tax assets and liabilities relate to the same taxable entity and the same tax authority.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the deferred tax asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
An operating segment is a distinguishable component of the Krka Group that is engaged in providing products or services within a particular geographically defined economic environment. Segments are different in terms of risks and returns. The Krka Group's segment reporting is based on the Group's internal reporting system applied by the controlling company's management in the decision-making process.
The segments include: the European Union (all countries of the European Union), South-Eastern Europe (Serbia, Bosnia and Herzegovina, North Macedonia, Montenegro, Kosovo, and Albania), Eastern Europe (Russian Federation and other former Soviet Union countries excluding the Baltic countries), as well as Other (countries not included in any of the above segments).
Revenue generated by individual segments of the Krka Group are presented in terms of customers’ geographical location. The data are calculated on the basis of revenue and expenses, assets and liabilities directly attributable to each Krka Group market. Eliminations relate to transactions between the controlling company and subsidiaries and to transactions between subsidiaries themselves.
Segment capital expenditure is the total cost incurred during the period to acquire property, plant and equipment, and intangible assets.
The following new and amended standards have not come into effect by the date of the financial statements and will be applied in future periods. The Krka Group will apply the new and revised standards and interpretations when they become effective. The Krka Group did not apply any amended standards or interpretations prior to their effective date.
The amendments address an acknowledged inconsistency between the requirements in IFRS 10 and those in IAS 28, in dealing with the sale or contribution of assets between an investor and its associate or joint venture. The main consequence of the amendments is that a full gain or loss is recognised when a transaction involves a business (whether it is housed in a subsidiary or not). A partial gain or loss is recognised by an entity when a transaction involves assets that do not constitute the entity’s business, even if these assets are housed in a subsidiary. In December 2015, the IASB postponed the effective date of this standard indefinitely pending the outcome of its research project on the equity method of accounting. The amendments have so far not been endorsed by the EU. The management has assessed the impact of the amendments and believes they will have no significant impact on the consolidated financial statements of the Krka Group.
The amendments were initially effective for annual periods beginning on or after 1 January 2022. Early application was permitted. In response to the COVID-19 pandemic, the IASB delayed the effective date of the amendments by one year, until 1 January 2024, to allow companies sufficient time to implement the changes to the classification of liabilities. The amendments help promoting consistency in applying the requirements by helping entities determine whether, in the statement of financial position, debt and other liabilities with an uncertain settlement date should be classified as current or non-current. The amendments affect the presentation of liabilities in the statement of financial position; however, they do not change existing requirements around measurement or timing of recognition of any asset, liability, income or expenses, nor the information that entities disclose about those items. Also, the amendments clarify the classification requirements for debt which may be settled by an entity issuing own equity instruments. The management has assessed the impact of the amendments and believes they will have no significant impact on the consolidated financial statements of the Krka Group.
The amendments are effective for annual periods beginning on or after 1 January 2023. Early adoption is permitted. The amendments provide guidance for assessing materiality in the disclosure of accounting policies and replace the requirement to disclose ‘significant’ accounting policies with a requirement to disclose ‘material’ accounting policies. At the same time, the Note provides guidance and illustrative examples to assist in applying the concept of materiality in assessing disclosures about accounting policies. The amendment has so far not been endorsed by the EU. The management has assessed the impact of the amendments and believes they will have no significant impact on the consolidated financial statements of the Krka Group.
The amendments are effective for annual periods beginning on or after 1 January 2023. Early adoption is permitted. They address changes in accounting policies and accounting estimates at the beginning of the period or subsequently and define accounting estimates as monetary amounts in the financial statements that have measurement uncertainty associated with them. They also explain what changes in accounting estimates are and how they differ from changes in accounting policies and corrections of errors. The amendment has so far not been endorsed by the EU. The management has assessed the impact of the amendments and believes they will have no significant impact on the consolidated financial statements of the Krka Group.
IAS 12 and to specify how an entity should account for deferred tax on certain transactions, such as leases and decommissioning liabilities. Under the amendments, the exemption does not apply to transactions for which the taxable amount at initial recognition is equal to the amount of deductible temporary differences. The exception applies only if, on recognition of the leased asset and the related liability (or the liability in connection with the decommissioning and decommissioning of a component of the asset), the taxable amount is not equal to the amount of the deductible temporary differences. The amendment has so far not been endorsed by the EU. The management has assessed the impact of the amendments and believes they will have no impact on the consolidated financial statements of the Krka Group.
The amendments are effective for annual periods beginning on or after 1 January 2024. Early application is permitted. The amendments affect how a vendor-lessee accounts for variable lease payments in sale and leaseback transactions. They introduce a new accounting model for variable payments and require vendor-lessees to reassess and potentially adjust sale and leaseback transactions entered into from 2019.
The amendments confirm the following:
The seller-lessee may adopt different approaches to meet the new subsequent measurement requirements. These amendments do not change the accounting for leases other than those arising in sale and leaseback transactions. Management has assessed the impact of the amendments on the financial statements of the Krka Group and believes that they will not have a material impact on them.
The Krka Group reports in terms of certain geographical segments. Revenue generated by individual segments are presented in terms of customers’ geographical location. The data are calculated on the basis of revenue and expenses, assets and liabilities directly attributable to each Krka Group market. Eliminations relate to transactions between the controlling company and subsidiaries and to transactions between subsidiaries themselves.
| Segment reporting | € thousand | ||||
|---|---|---|---|---|---|
| European Union | 2022 | 2021 | |||
| Revenue from sales to non-group customers | 904,135 | 851,210 | |||
| South-Eastern Europe | 2022 | 2021 | |||
| Revenue from sales to non-group customers | 93,316 | 88,481 | |||
| Eastern Europe | 2022 | 2021 | |||
| Total segment reporting | |||||
| Other | |||||
| Eliminations | |||||
| Total |
| 623,549 | 547,916 | 1,621,000 | 1,487,607 | 96,453 | 78,195 | 1,717,453 | 1,565,802 | |
|---|---|---|---|---|---|---|---|---|
| Revenue from sales to intra-group customers | 382,540 | 333,268 | 60,170 | 56,414 | 605,779 | 537,934 | 1,048,489 | 927,616 |
| 36,933 | 17,219 | -1,085,422 | -944,835 | Total revenue | 1,286,675 | 1,184,478 | 153,486 | 144,895 |
| 1,229,328 | 1,085,850 | 2,669,489 | 2,415,223 | 133,386 | 95,414 | -1,085,422 | -944,835 | |
| 1,717,453 | 1,565,802 | Other operating income | 7,985 | 11,005 | 54 | 46 | 416 | 307 |
| 8,455 | 11,358 | 742 | 18 | 9,197 | 11,376 | Operating expenses | -754,190 | -713,409 |
| -64,222 | -61,607 | -454,408 | -386,483 | -1,272,820 | -1,161,499 | -72,619 | -60,891 | |
| -1,345,439 | -1,222,390 | Intra-group operating expenses, including elimination of profits | -382,541 |
| -333,268 | -60,170 | -56,414 | -605,778 | -537,934 | -1,048,489 | -927,616 | -36,933 | -17,219 | 1,085,422 | 944,835 |
|---|---|---|---|---|---|---|---|---|---|---|
| Operating profit | 157,929 | 148,806 | 29,148 | 26,920 | 169,558 | 161,740 | 356,635 | 337,466 | 24,576 | 17,322 |
| 0 | 0 | 381,211 | 354,788 | Interest income | 2,127 | 249 | 7 | 4 | 787 | 216 |
| 2,921 | 469 | 890 | 351 | 3,811 | 820 | Intra-group interest income | 995 | 544 | 0 | 0 |
| 0 | 0 | 995 | 544 | 0 | 1 | -995 | -545 | Interest expenses | -1,114 | -366 |
| -15 | -11 | -127 | -113 | -1,256 | -490 | -5 | -5 | -1,261 | -495 | Intra-group interest expenses |
| -995 | -545 | 0 | 0 | 0 | 0 |
|---|---|---|---|---|---|
| -995 | -545 | 0 | 0 | 995 | 545 |
| Net financial result | -1,249 | -1,104 | 47 | -155 | |
| 46,275 | 5,891 | 45,073 | 4,632 | 6,789 | 2,997 |
| 51,862 | 7,629 | Income tax expense | -31,076 | -26,730 | -5,237 |
| -3,963 | -30,101 | -21,634 | -66,414 | -52,327 | -2,997 |
| -1,940 | -69,411 | -54,267 | Net profit | 125,604 | 120,972 |
| 23,958 | 22,802 | 185,732 | 145,997 | 335,294 | 289,771 |
| 28,368 | 18,379 | 0 | 0 | 363,662 | 308,150 |
| Investments | 90,600 | 54,623 | 579 | 363 | 14,627 |
| 10,619 | 105,806 | 65,605 | 168 | 781 | 105,974 |
| 66,386 |
| 31 Dec 2022 | 31 Dec 2021 | |
|---|---|---|
| Depreciation of property, plant and equipment | 70,443 | 71,651 |
| 2,073 | 2,004 | |
| 21,454 | 22,591 | |
| 93,970 | 96,246 | |
| 2,964 | 2,443 | |
| 96,934 | 98,689 |
| 31 Dec 2022 | 31 Dec 2021 | |
|---|---|---|
| Depreciation of the right-of-use assets | 2,828 | 2,502 |
| 110 | 105 | |
| 660 | 600 | |
| 3,598 | 3,207 | |
| 87 | 66 | |
| 3,685 | 3,273 |
| 31 Dec 2022 | 31 Dec 2021 | |
|---|---|---|
| Amortisation of intangible assets | 4,182 | 4,261 |
| 334 | 351 | |
| 2,249 | 1,989 | |
| 6,765 | 6,601 | |
| 300 | 274 | |
| 7,065 | 6,875 |
| 31 Dec 2022 | 31 Dec 2021 | |
|---|---|---|
| Total assets | 2,069,151 | 1,917,518 |
| 64,802 | 57,976 | |
| 463,008 | 492,729 | |
| 2,596,961 | 2,468,223 | |
| 90,539 | 68,765 | |
| 2,687,500 |
| € thousand | 2022 | 2021 |
|---|---|---|
| Revenue from contracts with customers (products) | 1,665,990 | 1,523,823 |
| Revenue from contracts with customers (health resorts and tourist services) | 42,552 | 36,465 |
| Revenue from contracts with customers (materials) | 3,988 | 1,978 |
| Total revenue from contracts with customers | 1,712,530 | 1,562,266 |
| € thousand | 2022 | 2021 |
|---|---|---|
| Region Slovenia | 60,495 | 56,415 |
| Region South-East Europe | 224,523 | 209,166 |
| Region East Europe | 623,377 | 547,778 |
| Region Central Europe | 364,154 | 351,501 |
| € thousand | 2022 | 2021 |
|---|---|---|
| Prescription pharmaceuticals | 1,390,972 | 1,305,316 |
| Non-prescription products | 181,977 | 137,250 |
| Animal health products | 93,041 | 81,257 |
| Total | 1,665,990 | 1,523,823 |
In Ukraine, our fourth largest market, we have sold €95,213 thousand of products in 2022 (2021: €96,419 thousand), which represents 5.6% of Krka Group's total sales.
In the Russian Federation, which is Krka's largest single market, we have sold €387,017 thousand of products in 2022 (2021: €332,899 thousand), representing 22.7% of Krka Group's total sales. Demand for our products is adequate.
Trade receivables are outlined in Note 17 ‘Trade and other receivables’, while liabilities from contracts with customers in Note 24 ‘Current liabilities from contracts with customers’. The Krka Group recognised assets from contracts with customers in the amount of €420 thousand (2021: €437 thousand) and liabilities from contracts in the amount of €10,858 thousand (2021: €7,766 thousand in 2021). The recognised assets and liabilities under contracts with customers are set out in the consolidated statement of financial position.
The Krka Group recognised right-of-return liabilities in the amount of €146,853 thousand (2021: €116,965 thousand).
The Krka Group is engaged in the development, production, marketing and sale of human health products (prescription pharmaceuticals, non-prescription products), animal health products, and health resorts and tourist services. Revenue from contracts with customers is recognised when control of the goods and services is transferred to the customer at an amount that reflects the consideration to which Krka expects to be entitled in exchange for those goods or services, while considering specific terms and conditions of an individual contract.
Transfers of control depend on terms and conditions of an individual contract. Generally, the transfer occurs when the customer accepts the goods in accordance with Incoterms 2021 or when the relevant services are performed. Payment terms vary from region to region (distribution channels), while the normal credit term ranges from 30 to 120 days.
At the year-end, the Krka Group incurred no costs on acquisition or fulfilment of contracts with customers, which could be recognised as assets.
| € thousand | 2022 | 2021 |
|---|---|---|
| Reversal of non-current provisions | 2,256 | 5,116 |
| Reversal of deferred income | 1,118 | 1,229 |
| Gains on sale of property, plant and equipment and intangible assets |
| € thousand | 2022 | 2021 |
|---|---|---|
| Cost of goods and materials | 540,206 | 394,891 |
| Cost of services | 249,574 | 229,106 |
| Employee benefits expense | 469,576 | 441,476 |
| Amortisation and depreciation | 107,684 | 108,837 |
| Net write-offs and allowances for inventories | 20,321 | 20,738 |
| Net impairments and write-offs of receivables | 1,875 | 1,048 |
| Formation of provisions for lawsuits | 20 | 563 |
| Other operating expenses | 34,923 | 34,716 |
| Total costs | 1,424,179 | 1,231,375 |
| Change in the value of inventories of finished products and work in progress | -78,740 | -8,985 |
| Total | 1,345,439 | 1,222,390 |
| € thousand | 2022 | 2021 |
|---|---|---|
| Gross wages and salaries and continued pay | 364,441 | 339,342 |
| Social security contributions | 26,368 | 25,003 |
| Pension insurance contributions |
| € thousand | 2022 | 2021 |
|---|---|---|
| Grants and assistance for humanitarian and other purposes | 1,752 | 1,548 |
| Environmental protection expenditures | 6,025 | 5,161 |
| Other taxes and levies | 21,933 | 21,264 |
| Loss on sale and write-offs of property, plant and equipment and intangible assets | 965 | 2,754 |
| Other operating expenses | 4,248 | 3,989 |
| Total other operating expenses | 34,923 | 34,716 |
Other levies include €18,125 thousand (2021: €17,320 thousand) of various taxes and levies paid on pharmaceuticals and fees paid to associates in individual foreign countries for pursuing promotional activities.
| € thousand | 2022 | 2021 |
|---|---|---|
| Net foreign exchange gains | 43,586 | 15,145 |
| Interest income | 3,811 | 820 |
| Derivatives income | 9,096 | 2,968 |
| – Realised revenue | 8,847 | 2,002 |
| – Fair value change | 249 | 966 |
| Income from dividends | 702 | 691 |
| Other financial income | 473 | 87 |
| Total financial income |
| 57,668 | 19,711 | |
|---|---|---|
| Interest expenses | -1,261 | -495 |
| – Interest paid | -960 | -199 |
| – Interest expenses on lease liabilities | -301 | -296 |
| Derivatives expenses | 0 | -10,459 |
| – Realised expenses | 0 | -10,459 |
| Other financial expenses | -4,545 | -1,128 |
| Total financial expenses | -5,806 | -12,082 |
| Net financial result | 51,862 | 7,629 |
The net financial result in 2022 improved over the previous period mostly on the account of net foreign exchange differences recorded in the amount of €44,233 thousand. In 2022, Krka continued its policy of partial hedging against rouble-related risk and the US dollar with financial instruments. The most significant impact was the exchange rate of the rouble (final exchange rate on 31 December 2022 €1 = RUB 78.4308 and on 31 December 2021 €1 = RUB 85.3004). Detailed information on the risk of changes in foreign exchange rates can be found in Note 29 ‘Financial Instruments and Financial Risks’.
| € thousand | 2022 | 2021 |
|---|---|---|
| Current income tax | 79,477 | 53,767 |
| Deferred tax | -10,066 | 500 |
| Total income tax expense | 69,411 | 54,267 |
| Profit before tax | 433,073 | 362,417 |
| Income tax for both years calculated at the rate of 19% | 82,284 | 68,859 |
| Tax on reduced income | -3,252 | -3,231 |
| Tax on non-deductible expenses | 4,518 | 3,190 |
| 31 Dec 2022 | 31 Dec 2021 | |
|---|---|---|
| Income tax from tax incentives | -19,336 | -16,028 |
| Tax on increase/decrease of costs for taxable purposes | 2,855 | 2,071 |
| Effect of different tax rates | 1,631 | 603 |
| Other | 711 | -1,197 |
| Total income tax expense | 69,411 | 54,267 |
| Effective tax rate | 16.0% | 15.0% |
Investments in R&D and investment relief represent the major share of tax incentives.
| € thousand | 31 Dec 2022 | 31 Dec 2021 |
|---|---|---|
| Land | 40,721 | 40,590 |
| Buildings | 356,784 | 359,244 |
| Equipment | 294,308 | 313,227 |
| Property, plant and equipment being acquired | 76,139 | 48,833 |
| Right-of-use assets | 11,384 | 11,763 |
| Total property, plant and equipment | 779,336 | 773,657 |
The largest investments in the controlling company were in 2022 earmarked for increasing the capacity of the OTO plant, i.e. €15,162 thousand (2021: €2,548 thousand) and for renovating the Notol's packaging unit i.e. €6,712 thousand (a new investment in 2022). Another €4,999 thousand (2021: €3,606 thousand) was earmarked for IT and telecommunication projects, €3,958 thousand (2021: €1,265 thousand) for the investment in the new packaging unit at Notol 2 and €3,406 thousand (new investment in 2022) for replacing the cladding boilers at Notol.
As for the subsidiaries, the largest investment was allocated to increase production capacity in the subsidiary Krka-Rus in the Russian Federation, amounting to €13,218 thousand (2021: €5,564 thousand). €3,300 thousand (2021: €179 thousand) was invested in renovating the accommodation facility within the Hotel Laguna in the Terme Krka.
The majority of the right-of-use asset refers to the right of using assets relating to buildings in the amount of Tax on increase/decrease of costs for taxable purposes €8,033 thousand (2021: €8,487 thousand).
| € thousand | Land | Buildings | Equipment | PPE being acquired | Right-of-use assets | Total |
|---|---|---|---|---|---|---|
| Purchase cost |
| 40,290 | 848,025 | 1,209,544 | 41,727 | 16,508 | 2,156,094 |
|---|---|---|---|---|---|
| 0 | 0 | 0 | 61,125 | 0 | 61,125 |
|---|---|---|---|---|---|
| 336 | 8,165 | 45,356 | -53,857 | 0 | 0 |
|---|---|---|---|---|---|
| 0 | 0 | 0 | 0 | 3,871 | 3,871 |
|---|---|---|---|---|---|
| -80 | -723 | -18,310 | -907 | -1,135 | -21,155 |
|---|---|---|---|---|---|
| 44 | 4,087 | 5,214 | 776 | 172 | 10,293 |
|---|---|---|---|---|---|
| 0 | 0 | -8 | -31 | 0 | -39 |
|---|---|---|---|---|---|
| 40,590 | 859,554 | 1,241,796 | 48,833 | 19,416 | 2,210,189 |
|---|---|---|---|---|---|
| 40,590 | 859,554 | 1,241,796 | 48,833 | 19,416 | 2,210,189 |
|---|---|---|---|---|---|
| 0 | 99,147 | 0 | 99,147 |
|---|---|---|---|
| 0 | 0 | 0 | 0 | 3,648 | 3,648 |
|---|---|---|---|---|---|
| -19 | -1,805 | -23,883 | 0 | -1,327 | -27,034 |
|---|---|---|---|---|---|
| 48 | 4,656 | 3,879 | 570 | 77 | 9,230 |
|---|---|---|---|---|---|
| 0 | -240 | 301 | -42 | 0 | 19 |
|---|---|---|---|---|---|
| 40,721 | 884,050 | 1,272,475 | 76,139 | 21,814 | 2,295,199 |
|---|---|---|---|---|---|
| 0 | -471,898 | -872,122 | 0 | -4,945 | -1,348,965 |
|---|---|---|---|---|---|
| 0 | -27,560 | -71,129 | 0 | -3,273 | -101,962 |
|---|---|---|---|---|---|
| Transfers, reclassifications | 0 | 0 | 5 | 0 | 0 | 5 |
|---|---|---|---|---|---|---|
| Translation reserve | 0 | -1,275 | -3,158 | 0 | -76 | -4,509 |
| Balance at 31 Dec 2021 | 0 | -500,310 | -928,569 | 0 | -7,653 | -1,436,532 |
| Balance at 1 Jan 2022 | 0 | -500,310 | -928,569 | 0 | -7,653 | -1,436,532 |
| Depreciation | 0 | -26,874 | -70,060 | 0 | -3,685 | -100,619 |
| Disposals, deficit, surplus | 0 | 1,363 | 22,946 | 0 | 919 | 25,228 |
| Transfers, reclassifications | 0 | -25 | -40 | 0 | 0 | -65 |
| Translation reserve | 0 | -1,420 | -2,444 | 0 | -11 | -3,875 |
| Balance at 31 Dec 2022 | 0 | -527,266 | -978,167 |
| € thousand | 31 Dec 2022 | 31 Dec 2021 |
|---|---|---|
| Goodwill | 42,644 | 42,644 |
| Trademark | 34,047 | 34,918 |
The Krka Group has production and distribution facilities in the Russian Federation, where production is carried out at Krka RUS, while distribution is carried out through Krka Farma. Both companies together constitute the cash-generating unit (CGU) Russian Federation. The carrying amount of property, plant and equipment allocated to the cash-generating unit is €86,527 thousand (2021: €74,461 thousand).
The Russian-Ukrainian situation has increased uncertainty, which has led to a significant increase in the weighted average cost of capital in the financial markets. Consequently, management has assessed the recoverable amount of the assets allocated to the Russian Federation CGU. The recoverable amount of the CGU is based on the value in use calculated by discounting the future cash flows generated by the continued use of the CGU. The Krka Group's current strategy does not envisage the sale of production capacity in the Russian Federation and does not foresee the payment of dividends in the foreseeable future.
| 14,685 | 15,216 | |
|---|---|---|
| Other intangible assets | ||
| 7,468 | 7,590 | |
| – Long-term deferred operating costs | 715 | 645 |
| – Development-related projects | 5,738 | 6,633 |
| – Emission coupons | 1,015 | 312 |
| Intangible assets being acquired | 3,706 | 3,933 |
| Total intangible assets | 102,550 | 104,301 |
Goodwill arose on the acquisition of subsidiaries TAD Pharma in Germany (€42,277 thousand) and Krka Pharma in Austria (€367 thousand). The item of trademark refers mostly to the trademark of TAD Pharma (€33,922 thousand).
| € thousand | Goodwill | Trademark | Concessions, trademarks and licences | Other IA | IA being acquired | Total | |
|---|---|---|---|---|---|---|---|
| Purchase cost | Balance at 1 Jan 2021 | 42,644 | 42,629 | 72,383 | 62,772 | 4,487 | 224,915 |
| Additions | 0 | 0 | 0 | 0 | 5,261 | 5,261 | |
| Transfer from IA being acquired | 0 | 0 | 3,548 | 1,317 | -4,865 | 0 | |
| Disposals, deficit, surplus | 0 | 0 | -55 | -596 | -952 |
| -1,603 | Transfers, reclassifications | 0 | 0 | -6 | 0 | 2 | -4 |
|---|---|---|---|---|---|---|---|
| Translation reserve | 0 | 0 | 37 | 209 | 0 | 246 | |
| Balance at 31 Dec 2021 | 42,644 | 42,629 | 75,907 | 63,702 | 3,933 | 228,815 | |
| Balance at 1 Jan 2022 | 42,644 | 42,629 | 75,907 | 63,702 | 3,933 | 228,815 | |
| Additions | 0 | 0 | 0 | 0 | 6,827 | 6,827 | |
| Transfer from IA being acquired | 0 | 0 | 3,893 | 2,917 | -6,810 | 0 | |
| Disposals, deficit, surplus | 0 | 0 | -869 | -2,016 | -238 | -3,123 | |
| Transfers, reclassifications | 0 | 0 | 132 | -190 | 0 | -58 | |
| Translation reserve | 0 | 0 | 62 | 179 | -6 | 235 | |
| Balance at 31 Dec 2022 | 42,644 |
| Accumulated amortisation | Balance at 1 Jan 2021 | Amortisation | Disposals, deficit, surplus | Transfers, reclassifications | Translation reserve | Balance at 31 Dec 2021 |
|---|---|---|---|---|---|---|
| 0 | 0 | 0 | 0 | 0 | 0 | |
| -6,841 | -870 | 0 | 0 | 0 | -7,711 | |
| -56,435 | -4,279 | 41 | 6 | -24 | -60,691 | |
| -54,268 | -1,726 | 65 | -4 | -179 | -56,112 | |
| 0 | 0 | 0 | 0 | 0 | 0 | |
| -117,544 | -6,875 | 106 | 2 | -203 | -124,514 |
| Balance at 1 Jan 2022 | Amortisation | Disposals, deficit, surplus |
|---|---|---|
| 0 | 0 | 0 |
| -7,711 | -871 | 0 |
| -60,691 | -4,486 | 833 |
| -56,112 | -1,708 | |
| 0 | 0 | |
| -124,514 | -7,065 |
| Transfers, reclassifications | 0 | 0 | -43 | 101 | 0 | 58 | |
|---|---|---|---|---|---|---|---|
| Translation reserve | 0 | 0 | -53 | -127 | 0 | -180 | |
| Balance at 31 Dec 2022 | 0 | -8,582 | -64,440 | -57,124 | 0 | -130,146 | |
| Carrying amount | Balance at 1 Jan 2021 | 42,644 | 35,788 | 15,948 | 8,504 | 4,487 | 107,371 |
| Balance at 31 Dec 2021 | 42,644 | 34,918 | 15,216 | 7,590 | 3,933 | 104,301 | |
| Balance at 1 Jan 2022 | 42,644 | 34,918 | 15,216 | 7,590 | 3,933 | 104,301 | |
| Balance at 31 Dec 2022 | 42,644 | 34,047 | 14,685 | 7,468 | 3,706 | 102,550 |
For the purpose of impairment testing, goodwill arising on the acquisition of TAD Pharma amounting to €42,277 thousand has been allocated to two cash-generating units (CGUs) i.e. to CGU TAD Pharma in the amount of €30,989 thousand and to CGU Krka (controlling company) in the amount of €11,288 thousand.
The values assigned to the key assumptions represent management's best estimate of future industry trends and were based on historical data obtained from both internal and external sources.
The estimated recoverable amount of the cash-generating unit exceeds its carrying amount and therefore there is no need to impair the cash-generating unit.
The recoverable amount of the CGU Krka is based on the value in use calculated by discounting the future cash flows generated by the continued use of the CGU. The five-year financial plans of CGU Krka were used, with a projected five-year average growth rate of earnings before interest, taxes, amortisation of 1.7% (previous year's projected five-year average growth rate: 4.8%), the discount rate is 8.0% (2021: 7.9%) and the annual growth rate of the free cash flow at residual value is 2.0% (2021: 2.0%). The annual growth rate of free cash flow was determined on the basis of long-term inflation estimates. The values assigned to the key assumptions represent management's best estimate of future industry trends and were based on historical data obtained from both internal and external sources.
Based on the goodwill impairment assessment performed, it was concluded that there is no need to impair CGU Krka.
| € thousand | 31 Dec 2022 | 31 Dec 2021 |
|---|---|---|
| Non-current loans | 77,539 | 40,300 |
| – Loans to others | 47,539 | 40,300 |
| – Deposits granted to banks | 30,000 | 0 |
| Current loans | 6,327 | 192,360 |
| – Portion of non-current loans maturing next year | 4,559 | 1,826 |
| – Loans to others | 23 | 321 |
| – Deposits granted to banks | 2 | 190,264 |
| – Current interest receivables | 1,743 | -51 |
| Total loans | 83,866 | 232,660 |
Non-current loans include a loans by a subsidiary in China for the construction of a production plant for an amount of €35,335 thousand (2021: €27,798 thousand), as well as housing loans granted by the controlling company and certain subsidiaries to employees in accordance with the internal rules. The loan in China has a maturity of 7 years from the first disbursement and a grace period for repayment of 2.5 years from the first disbursement. The loan is secured by a guarantee from Ningbo Menovo Pharmaceutical Co. Ltd, which is the owner of the borrowing company Ningbo Menovo Tiankang Pharmaceutical Co., Ltd, and a mortgage on the borrower's immovable property.
| € thousand | 31 Dec 2022 | 31 Dec 2021 |
|---|---|---|
| Non-current investments | 110,770 | 108,883 |
| – Investments at fair value through OCI (equity instruments) | 15,989 | 15,861 |
| – Investments at amortised cost (debt instruments) | 94,781 | 93,022 |
| 2021 | 2022 | |
|---|---|---|
| Investments at amortised cost (debt instruments) | 50,697 | 113,987 |
| Derivatives | 1,740 | 1,491 |
| Other current investments at fair value through profit or loss (debt instruments) | 0 | 39,970 |
| Total investments | 163,207 | 264,331 |
Investments at fair value through other comprehensive income comprised €877 thousand of investments in shares and interests in companies in Slovenia (2021: €1,002 thousand), and €15,112 thousand of investments in shares of companies located abroad (2021: €14,859 thousand). Investments at amortised cost include investments in Slovenian government bonds which amounted to €6,533 thousand (2012: €4,455 thousand), while investments in foreign government bonds amounted to €138,945 thousand (2021: €202,554 thousand).
| € thousand | Financial assets at fair value through OCI | Investments at amortised cost | Investments at fair value through profit or loss |
|---|---|---|---|
| Balance at 1 Jan 2021 | 10,420 | 0 | 0 |
| Increase | 0 | 205,946 | 40,000 |
| Foreign exchange differences | 0 | 1,063 | 0 |
| Adjustment to market value | 5,441 | / | -30 |
| Balance at 31 Dec 2021 | 15,861 | 207,009 | 39,970 |
| Balance at 1 Jan 2022 | 15,861 | 207,009 | 39,970 |
| Increase | 0 | 54,083 | 0 |
| Decrease | 0 | -119,265 |
-40,000
0
3,651
0
15,989
145,478
0
Increases in financial assets comprise new acquisitions and imputed interest, while decreases comprise coupons received, imputed interest and disposals due to the investment's maturity. Adjustments of non-current investments at fair value through OCI were recognised in other comprehensive income in the amount of €128 thousand (2021: €5,441 thousand). Exchange differences on investments at amortised cost of €3,651 thousand (2021: €1,063 thousand) are recognised in financial income.
| € thousand | Assets | Liabilities | ||
|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |
| Investments, property, plant and equipment and intangible assets | 332 | 367 | 11,925 | 12,316 |
| Investments at fair value through OCI | 1,708 | 1,727 | 2,490 | 2,466 |
| Inventories | 34,540 | 24,378 | 0 | -37 |
| Receivables | 11,766 | 10,242 | 0 | 0 |
| Dividends | 33 | 19 | 0 | 0 |
| Provisions for post-employment benefits and other non-current employee benefits | 8,704 | 13,398 | 0 | 0 |
| Transfer of tax loss | 344 | 575 | 0 | 0 |
| Total | 57,427 | 50,706 | 14,415 |
| € thousand | Balance at 1 Jan 2021 | Recognised in income statement | Translation reserve | Recognised in OCI | Balance at 31 Dec 2021 | Recognised in income statement | Translation reserve | Recognised in OCI | Balance at 31 Dec 2022 |
|---|---|---|---|---|---|---|---|---|---|
| Investments, property, plant and equipment and intangible assets | -12,206 | 296 | -39 | 0 | -11,949 | 417 | -61 | 0 | -11,593 |
| Investments at fair value through OCI | 295 | 0 | 0 | -1,034 | -739 | -19 | 0 | -24 |
| -782 | 30,547 | -6,208 | 76 | 0 | 24,415 | 10,218 | -93 | 0 | 34,540 |
|---|---|---|---|---|---|---|---|---|---|
| 4,693 | 5,290 | 259 | 0 | 10,242 | 967 | 557 | 0 | 11,766 |
|---|---|---|---|---|---|---|---|---|
| 14 | 5 | 0 | 0 | 19 | 14 | 0 | 0 | 33 |
|---|---|---|---|---|---|---|---|---|
| 13,642 | 347 | -3 | -588 | 13,398 | -1,300 | -1 | -3,393 | 8,704 |
|---|---|---|---|---|---|---|---|---|
| 805 | -230 | 0 | 0 | 575 | -231 | 0 | 0 | 344 |
|---|---|---|---|---|---|---|---|---|
| 37,790 | -500 | 293 | -1,622 | 35,961 | 10,066 | 402 | -3,417 | 43,012 |
|---|---|---|---|---|---|---|---|---|
| € thousand | 31 Dec 2022 | 31 Dec 2021 |
|---|---|---|
| Materials | 230,094 | 188,994 |
| Work in progress | 125,925 | 104,640 |
| Finished products | 169,510 | 152,597 |
| Merchandise | 8,297 | 7,299 |
| Advances for inventories | 19,506 | 2,177 |
| Total inventories | 553,332 | 455,707 |
The increase in inventories is the result of adapting to uncertain market conditions. By carefully planning our inventories and maintaining safety stocks, we ensure that we always have access to the intermediate goods that we require to produce our finished products. The planning of inventories of intermediate goods is based on sales forecasts. We also ensure optimal and adequate stocks of finished products throughout the distribution chain.
The net write-downs and write-offs of inventories recorded among operating expenses amounted in the reporting period to €20,321 thousand (2021: €20,738 thousand).
The Krka Group does not pledge inventories as collateral.
| € thousand | 31 Dec 2022 | 31 Dec 2021 |
|---|---|---|
| Current trade receivables | 402,730 | 467,764 |
| Current receivables due from others | 27,728 | 29,564 |
| Total trade and other receivables | 430,458 | 497,328 |
The net amount of the write-offs and impairment of receivables disclosed in operating expenses amounted in 2022 to €1,875 thousand (2021: €1,048 thousand).
96.1% of trade receivables were insured with a credit insurer, by taking into account 86.7% of the deductible (98.5% were insured as at 31 December 2021, by taking into account 89.8% of the deductible).
| € thousand | Gross value | Allowances for receivables | Net value at 31 Dec 2022 | Net value at 31 Dec 2021 |
|---|---|---|---|---|
| Trade receivables due from domestic customers | 11,605 | 39 |
| € thousand | 31 Dec 2022 | 31 Dec 2021 |
|---|---|---|
| Cash in hand | 64 | 30 |
| Bank balances | 518,870 | 159,808 |
| Total cash and cash equivalents | 518,934 | 159,838 |
The share capital of the Company in the amount of €54,732 thousand is represented by 32,793,448 ordinary no-par value shares. There is solely one class of share. The share capital is fully paid in.
At the 26th Annual General Meeting on 9 July 2020, the Management Board was granted authorisation for the purchase of treasury shares. However, the total amount of treasury shares should not exceed the 10% of Company's share capital, i.e. 3,279,344 shares, whereby the total amount is inclusive of shares already held by Krka as at the date. The authorisation is valid for a period of 36 months from the date of the decision adoption.
Based on this authorisation, the Company is allowed to acquire treasury shares on the regulated market at respective market prices. The Company may also acquire treasury shares outside the regulated market. When purchasing treasury shares on the regulated market or non-regulated market, the purchase price must not be lower than the book value based on the last published audited financial statements of the Krka Group. Furthermore, the purchase price must not exceed 25-fold the earnings per share held by the majority stakeholders as stated in the last published audited financial statements of the Krka Group.
Pursuant to paragraphs 3 and 4, Article 381 of the Companies Act (ZGD-1), an entity may reduce the share capital by withdrawal of all treasury shares in a simplified procedure and recognise the amount against other profit reserves.
| No. of shares | Weighted average share price (€) | Value of treasury |
|---|---|---|
| (€ thousand) | Balance at 31 Dec 2020 | 1,541,774 | |
|---|---|---|---|
| Repurchases in 2021 | 142,134 | 107.38 | 15,262 |
| Balance at 31 Dec 2021 | 1,683,908 | 114,541 | |
| Repurchases in 2022 | 101,941 | 98.35 | 10,025 |
| Balance at 31 Dec 2022 | 1,785,849 | 124,566 |
The performed repurchases of treasury shares refers to repurchases that were recorded in individual years. A subscription fee is included in the weighted average price of shares. The amount paid, including commission, is deducted from the total capital as treasury shares until such shares are withdrawn, reissued or sold.
The repurchases of treasury shares in 2022 in terms of days are outlined in Note 35 to the financial statements of Krka, d.d., Novo mesto ‘Repurchase of treasury shares’.
The Krka Group's reserves comprise reserves for treasury shares, the share premium, legal and statutory reserves, fair value reserve and translation reserves.
Reserves for treasury shares amounted as at the balance sheet date to €124,566 thousand and increased by €10,025 thousand based on their formation as a result of additional repurchase of treasury shares.
The share premium is to be used under the terms and purposes as defined by the applicable act. The share premium was reported at €105,897 thousand as at 31 December 2022 and consisted of the general equity revaluation adjustment of €90,659 thousand that was included in share premium during the transfer to IFRS; the share premium of €10,844 thousand formed pursuant to a special regulation applicable in the ownership transformation of the controlling company; and €4,394 thousand of share premium resulting from reduction in the share capital due to the withdrawal of treasury shares. The amount may be used solely for the purpose of increasing share capital. In 2022, the value of share premium remained unchanged.
Legal reserves may be formed up to 30% of the share capital. They amounted to €14,990 thousand as at 31 December 2022 and remained unchanged compared to the previous period.
Statutory reserves amounted to €30,000 thousand as at the reporting date and remained unchanged over the previous period. Statutory reserves are formed by the Krka Group up to the amount of €30,000 thousand. Statutory reserves can be used for loss coverage, formation of reserves for treasury shares, for decreasing share capital by share withdrawal, and for regulating the dividend policy. Statutory reserves are available for drawdown.
The fair value reserve includes the cumulative change in the fair value of financial assets and post-employment benefits. Compared to the previous period, the fair value reserve increased by €24,747 thousand and amounted to €2,670 thousand as at 31 December 2022. The cumulative change is due to a €128 thousand increase in the fair value of financial assets through OCI (equity instruments); a decrease for the impact of deferred taxes of €3,417 thousand and an increase due to the restatement of post-employment benefits of €28,036 thousand.
Compared to the previous period, the value of the translation reserve increased by €12,355 thousand and amounted to –€85,919 thousand as at 31 December 2022. The increase occurred as a result of exchange rate losses occurring during the translation of individual items in financial statements of foreign operations into the reporting currency.
Retained earnings grew based on the majority shareholder's profit of €363,296 thousand. On the other hand, they declined as a result of allocation of accumulated profit to dividend payment amounting to €175,025 thousand in accordance with the resolution adopted by the 28th Annual General Meeting on 7 July 2022; an additional formation of reserves for treasury shares in total of €10,025 thousand on account of the share repurchase by the controlling company in 2022 and changes in provisions for termination benefits amounting to €1,937 thousand.
In 2022, the declared gross dividend per share was €5.63 (2021: €5.00).
Krka holds a 60-percent holding in Ningbo Krka Menovo Pharmaceutical Co. Ltd., with Ningbo Menovo Pharmaceutical Co., Ltd. having a 40-percent holding. The following table summarises information about the company before any intra-group spin-offs. In 2022, the shareholders increased the company's share capital in the amount of €15,380 thousand, in proportion to their respective shareholdings.
| € thousand | 2022 | 2021 |
|---|---|---|
| Non-controlling interest | 40% | 40% |
| Non-current assets | 40,521 | 33,813 |
| Current assets | 20,626 | 5,082 |
| Non-current liabilities | 0 | -7 |
| Current liabilities | -11,416 | -4,189 |
| Net assets | 49,731 | 34,699 |
| Net assets, attributable to the non-controlling interest | 19,893 | 13,879 |
| Revenue | 29,634 | 14,543 |
| Net profit | 915 | -2,661 |
| Other comprehensive income | 0 | 0 |
| Total comprehensive income | 915 | -2,661 |
| Net profit, attributable to the non-controlling interest | 366 | -1,064 |
| Other comprehensive income, attributable to the non-controlling interest | -505 | 1,265 |
Basic earnings per share amounted to €11.69 in 2022 and increased by 18% over the previous year, when it amounted to €9.92. The calculation of earnings per share took into account the profit for the period attributable to the controlling interests in the amount of €363,296 thousand (2021: €309,214 thousand). The weighted average number of shares was accounted for in the calculation for both years i.e. 31,070,960 shares for 2022, and 31,185,323 shares for 2021. The average number of shares is calculated from the daily share balances during the year, less treasury shares.
Diluted earnings per share equal the basic earnings per share as the Krka Group has not issued any dilutive or contingently dilutive instruments.
221
Movement of provisions in 2022
| € thousand | Balance at | 31 Dec 2021 |
|---|---|---|
| Provisions for lawsuits | 577 | 10,000 | 20 | 0 | 0 | 0 | 10,597 |
|---|---|---|---|---|---|---|---|
| Provisions for post-employment benefits | 104,429 | 0 | -18,966 | -3,898 | -1,807 | -8 | 79,750 |
| Provisions for other non-current employee benefits | 19,854 | 0 | -1,857 | -1,442 | -341 | -5 | 16,209 |
| Other provisions | 1,293 | 0 | 719 | -1,225 | -108 | 0 | 679 |
| Total provisions | 126,153 | 10,000 | -20,084 | -6,565 | -2,256 | -13 | 107,235 |
| € thousand | Balance at 31 Dec 2021 | Formation | Utilisation | Reversal | Translation reserve | Balance at 31 Dec 2022 |
|---|---|---|---|---|---|---|
| Provisions for lawsuits | 2,164 | 563 | –12 | –2,138 |
| Provisions for post-employment benefits | 109,698 | 854 | –4,699 | –1,421 | –3 | 104,429 |
|---|---|---|---|---|---|---|
| Provisions for other non-current employee benefits | 20,512 | 1,243 | –1,584 | –315 | –2 | 19,854 |
| Other provisions | 2,312 | 629 | –406 | –1,242 | 0 | 1,293 |
| Total provisions | 134,686 | 3,289 | –6,701 | –5,116 | –5 | 126,153 |
The amounts of provisions for lawsuits referring to intellectual property are defined on the basis of the noted amount of the indemnification claim, or on the basis of anticipated amount, if the indemnification claim is not yet disclosed. External advisers for disputes referring to intellectual property are engaged for defining the anticipated amounts. Furthermore, the management each year verifies the calculated amount of provisions for each individual claim that is not yet closed.
In 2014, the European Commission found that Krka had infringed Article 101 of the Treaty on the Functioning of the EU, thereby distorting competition on the EU market for perindopril, and imposed a fine of €10,000 thousand on Krka. Krka paid the fine within the time limit set by the Commission. However, as it considered that its conduct did not infringe competition law rules, it brought an action against the decision before the EU General Court, which ruled in favour of Krka in December 2018.
The General Court's decision is not yet final and the Commission has lodged an appeal against it within the appeal period, which will be decided by the European Court of Justice. In 2022, Krka transferred the value from non-current operating liabilities to provisions for lawsuits.
The controlling company and its subsidiaries were in 2022 involved in intellectual property disputes and other areas of law (civil, labour, administrative disputes, etc.). The total value of the claims against Krka is estimated at €1,324 thousand. The Krka Group has formed provisions of €597 thousand for this purpose. The reversal of provisions is disclosed in Note 5 ‘Other operating income’.
Provisions for obligations to employees arising from post-employment and other non-current benefits are based on actuarial calculation using the following assumptions:
• the 2.00% increase in salaries (2021: 2.00%).
| € thousand | 2022 | 2021 |
|---|---|---|
| Balance at 1 Jan | 104,429 | 109,698 |
| Current service costs (CSC) | 5,824 | 6,602 |
| Interest costs (IC) | 1,300 | 796 |
| Post-employment benefits paid | -3,897 | -4,526 |
| Staff departures (reversal) | -1,807 | -1,382 |
| Actuarial surplus/deficit, whereof: | -26,099 | -6,759 |
| – Change in financial assumptions | -28,492 | -7,973 |
| – Experience | 2,393 | 1,214 |
| Balance at 31 Dec | 79,750 | 104,429 |
| Discount rate | Increase in wages and salaries | Change in percentage points | Change by | Impact on liabilities (€ thousand) |
|---|---|---|---|---|
| 0.5 | –0.5 | -4,879 | ||
| 0.5 | –0.5 | 5,358 | ||
| 0.5 | –0.5 | 5,435 | ||
| 0.5 | –0.5 | -4,990 |
| € thousand | Balance at 31 Dec 2021 | New deferred income received | Reversal of deferred income | Balance at 31 Dec 2022 |
|---|---|---|---|---|
| Grants received from the European Regional Development Fund and budget of the Republic of Slovenia intended for the production of pharmaceuticals in the new Notol 2 Plant | 1,058 | 0 |
| -215 | 843 |
|---|---|
| 3,320 | 266 |
| -355 | 3,231 |
| 2,376 | 0 |
|---|---|
| -521 | 1,855 |
| 3 | 0 |
|---|---|
| -1 | 2 |
| 12 | 13 |
|---|---|
| -12 | 13 |
| 10 | 10 |
|---|---|
| -10 | 10 |
| 93 | 0 |
|---|---|
| -1 | 92 |
| 3 | 0 |
|---|---|
| -1 | 2 |
| 0 | 2 |
|---|---|
| -2 | 0 |
| 6,875 | 291 |
|---|---|
| -1,118 | 6,048 |
Production of pharmaceuticals in the new Notol 2 Plant and Farma GRS projects are partly funded by the EU from the European Regional Development Fund. The Notol project is carried out within the framework of the Operational programme for strengthening regional development potentials for the 2007-2013 period; Priority axis 1: Competitiveness and Research Excellence: main type of activity 1.1.: Improvement of competitiveness and research excellence. The Farma GRS project was eligible for co-financing of costs under R&D projects, including project management and investment in research and development and production activities.
The amounts of deferred income are decreased by the proportionate share of depreciation of assets to which the grants refer and by any other types of expenses incurred.
| € thousand | 31 Dec 2022 | 31 Dec 2021 |
|---|---|---|
| Refund liabilities | 146,853 | 116,965 |
| – Bonuses and volume rebates | 145,924 | 114,795 |
| – Rights of return | 929 | 2,170 |
| Contract liabilities | 10,857 | 7,765 |
| – Contract liabilities – deferred income | 1,290 | 1,101 |
| – Contract liabilities – advances from other customers | 9,567 | 6,664 |
| Total current contract liabilities | 157,710 | 124,730 |
Accrued bonuses and volume discounts include discounts to which the customers are entitled when the relevant terms and conditions are fulfilled; these discounts are not granted to customers in the year of the sale.
| € thousand | 31 Dec 2022 | 31 Dec 2021 |
|---|---|---|
| Payables to employees – gross salaries, other receipts and charges | 69,812 | 67,978 |
| Liabilities under repurchase transactions (repo-type operations) | 0 | 102,234 |
| Other | 16,556 | 19,820 |
| Total other current liabilities | 86,368 | 190,032 |
The item ‘Other’ also includes current liabilities to the State on account of VAT payable in the amount of €10,557 thousand (2021: €13,261 thousand) and other current liabilities to the State totalling to €4,268 thousand (2021: €4,133 thousand).
| € thousand | 31 Dec 2022 |
|---|---|
| Guarantees issued | 17,291 |
|---|---|
| Other | 1,935 |
| Total contingent liabilities | 19,226 |
Among the guarantees issued, the largest items are the performance guarantee for the supply of products awarded in tenders in Italy, amounting to €12,000 thousand, and the guarantee for the TAD Pharma credit line, amounting to €3,000 thousand.
The Krka Group concludes lease agreements for various assets such as parking spaces and offices, warehouses, land, apartments, cars and equipment.
The lease terms are assessed according to the type of a lease:
The Krka Group does not sub-lease the leased assets.
The Krka Group concluded lease contracts for various production and non-production equipment, temporary offices and parking spaces, with lease term of shorter than one year. In respect of those leases, the Group applied a practical expedient provided by the Standard.
| € thousand | Carrying amounts of lease liabilities under interest-bearing loans and borrowings and movements during the period |
|---|---|
| Balance at 1 Jan 2021 | 11,833 |
| Increase/Decrease | 3,473 |
| Interest | 296 |
| Lease payments | -3,515 |
| Translation reserve | 70 |
| Balance at 31 Dec 2021 | 12,157 |
| – Current lease liabilities | 3,433 |
| – Non-current lease liabilities | 8,724 |
| Balance at 1 Jan 2022 | 12,157 |
| Increase/Decrease | 3,305 |
| Interest | 301 |
| Lease payments | -3,926 |
| Translation reserve | 4 |
11,841
– Current lease liabilities
3,752
– Non-current lease liabilities
8,089
The maturity analysis of lease liabilities is disclosed in Note 29 ‘Financial instruments and financial risks’.
| € thousand | 2022 | 2021 |
|---|---|---|
| Depreciation of right-of-use assets | 3,685 | 3,273 |
| Interest expenses on lease liabilities | 301 | 296 |
| Expenses relating to current leases | 1,134 | 1,357 |
| Total amount recognised in income statement | 5,120 | 4,926 |
225
| € thousand | Balance at 31 Dec 2021 | Monetary changes | Non-monetary changes | Other | Balance at 31 Dec 2022 |
|---|---|---|---|---|---|
| Dividends | 1,322 | -175,044 | 175,025 | 0 | 1,303 |
| Leases | 12,157 | -3,926 | 3,309 | 301 | 11,841 |
| Liabilities under repurchase transactions (repo-type operations) | 102,234 | -101,762 | 0 | -472 | 0 |
| Total | 115,713 | -280,732 | 178,334 | -171 | 13,144 |
| € thousand | Balance at 31 Dec 2020 | Monetary changes | Non-monetary changes | Other | Balance at 31 Dec 2021 |
|---|---|---|---|---|---|
| Dividends | 1,335 | -155,907 | 155,896 | -2 | 1,322 |
| Leases | 11,833 | -3,515 | 3,543 | 296 | 12,157 |
| Liabilities under repurchase transactions (repo-type operations) | 0 | 102,292 | 0 | -58 | 102,234 |
| Total | 13,168 | -57,130 | 159,439 | 236 | 115,713 |
The key credit risk of the Krka Group arises from trade receivables. This is the risk of customers failing to settle their liabilities by maturity dates.
The Krka Group introduced a centralised credit control process in 2004. The system includes all customers with credit limits exceeding €20,000. Numbering over 670 of such customers at the end of 2022, they accounted for more than 95% of total trade receivables. Receivables due from small customers accounted for less than 5% of total trade receivables. Control over small customers is decentralised in the sales network and under the constant supervision of the controlling company.
Credit control is a two-step process. The first step involves assessing the credit risk for each customer, determining hedging instruments, and assigning relevant credit limits. We assess each new customer and review the credit ratings of all customers twice a year. Each credit rating includes many different financial and non-financial indicators, which fall into 4 categories (an assessment of the buyer's profitability, payment habits and payment discipline, an assessment of the buyer's financial statements, a qualitative assessment of the sales staff and an assessment of country risk) each of which carries a different weight in the final assessment).
Each customer is assigned a customised credit limit according to the credit rating and the expected shipment and payment dynamics.
The second step in the credit-control process involves regular dynamic monitoring of a customer's payment discipline. The information systems of all Krka Group companies engaged in sales monitor available limits and overdue receivables. Control is exercised for each shipment of Krka products to customers. A shipment is automatically blocked if a customer is in arrears or if receivables together with the new shipment exceed the approved credit limit. Sales personnel are required to initiate a payment collection procedure or arrange hedging for the outstanding settlements.
Krka’s internal rules determine the process of credit control and authorisations for granting credit limits to customers. Credit control also avails of a system of regular reporting on trade receivables and the customer's payment discipline. The reporting system aids the early detection of customers at increased risk of defaulting on payments and facilitates effective credit risk management.
The credit control process employs uniform rules which apply to all customers. Due to specifics of sales markets, additional national controls have been introduced in individual subsidiaries. Credit control processes are regularly adjusted to changes in the sales markets.
Credit control guarantees permanent control over the quality of the trade receivables portfolio. The result is a low share of receivable write-offs and impairments in view of Krka Group sales.
The amount of receivable write-offs and impairments is also low because receivables are dispersed across many customers and sales markets, and the majority of outstanding receivables are due from customers with whom Krka has been doing business for several years.
The credit risk environment was due to the challenges related to the COVID-19 pandemic and the heightened situation in Ukraine, the Russian Federation and Belarus very challenging in 2022. We paid particular attention to these markets and further strengthened our activities to manage trade receivables. The credit risk management performance in 2022 was favourable. At the year-end, the value of trade receivables was 14% lower than at the beginning of the year, while the amount of overdue and unpaid receivables remained within a range acceptable to Krka.
The amount of the newly established valuation allowance for receivables exceeded the amount of the reversed allowance. The impact of net impairments and write-offs on the Krka Group's bottom line in 2022 was less than 0.11% of sales.
The carrying amount of financial assets represents the largest exposure to credit risk as illustrated below:
| € thousand | Notes | 31 Dec 2022 | 31 Dec 2021 |
|---|---|---|---|
| Loans | 13 | 83,866 | 232,660 |
| Investments at amortised cost (debt instruments) | 14 | 145,478 | 207,009 |
| Trade receivables | 17 | 402,730 | 467,764 |
| Cash and cash equivalents | 18 | 518,934 | 159,838 |
| Total | 1,151,008 | 1,067,271 |
As for the financial assets exposed to credit risk, the loans and trade receivables are presented separately.
The loans include a €30,000 thousand deposit with a maturity of over one year with a Slovenian bank with a high credit rating. The loan in the amount of €35,335 thousand for production facilities in China and housing loans for Krka employees represent a limited credit risk for the Krka Group.
Investments at amortised cost (debt instruments) represent investments in non-current and current bonds of EU countries. They are classified as a low credit risk financial instrument because their credit risk rating is equivalent to the globally understood definition of 'investment grade', which is equivalent to a rating of Baa2 or above by Moody's or BBB- or above by Standard & Poor's.
The majority of Krka Group's cash and cash equivalents are represented by the parent company's bank balances and deposits with maturities of less than 90 days with banks in the EU with a high credit rating (P-1 according to Moody's). A smaller proportion of cash and cash equivalents is represented by the bank balances of the subsidiaries' foreign bank accounts, earmarked for regular payments.
Loans by geographical region
| € thousand | 31 Dec 2022 | 31 Dec 2021 |
|---|---|---|
| Region | 31 Dec 2022 | 31 Dec 2021 |
|---|---|---|
| Slovenia | 11,568 | 12,214 |
| South-East Europe | 78,859 | 80,178 |
| East Europe | 143,635 | 240,641 |
| Central Europe | 72,534 | 58,109 |
| West Europe | 90,545 | 71,966 |
| Overseas Markets | 5,589 | 4,656 |
| Total | 402,730 | 467,764 |
As at 31 December 2022, €132 thousand of receivables were outstanding from Ukrainian customers (as at 31 December 2021, receivables in the amount of €39,159 thousand were outstanding, which were almost fully closed with customer payments during 2022). In 2022, advance payments have been agreed with all Ukrainian customers.
The value of receivables from Russian customers as at 31 December 2022 and 31 December 2021 amounted to €120,137 thousand and €181,661 thousand, respectively. The lower receivables balance is due to factoring carried out by the Russian subsidiary Krka Farma LLC with Russian banks.
| Gross value at | Allowance at | Gross value at | Allowance at |
|---|---|---|---|
| 31 Dec 2022 | 31 Dec 2022 | 31 Dec 2021 | 31 Dec 2021 |
| Not past due | 83,861 | 0 | 232,650 |
| € thousand | Gross value at 31 Dec 2022 | Allowance at 31 Dec 2022 | Net value at 31 Dec 2022 | Gross value at 31 Dec 2021 | Allowance at 31 Dec 2021 | Net value at 31 Dec 2021 |
|---|---|---|---|---|---|---|
| Not past due | 394,575 | 685 | 393,890 | 457,944 | 487 | 457,457 |
| Past due up to 20 days | 6,618 | 45 | 6,573 | 7,011 | 39 | 6,972 |
| Past due from 21 to 50 days | 372 | 16 | 356 | 2,341 | 80 | 2,261 |
| Past due from 51 to 180 days | 862 | 58 | 804 | |||
| Past due more than 180 days | 4 | 0 | 7 | |||
| Total | 83,866 | 0 | 232,660 |
| Past due more than 180 days | 38,862 | 37,755 | 1,107 | 37,922 | 36,897 | 1,025 |
|---|---|---|---|---|---|---|
| Total | 441,289 | 38,559 | 402,730 | 505,313 | 37,549 | 467,764 |
The Krka Group agrees extended terms with certain customers. If Krka Group did not extend payment terms to some of its customers, receivable maturity structure would be as follows at the reporting date: not past due €364,673 thousand (2021: €400,150 thousand); past due up to 20 days €21,125 thousand (2021: €43,046 thousand); past due between 21 and 50 days €10,136 thousand (2021: €22,462 thousand); past due between 51 and 180 days €2,806 thousand (2021: €104 thousand); and past due more than 180 days €3,458 thousand (2021: €1,610 thousand).
| € thousand | Gross value at 31 Dec 2022 | Allowance 31 Dec 2022 | Net value at 31 Dec 2022 | Gross value at 31 Dec 2021 | Allowance 31 Dec 2021 | Net value at 31 Dec 2021 |
|---|---|---|---|---|---|---|
| Not past due | 120,406 | 269 | 120,137 | 181,813 | 178 | 181,635 |
| Past due up to 20 days | 0 | 0 | 0 | 26 | 0 | 26 |
| Past due from 21 to 50 days | 0 | 0 | 0 | 0 | 0 | 0 |
| Past due from 51 to 180 days |
| Total | 120,406 | 269 | 120,137 | 181,839 | 178 | 181,661 |
|---|---|---|---|---|---|---|
Due to the decrease in receivables from customers in the Russian Federation, the high percentage of secured receivables, which amounted to 90.9% and 72.4% if taking into account the own participation (at 31 December 2021 all receivables were secured and 90% if taking into account the own participation 90%) and the good payment discipline of the customers, the allowance for doubtful debts towards Russian customers has not been increased with respect to 2021. None of the receivables as at 31 December 2022 was past due.
| € thousand | 2022 | 2021 |
|---|---|---|
| Balance at 1 Jan | 37,549 | 37,286 |
| Formation of allowance | 2,054 | 1,550 |
| Write-off of receivables | -700 | -957 |
| Impairment reversal | -352 | -334 |
| Collected written-off receivables | -1 | -16 |
| Effect of exchange rate differences | 9 | 20 |
| Balance at 31 Dec | 38,559 | 37,549 |
Business partners value Krka for its excellent financial discipline and stable cash flows. In 2022, we settled all financial liabilities regularly. Krka Group exposure to liquidity risk was low.
The Krka Group has agreements with two banks for the allowed negative balance on transaction accounts for a total amount of €5,688 thousand (in 2021, the Krka Group had agreements with two banks for a total amount of €5,415 thousand). As there were no negative balances on transaction accounts at 31 December 2022, the bank overdraft remained fully unused.
As at 31 December 2022, Krka Group had an undrawn credit facility of €20,000 thousand (2021: €20,000 thousand). At the end of 2022, the Krka Group recorded excess liquidity, primarily as cash at bank or deposits with commercial banks with high credit ratings. The increase in excess liquid assets in 2022 is due to the excess of positive cash flow from operating and investing activities over financing uses.
The European Central Bank started to gradually increase key interest rates in the second half of 2022. Low-risk cash investments have thus started to yield positive returns. In line with our internal investment diversification rules and taking into account interest rate, liquidity, credit and currency risks, we deposited most of our cash surpluses with commercial banks.
Cash from all Krka Group companies is transferred to the controlling company's master account either automatically daily (cash pooling) or manually through individual bank transfers. This allows for cash management optimisation, currency risk mitigation, an overview of liquidity of all Krka Group companies, and enhanced security of cash transactions. The Krka Group also reported favourable and stable liquidity ratios at the end of 2022.
Financial liabilities in terms of maturity are outlined in the tables below.
| € thousand | Carrying amount | Contractual cash flows | Total | Up to 6 months | 6 – 12 months | 1 – 2 years | 2 – 5 years | 5 – 10 years |
|---|---|---|---|---|---|---|---|---|
| Financial liabilities | Lease liabilities | 11,841 | 12,406 | 1,980 | 1,923 | 2,842 | 4,771 | 890 |
| Trade payables excluding advances | 140,837 | 140,837 | 140,837 | 0 | 0 | 0 | 0 | |
| Contract liabilities excluding advances | 145,924 | 145,924 | 145,924 | 0 | 0 | 0 | 0 | |
| Other liabilities excluding amounts owed to the State, to employees and advances | 7,478 | 7,478 | 7,478 | 0 | 0 | 0 | 0 | |
| Total financial liabilities | 306,080 | 306,645 | 296,219 |
| € thousand | Carrying amount | Contractual cash flows | Total | Up to 6 months | 6 – 12 months | 1 – 2 years | 2 – 5 years | 5 – 10 years |
|---|---|---|---|---|---|---|---|---|
| Financial liabilities | Lease liabilities | 12,157 | 12,805 | 1,838 | 1,778 | 3,152 | 4,620 | 1,417 |
| Trade payables excluding advances | 130,011 | 130,011 | 130,011 | 0 | 0 | 0 | ||
| Contract liabilities excluding advances | 114,795 | 114,795 | 114,795 | 0 | 0 | 0 | ||
| Repo liability | 102,234 | 102,234 | 102,234 | 0 |
Total derivative financial liabilities
0
0
0
0
0
0
0
Total
306,080
306,645
296,219
1,923
2,842
4,771
| 3,546 | 3,546 | 3,546 | 0 | 0 | 0 | 0 |
|---|---|---|---|---|---|---|
| 362,743 | 363,391 | 352,424 | 1,778 | 3,152 | 4,620 | 1,417 |
|---|---|---|---|---|---|---|
| 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|---|---|---|---|---|---|---|
| 362,743 | 363,391 | 352,424 | 1,778 | 3,152 | 4,620 | 1,417 |
|---|---|---|---|---|---|---|
The Krka Group operates in diverse international environments and is exposed to foreign exchange risk in certain sales and purchase markets.
Currency exposure arises from the difference in the value of assets and liabilities in a particular currency in the financial position statement of the Krka Group and from differences between operating income and expenses generated in individual currencies.
The key accounting categories composing a currency position are trade receivables, trade payables, liquid financial assets in foreign currencies, derivatives for currency risk hedging, and recorded purchase orders.
The Russian rouble is the largest currency position of the Krka Group at 39% at the end of 2022. The position in roubles has increased compared to the beginning of 2022. As of April 2022, the rouble currency position could no longer be reduced by derivatives, which was the key reason for its increase. The rouble position arises from trade receivables on the Russian market.
The significance of the Russian sales market, the size of the currency exposure and the volatile value of the Russian rouble are the reasons why we pay special attention to the risk management of the Russian rouble. Due to the lower availability of financial instruments, we put more emphasis on natural methods of reducing exposure in 2022.
In contrast to other currencies, we report an excess of liabilities over assets in US dollars from ordinary operations i.e. a short currency position. The exposure to the US dollar is mainly derived from the purchase of raw materials and supplies.
Taking into account the liquid US dollar financial assets and the forward contracts for the purchase of US dollars, which totally neutralise the short currency position from operating activities, the US dollar exposure at the end of 2022 represents approximately 5% of the Krka Group's total currency exposure.
The exposure to the Romanian leu, which represented 15% of the currency position at the end of 2022, arises from trade receivables resulting from longer payment terms in the country. The exposure to the Polish zloty is a result of trade receivables and production capacity that we have in Poland and represents 13% of the currency position.
The value of the rouble in euro terms increased by 8.8% from the beginning to the end of 2022, and was on average 18.7% higher than in 2021.
The value of the US dollar denominated in euro increased by 6.2% from the beginning to the end of 2022, on average 12.3% higher than in 2021. The impact of the change in the value of the US dollar on Krka Group's net financial result was neutralised by financial instruments.
The Ukrainian hryvnia has lost around 20% of its value against the euro since the beginning of the Russian invasion of Ukraine. We are not directly exposed to currency risks in Ukraine because we sell in euro.
The Polish zloty has been fairly stable, depreciating by 1.8% from the beginning to the end of 2022, while its average value was 2.6% lower than in 2021. The Romanian leu and the Croatian kuna, which were in the ERM in 2022, have been very stable. The value of the British pound decreased in 2022. The contribution of these currencies to Krka Group's net financial result was small.
The Krka Group generally eliminates currency risks through natural methods, primarily by increasing purchases and payables in the currencies in which it invoices sales. Where this is not possible, financial instruments are used or the risk is left unhedged. As a rule, forward contracts are used for hedging.
In 2022, we continued our policy of partially hedging the Russian rouble and US dollar risk with financial instruments. In the first quarter of 2022, we had partially hedged the Russian rouble risk with forward contracts, but this was no longer possible from April 2022 onwards. The appreciation of the rouble against the euro resulted in net foreign exchange gains.
The increasing operational risk exposure and an interest rate difference between the euro and the US dollar that is favourable for Krka are two key reasons that contributed to partial hedging of the exposure in the US dollar with financial instruments also in 2022. Due to the short currency position, the dollar strengthening had a negative financial impact on the Krka Group result. In 2022 however, this was largely offset by income from the US dollar hedging instruments.
To hedge the risk of changes in the EUR/USD currency pair and to hedge additional risks in 2023, forward contracts of the controlling company with a principal amount of $45,000 thousand and a maturity of less than 2 months were open at the year-end of 2022.
| € thousand | 31 Dec 2022 | ||||
|---|---|---|---|---|---|
| EUR* | RUB | PLN | USD | RON | |
| Loans | 44,244 | 86 | 17 | 0 | 31 |
| Trade receivables | 101,451 | 137,966 | 50,293 | 5,819 | 46,991 |
| Cash and cash equivalents | 454,565 | 29,846 | 2,674 | 7,682 | 538 |
| Current trade payables | -109,248 | -4,385 | -1,914 | -9,753 | -485 |
| Financial position exposure (net) | 491,012 | 163,513 | 51,069 |
| EUR* | RUB | PLN | USD | RON | |
|---|---|---|---|---|---|
| Loans | 204,071 | 69 | 211 | 0 | 31 |
| Trade receivables | 118,062 | 198,121 | 44,803 | 5,093 | 44,213 |
| Cash and cash equivalents | 87,416 | 6,497 | 3,104 | 44,169 | 1,075 |
| Non-current operating liabilities | -10,000 | 0 | 0 | 0 | 0 |
| Current trade payables | -101,305 | -8,566 | -2,058 | -9,129 | -283 |
| Financial position exposure (net) | 298,244 | 196,121 | 46,060 | 40,133 | 45,037 |
*EUR is the functional currency and does not represent exposure to foreign currency risk.
| Average exchange rate* | Final exchange rate* | 2022 | 2021 | |
|---|---|---|---|---|
| RUB | 73,43 | 78,43 | 87,15 | 85,30 |
| PLN | 4,69 | 4,68 | 4,57 | 4,60 |
| USD | 1,05 |
| 1 | 18 |
|---|---|
| 1 | 07 |
| 1 | 13 |
| RON | 4,93 |
| 4,92 | |
| 4,95 | |
| 4,95 |
*Number of national currency units for one euro.
The above-stated exchange rates were used for the calculation of items in the financial statements as at 31 December and equal the reference exchange rates of the ECB effective on the last day of the year. Since the end of March 2022, the Bloomberg exchange rate is used to convert the Russian rouble.
A 1% change in the value of these currencies against euro as at 31 December 2022 or 31 December 2021 would increase or decrease the profit by the amounts stated below. The analysis, prepared in the same manner for both years, assumes that all other remaining variables, in particular interest rates, remain unchanged. The calculation of the above-stated exchange rate volatility impact took into account the balance of receivables, liabilities, loans and cash and cash equivalents denominated in the local currencies.
| Currency | +1% | –1% | +1% | –1% |
|---|---|---|---|---|
| RUB | 1,635 | -1,635 | 1,961 | -1,961 |
| PLN | 511 | -511 | 461 | -461 |
| USD | 37 | -37 | 401 | -401 |
| RON | 471 | -471 | 450 | -450 |
Any additional 1% increase/decrease of the euro exchange rate in respect of currencies stated above, would increase or decrease the profit or loss before tax in the above-stated amounts.
Interest rate risk is defined as the risk that the Krka Group will incur an increase in its cost of long-term funding or a decrease in its income on non-current investments as a result of changed market interest rates.
The risk of changes in interest rates on current financial resources and current investments is managed within the Krka Group's liquidity risks.
Krka Group had no non-current borrowings in 2022.
| € thousand | 31 Dec 2022 | 31 Dec 2021 |
|---|---|---|
| Financial instruments at a fixed rate of interest | 485,123 | 232,701 |
| Financial assets |
| 485,123 | 232,701 |
|---|---|
| 30,000 | 10 |
|---|---|
| 30,000 | 10 |
|---|---|
A 100 basis-point increase in the variable interest rate for 2022 would have increased the profit or loss by €300 thousand. A decrease in 2021 (a decrease in the interest rate by 100 basis points would decrease the profit or loss by €300 thousand). An increase of 100 basis points in the variable interest rate would increase the 2021 profit or loss by €0.1 thousand (a decrease of the interest rate by 100 basis points would decrease the profit or loss by €0.1 thousand). The analysis, which is carried out in the same way for both years, assumes that all variables, in particular the exchange rate, remain constant.
The primary objective of the Krka Group's capital management is to ensure a high credit rating and adequate funding ratios to ensure the appropriate development of its business and to maximise value for its shareholders. By managing and adjusting its capital structure, the Krka Group aims to keep pace with changes in the economic environment. Dividends are paid once a year in line with the strategic dividend growth policy. The Krka Group has no specific employee ownership targets and no share option plan. There were no changes in approach to capital management in 2022 or 2021.
| € thousand | 31 Dec 2022 | 31 Dec 2021 |
|---|---|---|
| Trade payables and other current liabilities | 384,915 | 454,773 |
| Cash and cash equivalents | 518,934 | 159,838 |
| Net indebtedness | -134,019 | 294,935 |
| Equity | 2,138,509 | 1,919,085 |
| Equity and net indebtedness | 2,004,490 | 2,214,020 |
| Financial leverage (debt/equity) ratio | -6.7% | 13.3% |
The following table shows the carrying amounts and fair values of financial assets and financial liabilities. The table does not include disclosures about the fair values of financial assets and liabilities not measured at fair value, where the carrying amount is a reasonable approximation of fair value.
| € thousand | 31 Dec 2022 | 31 Dec 2021 | Carrying amount |
|---|---|---|---|
| Non-current financial assets | Carrying amount | Fair value |
|---|---|---|
| Loans | 77,539 | 40,300 |
| Investments at fair value through OCI | 15,989 | 15,989 |
| Investments at amortised cost | 94,781 | 93,022 |
| Current financial assets | Carrying amount | Fair value |
|---|---|---|
| Loans | 6,327 | 192,360 |
| Investments through profit or loss | 0 | 0 |
| Investments at amortised cost | 50,697 | 113,987 |
| Derivatives | 1,740 | 1,740 |
| Trade receivables | 402,730 | 467,764 |
| Cash and cash equivalents | 518,934 | 159,838 |
| Non-current financial liabilities | Carrying amount | Fair value |
|---|---|---|
| Trade payables | 0 | -10,000 |
| Lease liabilities | -8,089 | -8,724 |
| Current financial liabilities | Carrying amount | Fair value |
|---|---|---|
| Lease liabilities | -3,752 | -3,433 |
| Trade payables excluding advances | -140,837 | -130,011 |
| Contract liabilities excluding advances | -145,924 | -114,795 |
| Liabilities under repurchase transactions (repo-type operations) | 0 | -102,234 |
| Other current liabilities excluding amounts owed to the State, to employees and advances | -7,478 | -3,546 |
862,657
| € thousand | 31 Dec 2022 | 31 Dec 2021 |
|---|---|---|
| Level 1 | 14,602 | 14,474 |
| Level 2 | 0 | 0 |
| Level 3 | 1,387 | 1,387 |
| Total | 15,989 | 15,861 |
| Investments through profit or loss | 0 | 39,970 |
| Derivatives | 1,740 | 1,491 |
| Total assets at fair value | 17,729 | 57,322 |
Data on groups of persons
of the total equity or 0.0136% of voting rights.
| No. of shares | Equity share (%) | Share in voting rights (%) | No. of shares | Equity share (%) | Share in voting rights (%) | |
|---|---|---|---|---|---|---|
| Members of the Management Board | ||||||
| Jože Colarič | 22,500 | 0.0686 | 0.0726 | 22,500 | 0.0686 | 0.0723 |
| Aleš Rotar | 13,915 | 0.0424 | 0.0449 | 13,915 | 0.0424 | 0.0447 |
| Vinko Zupančič | 120 | 0.0004 | 0.0004 | 120 | 0.0004 | 0.0004 |
| David Bratož | 0 | / | / | 0 | / | / |
| Milena Kastelic | 505 | 0.0015 | 0.0016 | 505 | 0.0015 | 0.0016 |
| Total Members of the Management Board | 37,040 | 0.1129 | 0.1195 | 37,040 | 0.1129 | 0.1191 |
| Members of the Supervisory Board | (owner representatives) |
| Name | Value 1 | Value 2 | Value 3 | Value 4 |
|---|---|---|---|---|
| Jože Mermal | 0 | / | / | 0 |
| Matej Lahovnik | 600 | 0,0018 | 0,0019 | 600 |
| Julijana Kristl | 230 | 0,0007 | 0,0007 | 230 |
| Borut Jamnik | 0 | / | / | 0 |
| Mojca Osolnik Videmšek | 617 | 0,0019 | 0,0020 | 617 |
| Boris Žnidarič | 0 | / | / | 0 |
| Franc Šašek | 1,400 | 0,0043 | 0,0045 | 1,400 |
| Tomaž Sever | 500 | 0,0015 | 0,0016 | 500 |
| Mateja Vrečer | 0 | / | / | 0 |
Treasury shares were eliminated from the calculation of voting rights (1,785,849 treasury shares as at 31 December 2022 and 1,683,908 as at 31 December 2021).
| € thousand | 31 Dec 2022 | 31 Dec 2021 |
|---|---|---|
| Members of the Management Board in the controlling company | 4,163 | 3,560 |
| Managers of subsidiaries | 2,839 | 2,682 |
| Members of the Supervisory Board in the controlling company | 274 | 303 |
| Members of the Supervisory and Management Boards in subsidiaries | 1 | 1 |
| Total gross remuneration paid to groups of persons | 7,277 | 6,546 |
Remuneration paid to members of the Management Board in the controlling company and directors of subsidiaries included wages and salaries, fringe benefits and any other earnings. For each year, they are shown on a cost basis and therefore differ from the remuneration shown in the Report on Remuneration of the Members of the Management Board and Supervisory Board of the Company for 2022, where they are shown by payments in each year.
Remuneration paid to members of the Supervisory Board in the controlling company represents earnings in connection with exercising the function within the Supervisory Board. Remuneration paid to members of the Supervisory and Management Boards in subsidiaries, who simultaneously act as members of the Management Board in the controlling company or are employed under individual employment contracts, also only include earnings for exercising the function within the Supervisory and Management Boards.
Gross earnings paid to persons employed under individual employment contracts in 2022 amounted to €13,825 thousand (2021: €13,091 thousand).
| € thousand | Salary – fixed part | Salary – variable part | Total | Gross | Net payout | Net fringe benefits and other earnings |
|---|---|---|---|---|---|---|
| Jože Colarič |
| Aleš Rotar | 390 | 165 | 15 | 549 | 221 | 939 |
|---|---|---|---|---|---|---|
| Vinko Zupančič | 311 | 132 | 16 | 457 | 184 | 768 |
| David Bratož | 333 | 142 | 16 | 449 | 181 | 782 |
| Milena Kastelic | 219 | 94 | 13 | 85 | 35 | 304 |
| Total remuneration paid to Members of the Management Board | € thousand | |||||
| 1,774 | 747 | |||||
| 79 | 2,389 | |||||
| 962 | 4,163 | |||||
| 1,788 |
| Executive health insurance | |
|---|---|
| Supplementary pension insurance | |
| Anniversary bonuses | |
| Other bonuses | |
| Refund of work-related costs | |
| Pay for annual leave |
| Name | Salary – fixed part | Salary – variable part | Total Gross | Net payout | Net fringe benefits and other earnings |
|---|---|---|---|---|---|
| Jože Colarič | 10.00 | 2.89 | 3.18 | 1.19 | 0.04 |
| Aleš Rotar | 5.00 | 2.89 | 0.00 | 3.87 | 1.02 |
| Vinko Zupančič | 5.00 | 2.89 | 0.00 | 5.31 | 0.84 |
| David Bratož | 5.00 | 2.89 | 0.00 | 5.59 | 1.03 |
| Milena Kastelic | 5.00 | 2.89 | 1.92 | 0.06 | 1.09 |
| Total remuneration paid to Members of the Management Board | 30.00 | 14.45 | 5.11 | 16.02 | 4.01 |
| Member | Net fringe benefits and other earnings | Executive health insurance | Supplementary pension insurance | Anniversary bonuses | Other bonuses | Refund of |
|---|---|---|---|---|---|---|
| Aleš Rotar | 1,164 | 491 | 342 | 141 | 11 | 465 |
| Vinko Zupančič | 807 | 346 | 289 | 120 | 13 | 387 |
| David Bratož | 663 | 290 | 283 | 120 | 11 | 380 |
| Milena Kastelic | 250 | 118 | 170 | 78 | 6 | 80 |
| Total remuneration paid to Members of the Management Board | 3,560 | 1,539 | 1,514 | 637 | 48 | 2,046 |
| Name | Pay for Annual Leave | Total |
|---|---|---|
| Jože Colarič | 0.00 | 6.64 |
| Aleš Rotar | 0.00 | 10.65 |
| Vinko Zupančič | 0.00 | 12.86 |
| David Bratož | 0.00 | 10.81 |
| Milena Kastelic | 0.00 | 6.32 |
Total remuneration paid to Members of the Management Board: 47.28
Other bonuses refer to the use of a company car for private purposes and other similar bonuses. Refund of work-related costs consists of commuting and meal allowances. Members of the Management Board do not receive attendance fees or any other income for exercising their functions in the Management and Supervisory Boards in subsidiaries.
| € thousand | Basic pay for exercising the function | Attendance fees | Commuting allowances |
|---|---|---|---|
| Name | Total Gross | Total Net | Gross | Net | Gross | Net | Gross | Net |
|---|---|---|---|---|---|---|---|---|
| Jože Mermal | 30.00 | 21.82 | 1.65 | 1.20 | 0.00 | 0.00 | 31.65 | 23.02 |
| Matej Lahovnik | 27.75 | 20.18 | 2.75 | 2.00 | 0.85 | 0.62 | 31.35 | 22.80 |
| Borut Jamnik | 28.13 | 20.46 | 3.25 | 2.36 | 0.00 | 0.00 | 31.38 | 22.82 |
| Julijana Kristl | 26.25 | 19.09 | 2.59 | 1.88 | 0.41 | 0.30 | 29.25 | 21.27 |
| Mojca Osolnik Videmšek | 26.25 | 19.09 | 3.25 | 2.36 | 0.43 | 0.31 | 29.93 | 21.76 |
| Boris Žnidarič | 28.13 | 20.46 | 2.59 | 1.88 | 0.43 | 0.31 | 31.15 | 22.65 |
| Franc Šašek | 27.75 | 20.18 | 3.25 | 2.36 | 0.00 | 0.00 | 31.00 | 22.54 |
|---|---|---|---|---|---|---|---|---|
| Tomaž Sever | 26.25 | 19.09 | 2.59 | 1.88 | 0.43 | 0.32 | 29.27 | 21.29 |
| Mateja Vrečer | 26.25 | 19.09 | 2.31 | 1.68 | 0.00 | 0.00 | 28.56 | 20.77 |
| Total remuneration paid to Members of the Supervisory Board | 246.76 | 179.46 | 24.23 | 17.60 | 2.55 | 1.86 | 273.54 | 198.92 |
In accordance with a resolution adopted at the 27th Annual General Meeting on 8 July 2021, Members of the controlling company's Supervisory Board are entitled to an attendance fee, which for each individual member of the controlling company's Supervisory Board amounts to €275.00 gross. Members of the Supervisory Board Commission receive an attendance fee for their participation in sessions, which for each individual member amounts to 80% of the attendance fee for Supervisory Board sessions. The attendance fee for participating in correspondence sessions amounts to 80% of the general attendance fee. Notwithstanding the foregoing, and irrespective of the number of attendances at meetings of the Supervisory Board and the Commissions in any financial year, a member of the Supervisory Board shall be entitled to the payment of attendance fees until the total amount of the attendance fees reaches 50% of the basic pay for exercising the function of a Member of the Supervisory Board on an annual basis. Notwithstanding the foregoing, and irrespective of the number of attendances at meetings of the Supervisory Board and the Commissions in any financial year, a member of the Supervisory Board who is a member of a Commission or Commissions of the Supervisory Board shall be entitled to the payment of attendance fees until the total amount of the attendance fees for attendance at sessions of the Supervisory Board and the Commissions reaches 75% of the basic pay for exercising the function of a Member of the Supervisory Board on an annual basis.
entitled to a bonus corresponding to 37.5% of the extra fee for exercising the function of a member of the Supervisory Board Commission. A Member of the Supervisory Board Commission is in every financial year entitled – regardless of the above-mentioned or the number of Commissions he/she is a member of or presides over – to receive bonuses until the total amount of these bonuses reaches 50% of the basic pay for exercising the function of the Supervisory Board member on an annual basis. Notwithstanding the above, if the term of office of a member of the SC is shorter than a financial year, and irrespective of the number of Commissions of which he/she is a member or presides over, a member of a Commission of the Supervisory Board shall be entitled to payouts of extra fees for the performance of his/her duties in a financial year, until the total amount of such payouts for exercising the function reaches 50% of the basic pay for of a member of the Supervisory Board in respect of the eligible payments for the period of his/her term of office in the financial year.
Members of the Supervisory Board are also entitled to extra fees for special tasks. Special tasks are those which involve the actual performance of unusual tasks of above-average complexity over a prolonged period of time, normally lasting at least one month. The Supervisory Board is authorised to take decisions with the agreement of the Supervisory Board member on the assignment of special tasks to that member, the duration of the special tasks and the extra fees for the special tasks in accordance with this Assembly Decision. The Supervisory Board is also authorised to take decisions on extra fees for special tasks of the Supervisory Board members due to objective circumstances in the Company. Extra fees for special tasks are only admissible for the time when the special tasks are actually carried out, which may exceptionally be decided retrospectively by the Supervisory Board (in particular in the case of special tasks due to objective circumstances in the Company), but not more than for the previous financial year. The extra fees for special tasks that a member may receive in a given year may amount to a maximum of 50% of the basic pay for exercising the functions of a member of the Supervisory Board (irrespective of the number of special tasks). The amount of the additional payment shall take into account the complexity of the special task and the increased workload and responsibility involved. The extra fee rate shall be calculated according to the time actually spent on the special task.
Members of the Company's Supervisory Board receive a basic pay and an extra fee for exercising the function and a bonus for special tasks, in proportionate monthly payments which they are entitled while they are performing a function and/or a special task. The monthly payment amounts to one twelfth of the aforesaid annual amounts. Depending on the circumstances, a surcharge for special tasks may also be applied in a lump sum when the special task is completed.
The limitation of the amount of the total amount of the attendance fees and the payment of the extra fees to a member of the Supervisory Board shall in no way affect his/her duty to actively participate in all sessions of the Supervisory Board and of the sessions of the Commissions of which he/she is a member, nor his/her statutory responsibility.
The Members of the Supervisory Board are entitled to reimbursement of transportation costs, daily allowance and overnight accommodation expenses incurred in connection with their work for the Supervisory Board, up to the amount laid down in the rules governing the reimbursement of expenses relating to work and other income not deductible for tax purposes (provisions applicable to transport on official travel and accommodation on business travel). The amount due to a member of the Supervisory Board under the above-mentioned regulation is increased by the corresponding levies, therefore the net payment represents the reimbursement of actual travel expenses. The distances between places calculated on the AMZS public website are used to determine the mileage. Overnight accommodation expenses may be reimbursed only if the permanent or temporary residence of the member of the Supervisory Board or of a member of a Supervisory Board Commission is at least 100 kilometres from the place of work of the body, if he/she was unable to return because the timetable no longer provided for any public transport or for other objective reasons.
| Loans to groups of persons | € thousand | |||
|---|---|---|---|---|
| Balance | Repayments | |||
| 31 Dec 2022 | 31 Dec 2021 | 2022 | 2021 | |
| Members of the Management Board in the controlling company | 0 | 0 | 0 | 0 |
| Managers of subsidiaries | 26 | 37 | 37 | 10 |
| Members of the Supervisory Board in the controlling company | 0 |
Loans to staff employed under individual employment contracts amounted to €152 thousand at 31 December 2022 (2021: €179 thousand). In 2022, repayments of loans by staff employed under individual employment contracts reached €27 thousand (2021: €26 thousand).
| Controlling company | Ownership share | Value of share capital at 31 Dec 2022 (in thousand) | Currency | Headcount at 31 Dec 2022 | Headcount at 31 Dec 2021 |
|---|---|---|---|---|---|
| Krka, d. d., Novo mesto | 100% | 54,732 | EUR | 6320 | 6228 |
| TERME KRKA, d. o. o., Novo mesto, Slovenia | 100% | 14,753 | EUR | 592 | 548 |
| KRKA-FARMA d.o.o., Zagreb, Croatia | 100% | 143,027 | HRK | 204 | 184 |
| KRKA ROMANIA S.R.L., Bucharest, Romania | 100% | 37 | RON | 160 | 144 |
| KRKA-FARMA DOO BEOGRAD, Belgrade, Serbia | 100% | 65 | RSD | 93 | 77 |
| KRKA-FARMA DOOEL, Skopje, North Macedonia |
| Company | Country | Ownership | Currency | Amount | Value 1 | Value 2 |
|---|---|---|---|---|---|---|
| KRKA Bulgaria EOOD | Sofia, Bulgaria | 100% | MKD | 49,021 | 45 | 44 |
| KRKA HELLAS E.P.E. | Athens, Greece | 100% | BGN | 20 | 74 | 74 |
| KRKA FARMA, d.o.o. | Sarajevo, Bosnia and Herzegovina | 100% | EUR | 10 | 17 | 16 |
| Krka-Rus LLC | Istra, Russian Federation | 100% | BAM | 20 | 1 | 1 |
| KRKA FARMA LLC | Istra, Russian Federation | 100% | RUB | 5,361,375 | 569 | 525 |
| KRKA UKRAINE LLC | Kiev, Ukraine | 100% | RUB | 753,875 | 1356 | 1427 |
| LLC ´KRKA Kazakhstan´ | Almaty, Kazakhstan | 100% | UAH | 100 | 367 | 395 |
| KRKA – POLSKA Sp. z.o.o. | Warsaw, Poland | 100% | USD | 14 | 97 | 93 |
| KRKA ČR, s. r. o. | Prague, Czech Republic | 100% | PLN | 17,490 | 656 | 660 |
| KRKA Magyarország Kft. | Budapest, Hungary | 100% | CZK | 100 | 166 | 173 |
| 100% | HUF | 44,880 | 158 | 174 |
| Company | Country | Ownership | Currency | Value 1 | Value 2 |
|---|---|---|---|---|---|
| KRKA Slovensko, s.r.o. | Bratislava, Slovakia | 100% | EUR | 121 | 113 |
| UAB KRKA Lietuva | Vilnius, Lithuania | 100% | EUR | 53 | 55 |
| SIA KRKA Latvija | Riga, Latvia | 100% | EUR | 37 | 39 |
| TAD Pharma GmbH | Cuxhaven, Germany | 100% | 6,650 EUR | 200 | 215 |
| KRKA Sverige AB | Stockholm, Sweden | 100% | 150 SEK | 6 | 7 |
| KRKA Pharma GmbH | Vienna, Austria | 100% | EUR | 37 | 20 |
| KRKA Farmacêutica, Unipessoal Lda. | Estoril, Portugal | 100% | EUR | 48 | 46 |
| KRKA FARMACÉUTICA, S.L. | Madrid, Spain | 100% | EUR | 64 | 62 |
| KRKA Farmaceutici Milano, S.r.l. | Milan, Italy | 100% | EUR | 62 | 69 |
| KRKA France Eurl | Paris, France | 100% | EUR | 35 | 41 |
| KRKA PHARMA DUBLIN LIMITED | Dublin, Ireland | 100% | EUR | 1 | 9 |
We conduct our business activities in Ukraine and the Russian Federation, which are part of the Eastern Europe sales region, through three subsidiaries and our parent company Krka, d.d., Novo mesto.
Krka's subsidiary in Ukraine is only involved in marketing. It does not carry out distribution and production activities and therefore had no receivables from customers outside the Group, but had other assets of €1,658 thousand (2021: €2,492 thousand), the largest item whereof are property, plant and equipment (office premises and vehicles). The Krka Group has no significant exposure to credit risk (Note 29 ‘Credit risk‘) and no exposure to foreign exchange risk (Note 29 ‘Foreign exchange risk‘). The subsidiary in Ukraine had 367 employees at the end of 2022 and 395 employees at the end of 2021. Ukraine is our fourth largest market (Note 4 ‘Revenue from contracts with customers‘).
We have two subsidiaries in the Russian Federation. Krka-Rus LLC is engaged in the manufacture of pharmaceuticals. It produces the vast majority of all the products we sell on the Russian market. Production there runs smoothly. Krka Farma LLC is engaged in marketing and sales activities. The Russian Federation is Krka's largest single market (Note 4 ‘Revenue).
| KRKA Belgium, SA, Brussels, Belgium | 100% | 300 | EUR | 17 | 21 |
|---|---|---|---|---|---|
| KRKA Finland Oy, Espoo, Finland | 100% | 3 | EUR | 16 | 17 |
| KRKA UK Ltd, London, United Kingdom | 100% | 1 | GBP | 16 | 14 |
| 123 Acurae Pharma GmbH, Cuxhaven, Germany | 100% | 25 | EUR | 0 | 0 |
| Ningbo Krka Menovo Pharmaceutical Co. Ltd., China | 60% | 455,642 | CNY | 19 | 17 |
| KRKA USA LLC, Wilmington, USA | 100% | 10 | USD | 0 | 0 |
| KRKA GCC L.L.C., Dubai, United Arab Emirates* | 100% | - | AED | 0 | 0 |
| Total | 11,598 | 11,511 |
The subsidiary KRKA GCC L.L.C. in Dubai, United Arab Emirates, was incorporated on 14 September 2022, with the share capital in the amount of AED 36,700 (€9,000 thousand) being paid up on 12 January 2023.
from contracts with customers‘).
The companies have various forms of physical assets - business and production premises, equipment, vehicles, stocks of raw materials and supplies, finished goods and other assets. As indicators of impairment existed, an impairment test was performed on the assets (Note 11 ‘Property, plant and equipment‘). It indicated that the value of the assets did not require impairment. The Krka Group's assets (excluding trade receivables) in the two Krka subsidiaries in the Russian Federation amounted to €172,461 thousand and €133,968 thousand as at 31 December 2022 and 31 December 2021, respectively.
The situation is closely monitored and continuously adjusted in the different areas of the business. Demand for our products is adequate. We have put in place additional controls on receivables and are closely monitoring the liquidity of our business partners so that we can adjust our activities immediately in the event of any payment delays (Note 29 ‘Credit risk‘). In line with our business continuity plan, we have immediately started to implement the necessary activities to ensure uninterrupted production in the future. The largest increases compared to the previous year are in inventories, property, plant and equipment and cash. As at 31 December 2022, the number of employees in the Russian Federation subsidiaries was 1,925, compared to 1,952 at the end of 2021. The exposure to foreign exchange rate risk is disclosed in Note 29 ‘Foreign exchange risk‘).
In 2022, all payments between the subsidiaries in the Russian Federation and the parent company were made without specificity. The payment of dividends from companies in the Russian Federation is not prohibited, but it is subject to conditions or lengthy procedures. Special requests are required and are treated by the Russian government (Ministry of Finance) in accordance with the going concern principle in respect of the subsidiary that is to pay the dividend. Given that these are pharmaceutical companies, we consider that the Russian Federation has an interest in their continued operation.
| 2022 | Share (%) | 2021 | Share (%) | ||
|---|---|---|---|---|---|
| PhD | 204 | 1.8 | 206 | 1.8 | |
| MSc | 390 | 3.4 | 397 | 3.4 | |
| University education | 5330 | 46.1 | 5313 | 45.9 | |
| Higher professional education | 1773 | 15.3 | 1727 | 14.9 | |
| Vocational college education | 313 | 2.7 | 306 | 2.6 | |
| Secondary school education | 2591 | 22.4 | 2613 | 22.6 | |
| Skilled workers | 833 | 7.2 | 859 | 7.4 | |
| Unskilled workers |
The contract value of the audit of the Krka Group was €557 thousand (2021: €494 thousand) in 2022.
The contract value of auditing the financial statements performed in 2022 by the audit firm KPMG Slovenija, d.o.o. was €118 thousand and includes the verification of the compliance of the electronic financial statements with the requirements of the Delegated Regulation No 2019/815 on a single electronic reporting format (ESEF). KPMG Slovenija also performs the verification of the Report on Remuneration of Members of Management and Supervision, which has to be verified in accordance with the requirements of the legislation. The contract value of verifying the Report on the Management Board's remuneration amounted to €9 thousand. The contract value of the audit services provided by the companies within the KPMG network for the consolidated financial statements of the Krka Group amounts to €207 thousand.
The 2022 financial statements were not impacted by the event after the end of the period.
Repurchase of treasury shares: From 1 January 2023 to 20 March 2023, we acquired 25,852 of treasury shares. At the end of this period, Krka held 1,811,701 treasury shares (5.525% of total shares).
| € thousand | Notes | 31 Dec 2022 | 31 Dec 2021 | Index 2022/21 |
|---|---|---|---|---|
| Assets | ||||
| Property, plant and equipment | 10 | 566,780 | 569,391 | 100 |
| Intangible assets | 11 | 24,960 | 25,628 | 97 |
| Investments in subsidiaries | 12 | 355,763 | 346,444 | 103 |
| Loans | 13 | 56,013 | 31,010 | 181 |
| Investments | 14 | 110,769 | 108,882 | 102 |
| Deferred tax assets | 15 | 8,666 | 12,742 | 68 |
| Other non-current assets | 643 | 627 | 103 | |
| Total non-current assets | 1,123,594 | 1,094,724 | 103 | |
| Assets held for sale | 41 | 41 | 100 | |
| Inventories | 16 | 492,978 | 394,323 | 125 |
| 0 | 300 |
|---|---|
| 17 | 357,889 | 424,588 | 84 |
|---|---|---|---|
| 17 | 12,639 | 17,381 | 73 |
|---|---|---|---|
| 13 | 6,669 | 195,459 | 3 |
|---|---|---|---|
| 14 | 52,437 | 155,448 | 34 |
|---|---|---|---|
| 18 | 470,297 | 144,981 | 324 |
|---|---|---|---|
| 1,392,950 | 1,332,521 | 105 |
|---|---|---|
| 2,516,544 | 2,427,245 | 104 |
|---|---|---|
| 19 | 54,732 | 54,732 | 100 |
|---|---|---|---|
| 19 | -124,566 | -114,541 | 109 |
|---|---|---|---|
| 19 | 279,760 | 246,424 | 114 |
|---|---|---|---|
| 19 | 1,850,866 | 1,689,527 | 110 |
|---|---|---|---|
2,060,7921,876,142110
| Provisions | 22 | 96,608 | 113,136 | 85 |
|---|---|---|---|---|
| Deferred income | 23 | 2,816 | 3,546 | 79 |
| Trade payables | 24 | 0 | 10,000 | 0 |
| Lease liabilities | 2,909 | 2,101 | 138 | |
| Total non-current liabilities | 102,333 | 128,783 | 79 | |
| Trade payables | 24 | 194,143 | 178,143 | 109 |
| Borrowings | 21 | 53,524 | 55,092 | 97 |
| Lease liabilities | 1,033 | 987 | 105 | |
| Income tax payables | 25 | 660 | 4,611 | 556 |
| Contract liabilities | 25 | 21,687 | 19,477 | 111 |
| Other current liabilities | 26 | 57,372 | 164,010 | 35 |
| Total current liabilities | 353,419 |
| € thousand | Notes | 2022 | 2021 | Index 2022/21 |
|---|---|---|---|---|
| Revenue | 1,553,514 | 1,381,367 | 112 | |
| – Revenue from contracts with customers | 3 | 1,544,409 | 1,374,765 | 112 |
| – Other revenue | 9,105 | 6,602 | 138 | |
| Cost of goods sold | -663,332 | -614,832 | 108 | |
| Gross profit | 890,182 | 766,535 | 116 | |
| Other operating income | 4 | 4,699 | 6,660 | 71 |
| Selling and distribution expenses | -301,319 | -271,425 | 111 | |
| – Whereof net impairments and write-offs of receivables | -1,548 | -50 | 3.096 | |
| R\&D expenses | -158,292 | -150,232 | 105 |
| -77,400 | -78,213 | 99 |
|---|---|---|
| 357,870 | 273,325 | 131 |
|---|---|---|
| 8 | 57,744 | 24,714 | 234 |
|---|---|---|---|
| 8 | -3,356 | -12,083 | 28 |
|---|---|---|---|
| 54,388 | 12,631 | 431 |
|---|---|---|
| 412,258 | 285,956 | 144 |
|---|---|---|
| 9 | -64,043 | -40,740 | 157 |
|---|---|---|---|
| 348,215 | 245,216 | 142 |
|---|---|---|
| 20 | 11.21 | 7.86 | 143 |
|---|---|---|---|
| 20 | 11.21 | 7.86 | 143 |
|---|---|---|---|
The accompanying Notes are an integral part of the financial statements and should be read in conjunction with them.
| € thousand | Notes | 2022 | 2021 | Index | 2022/21 |
|---|---|---|---|---|---|
| Net profit | 348,215 | 245,216 | 142 | ||
| Other comprehensive income that will not be reclassified to |
| Change in fair value of financial assets | 14 | 128 | 5,441 | 2 |
|---|---|---|---|---|
| Restatement of post-employment benefits | 22 | 24,691 | 6,438 | 384 |
| Deferred tax effect | 15 | -3,334 | -1,645 | 203 |
| Net other comprehensive income that will not be reclassified to profit or loss at a future date | 21,485 | 10,234 | 210 | |
| Total other comprehensive income for the year (net of tax) | 21,485 | 10,234 | 210 | |
| Total comprehensive income for the year (net of tax) | 369,700 | 255,450 | 145 |
The accompanying Notes are an integral part of the financial statements and should be read in conjunction with them.
| € thousand | Share capital | Treasury shares | Reserves | Retained earnings | Total equity |
|---|---|---|---|---|---|
| Reserves for treasury shares | |||||
| Share premium | |||||
| Legal reserves | |||||
| Statutory reserves | |||||
| Fair value reserve | |||||
| Other profit reserves | |||||
| Retained earnings |
| Balance at 1 Jan 2022 | 54,732 |
|---|---|
| -114,541 | 114,541 |
| 105,897 | 14,990 |
| 30,000 | -19,004 |
| 1,370,902 | 88,671 |
| 229,954 | 1,876,142 |
| Net profit | 0 |
| 0 | 0 |
| 0 | 0 |
| 0 | 0 |
| 0 | 0 |
| 0 | 0 |
| 0 | 348,215 |
| Total other comprehensive income for the year (net of tax) | 0 |
| 0 | 0 |
| 0 | 0 |
| 0 | 0 |
| 0 | 23,311 |
| 0 | -1,826 |
| 0 | 21,485 |
| Total comprehensive income for the year (net of tax) | 0 |
| 0 | 0 |
| 0 | 0 |
| 0 | 0 |
| 0 | 0 |
| 0 | 23,311 |
| 0 | -1,826 |
| 348,215 | 369,700 |
| Transactions with owners, recognised in equity | Formation of other profit reserves under the resolution of the AGM |
| 0 | 0 |
| 0 |
| 0 | 0 | 0 | 0 | 71,800 | -71,800 | 0 | 0 |
|---|---|---|---|---|---|---|---|
| 229,954 | -229,954 | 0 | Repurchase of treasury shares | 0 | -10,025 | 0 | 0 |
| 0 | 0 | 10,025 | 0 | 0 | 0 | 0 | 0 |
| -10,025 | 0 | Dividends paid | 0 | 0 | 0 | 0 | -175,025 |
| 0 | -175,025 | Total transactions with owners, recognised in |
| € thousand | Share capital | Treasury shares | Reserves | Retained earnings | Total equity |
|---|---|---|---|---|---|
| Balance at 1 Jan 2021 | 54,732 | -99,279 | 99,279 | ||
| Balance at 31 Dec 2022 | 54,732 | -124,566 | 124,566 | 105,897 | 14,990 |
| 30,000 | 4,307 | 1,442,702 | 69,974 | 338,190 | |
| 2,060,792 |
| Net profit | 105,897 | 14,990 | 30,000 | –31,379 | 1,280,090 | 102,773 | 234,747 | 1,791,850 | |||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Total other comprehensive income for the year (net of tax) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 245,216 | 245,216 | |
| Total comprehensive income for the year (net of tax) | 0 | 0 | 0 | 0 | 0 | 0 | 12,375 | 0 | –2,141 | 245,216 | 255,450 |
| Transactions with owners, recognised in equity | Formation of other profit reserves under the resolution of the AGM | ||||||||||
| 0 | 0 | 0 | 0 | 0 | 0 | 90,812 | –90,812 |
| 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 234,747 | –234,747 | 0 |
|---|---|---|---|---|---|---|---|---|---|---|
| 0 | –15,262 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | –15,262 |
|---|---|---|---|---|---|---|---|---|---|---|
| 0 | 0 | 15,262 | 0 | 0 | 0 | 0 | 0 | –15,262 | 0 |
|---|---|---|---|---|---|---|---|---|---|
| 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | –155,896 | 0 | –155,896 |
|---|---|---|---|---|---|---|---|---|---|---|
| 0 | –15,262 | 15,262 | 0 | 0 |
|---|---|---|---|---|
| € thousand | Notes | 2022 | 2021 |
|---|---|---|---|
| CASH FLOWS FROM OPERATING ACTIVITIES | |||
| Net profit | 348,215 | 245,216 | |
| Adjustments for: | |||
| – Amortisation/Depreciation | 10, 11 | 82,216 | 84,863 |
| – Net foreign exchange differences | -6,490 | -3,634 | |
| – Net write-offs and allowances for inventories | 14,194 | 17,287 | |
| – Net impairments and write-offs of receivables | 1,548 | 50 | |
| – Investment income | -12,990 | -10,118 | |
| – Investment expenses | -60 | 12,951 | |
| – Income on financing activities | 0 | -3 | |
| – Interest expenses and other financial expenses | 2,830 | 1,431 |
| 9 | 64,043 | 40,740 |
|---|---|---|
| 493,506 | 388,783 |
|---|---|
| 70,231 | -10,847 |
|---|---|
| 16 | -112,849 | -22,432 |
|---|---|---|
| 24 | 7,501 | 41,785 |
|---|---|---|
| 22 | -3,289 | -1,128 |
|---|---|---|
| 23 | -730 | -841 |
|---|---|---|
| -4,386 | 2,567 |
|---|---|
| -42,251 | -49,648 |
|---|---|
| 407,733 | 348,239 |
|---|---|
| 1,656 | 403 |
|---|---|
| 631 | 668 |
|---|---|
| 0 | 5,419 |
|---|---|
| 2,971 | 1,391 |
|---|---|
| 10 | -61,771 | -48,851 |
|---|---|---|
| 11 | -6,570 | -4,836 |
|---|---|---|
| Refunds of subsequent contributions to subsidiaries | 12 | -9,319 | -7,824 |
|---|---|---|---|
| Proceeds from non-current loans | 12 | 0 | 992 |
| Payments for current loans | 5,726 | 6,670 | |
| Net proceeds from/payments for current loans | -31,708 | -2,795 | |
| Proceeds from sale of non-current investments | 190,432 | -137,558 | |
| Payments for acquiring non-current investments | 4,941 | 20 | -32,946 |
| Proceeds from sale of current investments | 153,804 | 102,292 | |
| Payments for acquiring current investments | -121,621 | -153,780 | |
| Proceeds from derivatives | 8,847 | 2,002 | |
| Payments for derivatives | 0 | -10,459 | |
| Net cash flows from investing activities | 105,073 | -338,401 |
| Interest paid | -1,856 | -444 | |
|---|---|---|---|
| Net proceeds from/payments for current borrowings | 29 | -1,758 | |
| Lease liabilities paid | 8,703 | 28 | -1,124 |
| Dividends and other profit shares paid | -991 | 29 | -175,044 |
| Repurchase of treasury shares | -155,907 | 34 | -10,025 |
| Net cash flow from financing activities | -15,262 |
| -189,807 | |
|---|---|
| -163,901 | |
| Net increase/decrease in cash and cash equivalents | 322,999 |
| -154,063 | |
| Cash and cash equivalents at beginning of year | 144,981 |
| 296,398 | |
| Effect of foreign exchange rate fluctuations on cash held | 2,317 |
| 2,646 | |
| Closing balance of cash and cash equivalents | 470,297 |
| 144,981 |
The accompanying Notes are an integral part of the financial statements and should be read in conjunction with them.
Krka, d.d., Novo mesto is the controlling company in the Krka Group with its registered seat at Šmarješka cesta 6, 8501 Novo mesto, Slovenia. The Company was registered at the District Court of Novo mesto on 13 July 1989, registration number: 1/00097/00. Company registration number: 5043611000.
The financial statements of the Company refer to the year ended 31 December 2022.
The Company is engaged in the development, production, marketing and sale of human health products (prescription pharmaceuticals and non-prescription products), and animal health products.
The financial statements of the Company have been prepared in accordance with International Financial Reporting Standards (‘IFRS’), and interpretations issued by the International Financial Reporting Interpretations Committee of the IASB (‘IFRIC’) adopted by the European Union, and in compliance with additional provisions required by the Companies Act (ZGD-1). The financial statements were approved by the Krka Management Board on 28 March 2023.
The financial statements have been prepared on the historical cost basis, with the exception of derivatives, financial instruments at fair value through profit or loss and financial instruments at fair value through other comprehensive income (OCI) for which fair value was used. Methods applied in the measurement of fair value are presented in Note 2 ‘Fair Value’.
The financial statements are presented in the euro, which is the Company’s functional currency. All financial information presented in the euro has been rounded to the nearest thousand.
The preparation of financial statements requires the Management Board of the controlling company to make judgements, estimates and assumptions that affect the carrying amounts of assets and liabilities of Krka as well as the reported income and expenses for the period.
These include, among others: determination of the useful life and residual value of property, plant and equipment, as well as intangible assets; revenue from contracts with customers, allowances made for inventories and receivables; investment impairment; assumptions material to the actuarial calculation of defined employee benefits; assumptions used in the calculation of potential provisions for disputes, and an estimate of the duration of the lease and the interest rate used.
Regardless of the fact that the Management Board duly considers all factors that may impact the preparation of these assumptions, the actual consequences of business events may differ from those estimates. In the process of making accounting estimates, management makes judgements while considering potential changes in the business environment, new business events, new and additional information that may be available, as well as experience.
Key estimates and assumptions as at the day of the statement of financial position that are associated with future operations and which could result in significant adjustment of the book values of assets and liabilities are presented below.
Information that have the most significant effect on the amounts recognised in the financial statements is presented in the following notes:
Revenue from contracts with customers is recognised when control of the goods and services is transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services, while considering specific terms and conditions of an individual contract. In assessing variable compensation, the Company specifically addresses returns, while considering specific terms and conditions of an individual contracts for the sale of products and services to customers, statutory provisions, and business practices in a given environment. When assessing variable compensation, the Company must use either the expected value method or the most likely amount method, whichever better predicts the amount of consideration to which it will be entitled.
Given the large number of contracts with customers, the Company determined the expected value method as the most appropriate for estimating variable consideration for the sale of products with a right to return. To estimate the variable consideration for expected future volume rebates on the quantity of products purchased, the Company identified combination of the most likely amount method and the expected value method as the most appropriate. The method that best predicts the amount of variable consideration is primarily driven by the number of volume thresholds contained in the contracts, legal provisions and business practices in various environments. The most likely amount method is best suited for contracts with a single-volume threshold, and the expected value method for contracts with more than one volume threshold.
Prior to including any variable consideration in the transaction price, the Company assesses whether there is a constraint on variable consideration. Based on past experience, business forecasts and current economic conditions, the Company has determined that there are no constraints on variable consideration.
The Company is a seller of products that may be subject to payment terms in excess of one year in certain markets. The Company recognises financial income and expenses on these sales using the appropriate discount rate.
The controlling company checks whether there are any indicators of impairment of investments in subsidiaries at least once a year. The fair value of investments that may be impaired is determined as the present value of future cash flows, which is based on an estimate of expected cash flows from the cash-generating unit and on determination of the appropriate discount rate. The Company found no need for impairment of investments in subsidiaries as at 31 December 2022.
On the financial statement preparation (quarterly and annually), the Company recognises allowances (impairment) of those receivables for which it is assumed that will not be settled in full or not at all. Allowances are recognised using uniform methodology applicable to the Krka Group and in consideration of the probability or assessed probability of receivable settlement by the debtors. The methodology includes quantitative and qualitative criteria grouped into the following four sets: an analysis of the existing business dealings with the customer, an analysis of the customer's financial statements, a qualitative assessment of the customer by the sales personnel, and an assessment of the customer's country risk. For all customers whose receivables are insured by an insurance company or other first-class insurance, insurance is taken into account when assessing the amount of impairments. Hence, allowances of receivables due from individual customer are calculated by means of an algorithm that includes all the above criteria.
Defined post-employment benefit obligations include the present value of termination benefits on retirement. They are recognised on the basis of the actuarial calculation using assumptions and estimates effective at the time of 2022 Annual Report – Financial Report. The calculation may, as a result of future changes, differ from actual assumptions applicable at that future time. This applies primarily to determination of a discount rate, assessment of employee turnover, mortality assessment, and assessment of an increase in salaries. Due to the complexity of the actuarial calculation and the long-term nature of the item, defined benefit obligations are sensitive to changes in the above estimates and assessments.
The Company applied the same accounting policies in all periods presented in the accompanying financial statements. The accounting policies and the calculation methods used are the same as for the last annual reporting, except for the newly adopted standards and interpretations, which are noted below and were applied if relevant events occurred in the Company in the reporting period.
Amendments to IFRS 3 - Business Combinations, IAS 16 - Property, Plant and Equipment, IAS 37 - Provisions, Contingent Liabilities and Contingent Assets and Annual Improvements 2018-2020. The amendments are effective for annual periods beginning on or after 1 January 2022. Early application is permitted.
IASB has published the following limited amendments to IFRSs:
The management has assessed the impact of the amendments and believes they had no significant impact on the consolidated financial statements of the Company.
Transactions and balances in foreign currencies are translated to the euro (the functional currency of the Company) at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are converted to the functional currency at the exchange rate at that date. Non-monetary assets and liabilities denominated in foreign currencies are translated to the euro at the exchange rate applicable on the reporting date. Non-monetary assets and liabilities denominated in foreign currencies and measured at the fair value are converted to the euro at the exchange rate at the date that the fair value was determined. Foreign currency differences are recognised in profit or loss, except for differences arising on the translation of equity instruments, which are recognised directly in other comprehensive income. Non-cash items measured at historical cost in foreign currency are translated to the functional currency by applying the exchange rate valid at the date of the transaction.
A number of the Company’s accounting policies and disclosures require the determination of fair value for both, financial and non-financial assets and liabilities. Fair value is the amount for which an asset could be sold or a liability exchanged in a regular transaction between market participants. All assets and liabilities measured and disclosed at their fair value in financial statements are classified in the fair value hierarchy on the basis of lowest level of input data significant for measurements of total fair value:
Fair values have been determined for measurement and/or disclosure purposes based on the methods presented below. Where applicable, further information about the assumptions made in determining fair values is disclosed in the Notes specific to that asset or liability.
The fair value of financial assets at fair value through profit or loss and at fair value through OCI is determined by reference to their quoted closing bid price. For investments in debt securities at amortised cost, for reporting purposes the fair value is calculated on the basis of the closing rate, which is increased by accrued interest on the reporting date.
Fair value of trade and other receivables is estimated at the present value of future cash flows discounted at the market rate of interest effective at the reporting date.
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial assets of the Company include cash and cash equivalents, receivables, derivatives, loans and investments and investments in subsidiaries (refer to accounting policies Investments in subsidiaries).
Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through other comprehensive income (OCI), and fair value through profit or loss.
The classification of financial assets at initial recognition depends on the financial assets’ contractual cash flow characteristics and the Company's business model for managing them. With the exception of trade receivables that do not contain a significant financing component or for which the Company has applied the practical expedient, the Company initially measures a financial asset at fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do not contain a significant financing component or for which the Company has applied the practical expedient are measured at the transaction price determined under IFRS 15 (refer to the accounting policies in section Revenue from contracts with customers).
In order for financial assets to be classified and measured at amortised cost or fair value through OCI, they need to give rise to cash flows that are ‘solely payments of principal and interest (SPPI)’ on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level.
The Company's business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both.
If Company selects a business model that aims to collect contractual cash flows, it values its financial assets (debt instruments) at amortised cost. If the Company acquires financial assets (debt instruments) with the objective of collecting contractual cash flows and for sale, then they are measured at fair value through other comprehensive income by recycling cumulative gains and losses. If the Company does not choose any of these business models, it measures its financial assets (debt instruments) at fair value through profit or loss. Financial assets that have the characteristics of an equity instrument in accordance with IAS 32 – Financial Instruments, are classified as equity instruments at fair value through other comprehensive income without recycling cumulative gains and losses after derecognition.
Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace (regular way trades) are recognised on the trade date, i.e. the date that the Company commits to purchase or sell the asset.
The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire or when it transfers the rights to the contractual cash flows from the financial asset in a transaction that transfers all the risks and rewards of ownership of the financial asset.
For purposes of subsequent measurement, financial assets are classified into four categories:
Cash and cash equivalents comprise cash, bank deposits up to three months, and other current, highly realisable investments with an original maturity of three months or less. The latter can be easily converted into known amounts of cash and for which the risk of changes in value is insignificant. The cash flows derived from these assets are solely payments of the principal and interest are therefore classified as financial assets at amortised cost.
According to the SSPI test, loans issued by the Company are classified as financial assets at amortised cost, since the cash flows derived from these assets are solely payments of the principal and interest on the principal amount outstanding.
The Company's investments in debt securities, which include only low credit risk government bonds, are classified as financial assets at amortised cost.
The Company’s financial assets at amortised cost also include trade receivables.
Subsequent to initial recognition, they are measured at fair value. Interest income, foreign exchange differences, and impairment losses or reversals are recognised in the statement of profit or loss and computed in the same manner as for financial assets measured at amortised cost. The remaining fair value changes are recognised in OCI. Upon derecognition, the cumulative fair value change recognised in OCI is recycled to profit or loss.
Subsequent to initial recognition, they are measured at fair value. Changes in fair value are recognised directly in other comprehensive income. When an investment is derecognised, the cumulative gain or loss in equity is not transferred to profit or loss.
Financial assets at fair value through profit or loss include financial assets held for trading, financial assets designated upon initial recognition at fair value through profit or loss, or financial assets mandatorily required to be measured at fair value. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. Derivatives, including separated embedded derivatives, are also classified as held for trading unless they are designated as effective hedging instruments. Financial assets with cash flows that are not solely payments of principal and interest are classified and measured at fair value through profit or loss, irrespective of the business model. Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value with net changes in fair value recognised in the statement of profit or loss.
Impairment of financial assets is described in the section ‘Impairment – financial assets’.
Financial liabilities consist mainly of loans, payables to suppliers and other liabilities. Lease liabilities and employee benefits are treated separately (refer to accounting policies in the Leases and Employee benefits expense sections). All other financial liabilities are initially recognised on the trade date or when the Company becomes a contracting party in relation to the instrument. On initial recognition, the Company classifies non-derivative financial liabilities as subsequently measured at amortised cost and derivative financial liabilities as at fair value through profit or loss. After initial recognition, financial liabilities arising from loans are measured using the effective interest method. Gains and losses are recognised in profit or loss when these liabilities are discharged or modified. The Company derecognises a financial liability if the obligations set out in the contract are fulfilled, cancelled or expired.
Non-current investments made in equity of subsidiaries included in consolidated financial statements are valued at cost. Participation in the profit of a subsidiary is recognised in the profit or loss of the controlling company when an appropriate resolution referring to profit distribution has been adopted. If the investment is required to be impaired due to subsidiary's loss, the amount of loss due to impairment is measured as a difference between the carrying amount of the investment and the present value of expected future cash flows.
Property, plant and equipment
The items of property, plant and equipment are measured at cost less accumulated depreciation and impairment losses (refer to the accounting policy Impairment). The cost of an item of property, plant and equipment as at 1 January 2004, the date of transition to IFRS, is determined by reference to its fair value at that date.
Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, any other directly attributable cost of making the asset ready for its intended use, and (if applicable) assessed costs of dismantling and removing the items and restoring the site on which they are located, as well as capitalised borrowing costs. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment.
Gains and losses on disposal of an item of property, plant and equipment are determined as the difference between proceeds from disposal and the carrying amount of property, plant and equipment and are recognised within ‘Other operating income’ or ‘Other operating expenses’ in profit or loss.
The Company includes in the cost of property, plant and equipment also borrowing costs that are directly attributable to the acquisition, construction or production of the asset under construction. Borrowing costs related to the acquisition or construction of the relevant assets are capitalised if they relate to the acquisition of a significant asset and the construction or preparation for use of the relevant assets takes more than six months.
Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each item of property, plant and equipment or its individual parts. Land and assets being acquired are not depreciated. The estimated useful lives are as follows:
At contract inception, the Company assesses whether a contract is, or contains a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
As a lessee, the Company determines the lease term as the period during which the lease cannot be terminated, inclusive of:
At the commencement date of the lease, the Company recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid by the Company under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Company and payments of penalties for terminating the lease if the lease term reflects the Company exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognised in profit or loss as expenses in the period in which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Company uses its incremental borrowing rate based on estimated bond returns if it were to incur debt on the financial markets, while considering their maturity if the interest rate implicit in the lease is not readily determinable.
After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. The carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g. change of future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.
For short-term leases and leases where the leased asset is of low value, the Company applies the practical expedient allowed by the standard and recognises lease payments as an expense on a straight-line basis over the lease term. The practical expedient is applied to leases with a lease term of less than one year and leases where the cost of the new leased asset is less than €5,000.
The Company recognises a right-of-use property, plant and equipment asset and a lease liability at the inception of the lease (i.e. the date the leased asset is available for use).
Leases in which the Company does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. Rental income arising is accounted for on a straight-line basis over the lease terms and is included in revenue in the statement of profit or loss. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income.
Development costs are not capitalised because the Company does not distinguish between the research and development phases. All costs referring to the research and development work within the Company are recognised in profit or loss as incurred.
Other intangible assets that are acquired by the Company, which have finite useful lives, are measured at cost less accumulated amortisation and accumulated impairment losses (refer to the accounting policy Impairment).
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is recognised in profit or loss as incurred.
Amortisation is recognised on a straight-line basis over the estimated useful lives of intangible assets from the date that they are made available for use. The estimated useful lives for software, licences and other rights range from 2 to 10 years.
In the statement of financial position, inventories are measured at the lower of cost and net realisable value. Net realisable value is the estimated selling price at the reporting date less selling expenses and other potential administrative expenses, which are usually associated with the sale. The Company reviews the net realisable value of inventories once a year at the financial position date. If the carrying amount of inventories exceeds their net realisable value, inventories are impaired through profit or loss.
An inventory unit of raw materials and materials, auxiliary and packaging materials is valued at cost including all direct costs of purchase. Inventories of material are carried at moving average prices. Inventories of finished products and work in progress are carried at standard cost, which in addition to direct cost of material includes also cost of production, such as: direct labour cost, direct cost of depreciation, direct cost of services, energy, maintenance, and quality management. Fixed price variances are determined in accordance with the current valuation of inventories using production costs. A quantity unit of merchandise is valued at cost including cost of purchase, import duties, and all costs directly attributable to the acquisition decreased by discounts. Inventories of merchandise are carried at moving average prices.
The Company recognises an allowance for the expected credit losses (ECLs) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Company expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.
Expected credit losses are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12 months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since the initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).
For trade receivables and contract assets, the Company applies a simplified approach in calculating ECLs. Trade receivables that do not contain a significant financing component or for which the Company has applied the practical expedient (contracts agreed for a period of one year or less) are measured at the transaction price determined under IFRS 15 less any impairment losses.
For investments that include government bonds measured at amortised cost, the Company measures expected credit losses annually. Except when a 12-month expected credit loss is recognised, the Company recognises an allowance for credit losses in an amount equal to the expected credit loss over the life of the financial instrument. A 12-month expected credit loss is recognised by:
The Company considers a debt security to have low credit risk if its credit risk rating is equivalent to the globally understood definition of ‘investment grade’ or equivalent to a rating of Baa2 or above by Moody's or BBB- or above by Standard & Poor's.
The Company monitors changes in credit risk by tracking published external credit ratings. The probabilities of default (PD), both 12-month and over the life of the financial instrument, are based on information provided by the external credit rating agency. The loss given default (LGD) ratios, which reflect the assumed recovery rate, are also provided by the external credit rating agencies.
The carrying amounts of the Company’s non-financial assets, except for inventories and deferred tax assets, are reassessed at each reporting date to determine whether there is any indication of impairment. If such indications exist, the asset’s recoverable amount is assessed.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets are grouped together. These are the smallest groups of assets that generate cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets.
An impairment of an asset or cash-generating unit is recognised when its carrying amount exceeds its recoverable amount. Impairment is recognised in the income statement. A loss recognised in a cash-generating unit as a result of impairment is allocated by first reducing the carrying amount of goodwill allocated to the cash-generating unit and then to the other assets of the unit (group of units) in proportion to the carrying amount of each asset in the unit.
Impairment losses recognised in previous periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount of the asset. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised in the previous periods.
When treasury shares recognised as a part of share equity are repurchased, the amount of the consideration paid, including directly attributable costs, is recognised as a deduction from equity. Repurchased shares are classified as treasury shares and are presented as a deduction from total equity.
Dividends are recognised in the Company’s financial statements in the period in which they are declared by the Annual General Meeting.
Current employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided.
Provisions for post-employment benefits and other non-current employee benefits. Pursuant to the local legislation, the Company is liable to pay to its employees’ anniversary bonuses and termination benefits upon retirement and recognises relevant amount of provisions for these purposes. The Company has no other pension obligations.
is calculated by estimating the costs of retirement benefits upon retirement and the costs of all expected anniversary bonuses until retirement. The calculation is performed using the projected unit credit method. Employee benefit costs, as well as cost of interest, are recognised in profit or loss, whereas restatement of post-employment benefits or unrealised actuarial profit or loss is recognised in other comprehensive income.
A provision is recognised if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the estimated future cash flows to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the liability.
The Company discloses provisions for lawsuits referring to alleged patent infringements. The eligibility of provisions formed in terms of a favourable or unfavourable outcome of the lawsuit is assessed on an annual basis. The amounts of provisions are defined on the basis of the noted amount of the indemnification claim, or on the basis of anticipated potential amount, if the indemnification claim is not yet disclosed.
The Company is engaged in development, production, marketing and sale of human health products (prescription pharmaceuticals, non-prescription products), animal health products, and material. Revenue from contracts with customers is recognised when control of the goods and services is transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services while considering specific terms and conditions of an individual contract.
Transfer of control over those goods and services depends on terms and conditions of the contract. In general, control is transferred when goods are accepted by the customer or services are rendered. The normal credit term ranges from 30 to 120 days.
The Company considers whether there are other promises in the contract that are separate performance obligations to which a portion of the transaction price needs to be allocated. In determining the transaction price for the sale of products, The Company considers the effects of variable consideration and the existence of significant financing components.
If the consideration in a contract includes a variable amount, the Company estimates the amount of consideration to which it will be entitled in exchange for transferring the goods to the customer. The variable consideration is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognised will not occur when the associated uncertainty with the variable consideration is subsequently resolved. Some contracts for the sale of products provide customers with a right of return, bonuses, and volume rebates. The rights of return, bonuses, and volume rebates give rise to variable consideration.
Certain contracts provide a customer with a right to return goods that are past the expiry date. The Company uses the expected value method to estimate the goods that will not be returned because this method best predicts the amount of variable consideration to which it will be entitled. The requirements of IFRS 15 on constraining estimates of variable consideration are also applied in order to determine the amount of variable consideration that can be included in the transaction price. For the goods expected to be returned instead of revenue, the Company recognises a refund liability. A right-of-return asset (and corresponding adjustment to cost of products sold) is also recognised for the right to recover products from a customer.
The Company provides retrospective bonuses and volume rebates to certain customers once the quantity or value of products purchased during the period exceeds a threshold specified in the contract. Rebates are offset against amounts payable by the customer. The Company estimates the variable consideration for the expected future bonuses and volume rebates based on terms and conditions of the contract including criteria and elements that provide the basis for the recognition of those bonuses and volume rebates. For valuation, the Company uses the most probable value method or the expected value method. The method chosen, which best predicts the value of the rebates and volume discounts, is based on the number of thresholds in the contract.
Disclosures about the use of estimates and judgements in estimating variable consideration are provided in the Basis of preparation of the financial statements section.
and when the customer pays for those goods or services will be one year or less. For sales to the subsidiary Krka-Rus in the Russian Federation, the Company has in the past periods agreed payment terms in excess of one year. In order to take into account a significant financing component, the transaction price under these contracts is discounted using a discount rate that reflects the Company's separate financial transactions.
A contract asset is the right to an amount of consideration in exchange for goods or services transferred to the customer. If the Company transfers goods or services to a customer before the customer pays consideration or payment is due, a contract asset is recognised for the earned consideration that is conditional. Once the transaction is completed and the customer is confirmed, the contract assets are reclassified as trade receivables.
A receivable represents the Company's right to an amount of consideration that is unconditional, i.e. only the passage of time is required before payment of consideration is due (refer to the accounting policy Recognition of financial instruments).
A contract liability is the obligation to transfer goods or services to a customer for which the Company has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the goods or services are transferred to the customer, a contract liability is recognised when the payment is made, or the payment is due (whichever is earlier). Contract liabilities are recognised as revenue when the Company performs under the contract.
Right-of-return assets represent the Company's right to recover the goods expected to be returned by the customer. The asset is measured at the former carrying amount of the inventory, less any expected costs to recover the goods, including any potential decreases in the value of returned goods. The Company regularly updates the measurement of the asset recorded for any revisions to its expected level of returns, as well as any additional decreases in the value of the returned products.
A refund liability is the obligation to refund some or all of the consideration received (or receivable from the customer). The refund liability arises from bonuses and volume discounts. It is measured at the amount the Company ultimately expects it will have to return to the customer. The Company updates its estimates of refund liabilities (and the corresponding change in the transaction price) at the end of each reporting period. The described accounting policy applies also to the variable consideration.
Income referring to government grants is initially recognised when there is reasonable assurance that they will be received and that the Company will comply with the conditions associated with the grants. Income that compensates the expenses incurred is recognised in profit or loss on a systematic basis in the same periods in which the costs are recognised. Income that compensates an entity for the cost of an asset is recognised in profit or loss on a systematic basis over the useful life of the asset.
Financial income comprises interest income on funds invested, dividend income, gains on the disposal of financial assets, changes in the fair value of financial assets at fair value through profit or loss, foreign exchange gains and gains on hedging instruments that are recognised in profit or loss. Interest income is recognised as it accrues in profit or loss, using the effective interest method. Dividend income is recognised on the date that the shareholder's right to receive payment is established, which in the case of quoted securities is the ex-dividend date.
Financial expenses comprise interest expense on borrowings, foreign exchange losses, changes in the fair value of financial assets at fair value through profit or loss, impairment losses recognised on financial assets, and losses on hedging instruments that are recognised in profit or loss. All borrowing costs are recognised in profit or loss using the effective interest method, except those that are attributable to property, plant and equipment under construction.
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: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit, and differences relating to investments in subsidiaries and jointly controlled entities to the extent that it is probable that they will not reverse in the foreseeable future. Also, deferred tax is not recognised for taxable temporary differences arising on the initial recognition of goodwill. The amount of deferred tax is based on the expected manner of settling the carrying amount of assets and liabilities using tax rates enacted at the reporting date. Deferred tax assets are offset against deferred tax liabilities when an entity has a legal right to offset current assets and liabilities, and deferred tax assets and liabilities relate to the same taxable entity and the same tax authority.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the deferred tax asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
The Company presents basic earnings per share (EPS) data. EPS is calculated by dividing the profit or loss attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is equal to basic EPS, because the Company has not issued any dilutive or potentially dilutive instruments.
The following new and amended standards have not come into effect by the date of the financial statements and will be applied in future periods. The Company will apply the new and revised standards and interpretations when they become effective. The Company did not apply any revised standards or interpretations prior to their effective date.
The amendments address an acknowledged inconsistency between the requirements in IFRS 10 and those in IAS 28, in dealing with the sale or contribution of assets between an investor and its associate or joint venture. The main consequence of the amendments is that a full gain or loss is recognised when a transaction involves a business (whether it is housed in a subsidiary or not). A partial gain or loss is recognised by an entity when a transaction involves assets that do not constitute the entity’s business, even if these assets are housed in a subsidiary. In December 2015, the IASB postponed the effective date of this standard indefinitely pending the outcome of its research project on the equity method of accounting. The amendments have so far not been endorsed by the EU. The management has assessed the impact of the amendments and believes they will have no significant impact on the consolidated financial statements of the Company.
The amendments were initially effective for annual periods beginning on or after 1 January 2022. Early application was permitted. In response to the COVID-19 pandemic, the IASB delayed the effective date of the amendments by one year, until 1 January 2024, to allow companies sufficient time to implement the changes to the classification of liabilities. The amendments help promoting consistency in applying the requirements by helping entities determine whether, in the statement of financial position, debt and other liabilities with an uncertain settlement date should be classified as current or non-current. The amendments affect the presentation of liabilities in the statement of financial position; however, they do not change existing requirements around measurement or timing of recognition of any asset, liability, income or expenses, nor the information that entities disclose about those items. Also, the amendments clarify the classification requirements for debt which may be settled by an entity issuing own equity instruments. The management has assessed the impact of the amendments and believes they will have no significant impact on the consolidated financial statements of the Krka Group.
The amendments are effective for annual periods beginning on or after 1 January 2023. Early adoption is permitted. The amendments provide guidance for assessing materiality in the disclosure of accounting policies and replace the requirement to disclose ‘significant’ accounting policies with a requirement to disclose ‘material’ accounting policies. At the same time, the Note provides guidance and illustrative examples to assist in applying the concept of materiality in assessing disclosures about accounting policies. The amendment has so far not been endorsed by the EU. The management has assessed the impact of the amendments and believes they will have no significant impact on the consolidated financial statements of the Company.
The amendments are effective for annual periods beginning on or after 1 January 2023. Early adoption is permitted. In May 2021, the IASB issued amendments to IAS 12 to restrict the application of the initial recognition exemption under IAS 12 and to specify how an entity should account for deferred tax on certain transactions, such as leases and decommissioning liabilities. Under the amendments, the exemption does not apply to transactions for which the taxable amount at initial recognition is equal to the amount of deductible temporary differences. The exception applies only if, on recognition of the leased asset and the related liability (or the liability in connection with the decommissioning and decommissioning of a component of the asset), the taxable amount is not equal to the amount of the deductible temporary differences. The amendment has so far not been endorsed by the EU. The management has assessed the impact of the amendments and believes they will have no impact on the consolidated financial statements of the Company.
The amendments are effective for annual periods beginning on or after 1 January 2024. Early application is permitted. The amendments affect how a vendor-lessee accounts for variable lease payments in sale and leaseback transactions. They introduce a new accounting model for variable payments and require vendor-lessees to reassess and potentially adjust sale and leaseback transactions entered into from 2019.
The amendments confirm the following:
The seller-lessee may adopt different approaches to meet the new subsequent measurement requirements. These amendments do not change the accounting for leases other than those arising in sale and leaseback transactions. Management has assessed the impact of the amendments on the Company's financial statements and believes that they will not have a material impact on them.
| € thousand | 2022 | 2021 |
|---|---|---|
| Revenue from contracts with customers (products) | 1,356,075 | 1,211,494 |
| Revenue from contracts with customers (materials) | 188,334 | 163,271 |
| Total revenue from contracts with customers | 1,544,409 | 1,374,765 |
| € thousand | 2022 | 2021 |
|---|---|---|
| Region Slovenia | 60,503 | 56,421 |
| Region South-East Europe | 220,624 | 205,491 |
| Region East Europe | 387,489 | 320,973 |
| Region Central Europe |
| € thousand | 2022 | 2021 |
|---|---|---|
| Prescription pharmaceuticals | 1,104,323 | 1,017,273 |
| Non-prescription products | 163,482 | 118,527 |
| Animal health products | 88,270 | 75,694 |
| Total | 1,356,075 | 1,211,494 |
Trade receivables are described in Note 17 ‘Trade and other receivables’, while liabilities recognised from contracts with customers in Note 25 ‘Current liabilities from contracts with customers’. The Company has not recognised assets from contracts with customers (2021: €300 thousand) while liabilities from contracts were recognised in the amount of €8,593 thousand (2021: €5,839 thousand). Recognised assets and liabilities arising from contracts with customers are reported in the statement of financial position.
The Company recognised right-of-return liabilities as accrued bonuses, volume rebates and discounts on products sold to other customers in the amount €13,094 thousand (2021: €13,638 thousand).
The Company is engaged in the development, production, marketing and sale of human health products (prescription pharmaceuticals, non-prescription products), animal health products, and material. Revenue from contracts with customers is recognised when control of the goods and services is transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services, while considering specific terms and conditions of an individual contract.
Transfers of risks and rewards depend on terms and conditions of an individual contract. Generally, the transfer occurs when the customer accepts the goods in accordance with Incoterms 2021 or when the relevant services are performed. Payment terms vary from region to region (distribution channels), while the normal credit term ranges from 30 to 120 days. At the year-end, the Company incurred no costs on acquisition or fulfilment of contracts with customers, which could be recognised as an item of asset.
| € thousand | 2022 | 2021 |
|---|---|---|
| Reversal of non-current provisions |
| Reversal of deferred income | 1,827 | 3,332 |
|---|---|---|
| Gains on sale of property, plant and equipment and intangible assets | 755 | 870 |
| Revaluation operating revenue – leases | 352 | 515 |
| Other operating income | 0 | 3 |
| Total other operating income | 1,765 | 1,940 |
Other operating income also includes income from government grants relating to the curbing of the COVID-19 pandemic in the amount of €156 thousand (2021: €489 thousand) and the aid received in connection with the increase in energy prices in the amount of €180 thousand (no such grant was recorded in 2021).
| € thousand | 2022 | 2021 |
|---|---|---|
| Cost of goods and materials | 487,124 | 388,639 |
| Cost of services | 331,940 | 307,464 |
| Employee benefits expense | 317,362 | 305,192 |
| Amortisation and depreciation | 82,216 | 84,863 |
| Net write-offs and allowances for inventories | 14,194 | 17,287 |
| Net impairments and write-offs of receivables | 1,548 | 50 |
| Formation of provisions for lawsuits | 0 | 543 |
| Other operating expenses | 25,048 | 25,053 |
| Total costs | 1,259,432 | 1,129,091 |
| Change in the value of inventories of finished products and work in progress | -59,089 | -14,389 |
| Total | 1,200,343 | 1,114,702 |
| € thousand | 2022 | 2021 |
|---|---|---|
| Gross wages and salaries and continued pay | 247,046 | 234,331 |
| Social security contributions | 16,763 | 16,173 |
| Pension insurance contributions | 33,189 | 31,079 |
| Post-employment benefits and other non-current employee benefits | 3,264 | 7,020 |
| Other employee benefits | 17,100 | 16,589 |
| Total employee benefits expense | 317,362 | 305,192 |
Post-employment benefits and other non-current employee benefits are detailed in Note 22 ‘Provisions’. Other employee benefits include primarily vacation bonuses and commuting allowances.
Compulsory pension and disability insurance (comprising both the employee’s and the employer’s contribution) payable amounted in 2022 to €61,399 thousand (2021: €57,825 thousand).
Supplementary pension insurance contributions amounted to €9,546 thousand in 2021 (2021: €8,913 thousand).
| € thousand | 2022 | 2021 |
|---|---|---|
| Grants and assistance for humanitarian and other purposes | 1,551 | 1,409 |
| Environmental protection expenditures | 4,414 | 3,653 |
| Other taxes and levies | 15,904 | 15,040 |
| Revaluation operating expenses on property, plant and equipment and intangible assets | 818 | 2,506 |
| Other operating expenses | 2,361 | 2,445 |
| Total other operating expenses | 25,048 | 25,053 |
Other levies include €13,854 thousand (2021: €13,100 thousand) of various taxes and levies paid on pharmaceuticals and fees paid to associates in individual foreign countries for pursuing promotional activities.
| € thousand | 2022 | 2021 |
|---|---|---|
| Net foreign exchange gains |
| Interest income | 2,369 |
|---|---|
| Derivatives income | 9,096 |
| – Realised revenue | 8,847 |
| – Fair value change | 249 |
| Income from dividends and other profit shares | 702 |
| – Dividends | 702 |
| – Profits of subsidiaries | 0 |
| Other financial income | 472 |
| Total financial income | 57,744 |
| Interest expenses | -1,718 |
| – Interest paid | -1,669 |
| – Interest expenses on lease liabilities | -49 |
| Derivatives expenses | 0 |
| – Realised expenses | 0 |
| Other financial expenses | -1,638 |
| Total financial expenses | -3,356 |
| Net financial result | 54,388 |
| € thousand | 2022 | 2021 |
|---|---|---|
| Current income tax | 63,301 | 40,905 |
| Deferred tax | 742 | -165 |
| Total income tax expense | 64,043 | 40,740 |
| Profit before tax | 412,258 | 285,957 |
| Income tax for both years calculated at the rate of 19% | 78,329 | 54,332 |
| Tax on reduced income | -133 | -1,137 |
| Tax on non-deductible expenses | 2,677 | 2,529 |
| Income tax from tax incentives | -17,588 | -15,664 |
| Tax on increase/decrease of costs for taxable purposes | 758 | 680 |
| Total income tax expense | 64,043 | 40,740 |
Effective tax rate
15.5%
14.2%
Investments in R&D and investment relief represent the major share of tax incentives.
| € thousand | 31 Dec 2022 | 31 Dec 2021 |
|---|---|---|
| Land | 28,010 | 28,010 |
| Buildings | 243,918 | 248,550 |
| Equipment | 238,871 | 255,165 |
| Property, plant and equipment being acquired | 52,107 | 34,621 |
3,874
3,045
566,780
569,391
The largest investments in the controlling company were in 2022 earmarked for increasing the capacity of the OTO plant i.e. €15,162 thousand (2021: €2,548 thousand), and for renovating the Notol's packaging unit €6,712 thousand (a new investment in 2022). Another €4,999 thousand (2021: €3,606 thousand) was earmarked for IT and telecommunications-related projects, €3,958 thousand (2021: €1,265 thousand) for the investment in the new packaging unit at Notol 2 and €3,406 thousand (new investment in 2022) for replacing the cladding boilers at Notol.
The majority of the right-of-use asset refers to the right of using assets relating to buildings in the amount of €3,858 thousand (2021: €3,026 thousand).
| € thousand | Land | Buildings | Equipment | PPE being acquired | Right-of-use assets | Total | |
|---|---|---|---|---|---|---|---|
| Purchase cost | Balance at 1 Jan 2021 | 27,703 | 618,791 | 1,037,419 | 30,263 | 4,050 | 1,718,226 |
| Additions | 0 | 0 | 0 | 44,657 | 0 | 44,657 | |
| Capitalisations – transfer from PPE being acquired | 307 | 6,104 | 33,031 | -39,442 | 0 | 0 | |
| Capitalisations – IFRS 16 Leases | 0 | 0 | 0 | 0 | 1,320 | 1,320 | |
| Disposals, impairments, deficit, surplus | 0 |
| Transfers, reclassifications | -683 | -12,167 | -857 | -259 | -13,966 | |
|---|---|---|---|---|---|---|
| Balance at 31 Dec 2021 | 28,010 | 624,212 | 1,058,291 | 34,621 | 5,111 | 1,750,245 |
| Balance at 1 Jan 2022 | 28,010 | 624,212 | 1,058,291 | 34,621 | 5,111 | 1,750,245 |
| Additions | 0 | 0 | 0 | 72,970 | 0 | 72,970 |
| Capitalisations – transfer from PPE being acquired | 0 | 16,122 | 39,362 | -55,484 | 0 | 0 |
| Capitalisations – IFRS 16 Leases | 0 | 0 | 0 | 0 | 1,918 | 1,918 |
| Disposals, impairments, deficit, surplus | 0 | -636 | -17,131 | 0 | -257 | -18,024 |
| Transfers, reclassifications | 0 |
| Balance at 31 Dec 2022 | 28,010 | 639,458 | 1,080,820 | 52,107 | 6,772 | 1,807,167 |
|---|---|---|---|---|---|---|
| Balance at 1 Jan 2021 | 0 | -354,935 | -757,623 | 0 | -1,199 | -1,113,757 |
| Depreciation | 0 | -21,115 | -57,188 | 0 | -955 | -79,258 |
| Disposals, deficit, surplus | 0 | 388 | 11,691 | 0 | 88 | 12,167 |
| Transfers, reclassifications | 0 | 0 | -6 | 0 | 0 | -6 |
| Balance at 31 Dec 2021 | 0 | -375,662 | -803,126 | 0 | -2,066 | -1,180,854 |
| Balance at 1 Jan 2022 | 0 | -375,662 | -803,126 | 0 | -2,066 | -1,180,854 |
| Depreciation | 0 | -20,360 |
| -55,104 | 0 | -1,062 | -76,526 | |||
|---|---|---|---|---|---|---|
| 0 | 507 | 16,314 | 0 | 230 | 17,051 | |
| Transfers, reclassifications | 0 | -25 | -33 | 0 | 0 | -58 |
| 0 | -395,540 | -841,949 | 0 | -2,898 | -1,240,387 |
|---|---|---|---|---|---|
| 27,703 | 263,856 | 279,796 | 30,263 | 2,851 | 604,469 |
|---|---|---|---|---|---|
| 28,010 | 248,550 | 255,165 | 34,621 | 3,045 | 569,391 |
|---|---|---|---|---|---|
| 28,010 | 248,550 | 255,165 | 34,621 | 3,045 | 569,391 |
|---|---|---|---|---|---|
| 28,010 | 243,918 | 238,871 | 52,107 | 3,874 | 566,780 |
|---|---|---|---|---|---|
In 2021 and 2022, the Company did not make any investments that would have met the criteria for capitalised borrowing costs.
| € thousand | 31 Dec 2022 | 31 Dec 2021 |
|---|---|---|
| Software | 14,334 | 14,800 |
| Other intangible assets | 7,007 | 6,899 |
| – Long-term deferred operating costs | 282 | 95 |
| – Development-related projects | 5,710 | 6,492 |
| – Emission coupons | 1,015 | 312 |
| Intangible assets being acquired | 3,619 | 3,929 |
| Total intangible assets | 24,960 | 25,628 |
| € thousand | Concessions, trademarks and licences | Other IA | IA being acquired | Total | |
|---|---|---|---|---|---|
| Purchase cost | Balance at 1 Jan 2021 | 84,150 | 27,970 | 4,450 | 116,570 |
| Additions | 0 | 0 | 4,836 | 4,836 | |
| Transfer from IA being acquired | 3,274 | 1,130 | -4,404 | 0 | |
| Disposals, deficit, surplus | -14 | -527 | -953 |
| Balance at 31 Dec 2021 | |||
|---|---|---|---|
| 87,404 | 28,571 | 3,929 | 119,904 |
| Balance at 1 Jan 2022 | |||
| 87,404 | 28,571 | 3,929 | 119,904 |
| Additions | |||
| 0 | 0 | 6,570 | 6,570 |
| Transfer from IA being acquired | |||
| 3,771 | 2,870 | -6,641 | 0 |
| Disposals, deficit, surplus | |||
| -858 | -1,982 | -239 | -3,079 |
| Transfers, reclassifications | |||
| -54 | -4 | 0 | -58 |
| Balance at 31 Dec 2022 | |||
| 90,263 | 29,455 | 3,619 | 123,337 |
| Balance at 1 Jan 2021 | |||
| -68,588 | -20,089 | 0 | -88,677 |
| Amortisation | |||
| -4,022 | -1,583 | 0 | -5,605 |
| Transfers, reclassifications | |||
| 6 | 0 | 0 | 6 |
| Balance at 31 Dec 2021 | |||
| -72,604 |
| € thousand | Investments in subsidiaries | Purchase cost | ||
|---|---|---|---|---|
| Balance at 1 Jan 2021 | 348,603 | |||
| Balance at 1 Jan 2022 | 14,800 | 6,899 | 3,929 | 25,628 |
| Balance at 31 Dec 2022 | 14,334 | 7,007 | 3,619 | 24,960 |
| -21,672 | 0 | -94,276 | ||
|---|---|---|---|---|
| Amortisation | -4,202 | -1,488 | 0 | -5,690 |
| Disposals, deficit, surplus | 823 | 708 | 0 | 1,531 |
| Transfers, reclassifications | 54 | 4 | 0 | 58 |
| Balance at 31 Dec 2022 | -75,929 | -22,448 | 0 | -98,377 |
| Subsequent payments | 7,799 |
|---|---|
| Refunds of subsequent contributions | -992 |
| Balance at 31 Dec 2021 | 355,435 |
| Balance at 1 Jan 2022 | 355,435 |
| Acquisition of equity interest | 91 |
| Subsequent payments | 9,228 |
| Balance at 31 Dec 2022 | 364,754 |
| Balance at 1 Jan 2021 | –8,991 |
|---|---|
| Balance at 31 Dec 2021 | –8,991 |
| Balance at 1 Jan 2022 | –8,991 |
| Balance at 31 Dec 2022 | –8,991 |
| Balance at 1 Jan 2021 | 339,612 |
|---|---|
| Balance at 31 Dec 2021 | 346,444 |
| Balance at 1 Jan 2022 | 346,444 |
| Balance at 31 Dec 2022 | 355,763 |
The Company reviews whether there are any indications for impairment of investments in subsidiaries at least once a year. The fair value of an investment that may be impaired is determined by applying methods that are most appropriate in an individual investment. The most recent assessment was performed in December 2022.
In the Russian Federation, the Company is the owner of the subsidiary Krka-Rus, which is engaged in production activities, and of Krka Farma, which carries out distribution activities. Both investments constitute a single cash-generating unit.
The carrying amount of the investment in Krka-Rus is €118,916 thousand (2021: €118,916 thousand), whereas the carrying amount of the investment in Krka Farma is recorded at €15,170 thousand (2021: €15,170 thousand).
The Russian-Ukrainian situation has increased uncertainty, which has also resulted in a significant increase in the weighted average cost of capital. As a consequence, management has assessed the value in use of the two investments in the subsidiaries. The value in use is calculated by discounting the future cash flows of the subsidiaries. Company's current strategy does not envisage the sale of the two subsidiaries in the Russian Federation and does not foresee the payment of dividends in the foreseeable future.
In the five-year projection of the operating cash flows of the subsidiaries until 2027, a discount rate of 14.0% is applied, while for the residual value a discount rate of 12.1% is set. Based on the impairment assessment performed, it was concluded that there is no need to impair the investments in the subsidiary.
| € thousand | Ownership share (%) | Share capital | Value of share in |
|---|---|---|---|
Subsidiaries
| 31 Dec 2022 | 31 Dec 2021 | ||||
| KRKA-RUS LLC, Istra, Russian Federation | 100% | 68,358 | 118,916 | ||
| TAD Pharma GmbH, Cuxhaven, Germany | 100% | 6,650 | 97,000 | ||
| TERME KRKA, d.o.o., Novo mesto, Slovenia | 100% | 14,753 | 36,416 | ||
| Ningbo Krka Menovo Pharmaceutical Co. Ltd., Ningbo, China | 60% | 61,923 | 35,642 | 26,414 | |
| KRKA-FARMA d.o.o., Zagreb, Croatia | 100% | 18,978 | 19,738 | ||
| KRKA – POLSKA Sp. z.o.o., Warsaw, Poland | 100% | 3,737 | 18,697 | ||
| KRKA FARMA LLC, Istra, Russian Federation | 100% | 9,612 | 15,170 | ||
| Krka France Eurl, Paris, France | 100% | 10 | 4,662 | ||
| KRKA Pharma GmbH, Vienna, Austria | 100% | 36 | 2,344 | ||
| KRKA Farmacêutica, Unipessoal Lda., Estoril, Portugal | 100% | 10 | 2,266 | ||
| KRKA Farmaceutici Milano, S.r.l., Milan, Italy | 100% | 10 |
| KRKA-FARMA DOO BEOGRAD, Belgrade, Serbia | 1,350 | 100% |
|---|---|---|
| KRKA Finland Oy, Espoo, Finland | 1,042 | 100% |
| KRKA-FARMA DOOEL, Skopje, North Macedonia | 1,003 | 100% |
| KRKA Belgium, SA, Brussels, Belgium | 802 | 100% |
| KRKA Magyarország Kft., Budapest, Hungary | 376 | 100% |
| 123 Acurae Pharma GmbH, Cuxhaven, Germany | 184 | 100% |
| KRKA Sverige AB, Stockholm, Sweden | 25 | 100% |
| LLC ´KRKA Kazakhstan´, Almaty, Kazakhstan | 16 | 100% |
| KRKA Bulgaria EOOD, Sofia, Bulgaria | 11 | 100% |
| KRKA FARMA, d.o.o., Sarajevo, Sarajevo, Bosnia and Herzegovina | 10 | 100% |
| KRKA FARMACÉUTICA, S.L., Madrid, Spain | 10 | 100% |
| KRKA HELLAS E.P.E., Athens, Greece | 10 | 100% |
| Company Name | Country | Score 1 | Score 2 | Score 3 |
|---|---|---|---|---|
| KRKA ROMANIA S.R.L. | Bucharest, Romania | 100% | 10 | 10 |
| KRKA Slovensko, s.r.o. | Bratislava, Slovakia | 100% | 10 | 10 |
| SIA KRKA Latvija | Riga, Latvia | 100% | 10 | 10 |
| UAB KRKA Lietuva | Vilnius, Lithuania | 100% | 10 | 10 |
| KRKA UKRAINE LLC | Kiev, Ukraine | 100% | 10 | 10 |
| KRKA USA LLC | Wilmington, USA | 100% | 3 | 9 |
| KRKA ČR, s. r. o. | Prague, Czech Republic | 100% | 9 | 8 |
| KRKA UK Ltd | London, United Kingdom | 100% | 4 | 3 |
| KRKA PHARMA DUBLIN LIMITED | Dublin, Ireland | 100% | 1 | 2 |
| KRKA GCC L.L.C. | Dubai, United Arab Emirates* | 100% | / | / |
| Total | 185,436 | 355,763 | 346,444 |
The subsidiary KRKA GCC L.L.C. in Dubai, United Arab Emirates, was incorporated on 14 September 2022, with the share capital in the amount of AED 36,700 (€9,000 thousand) being paid up on 12 January 2023. The subsidiary Terme Krka, d.o.o. had a 100% interest in Golf Grad Otočec, d.o.o., at 31 December 2022; the subsidiary KRKA France Eurl had a 100-percent interest in HCS bvba in Belgium. The Chinese company Ningbo Menovo Pharmaceutical Co. Ltd. has a 40-percent holding in the company Ningbo Menovo Pharmaceutical Ltd.
| € thousand | 31 Dec 2022 | 31 Dec 2021 |
|---|---|---|
| Non-current loans | 56,013 | 31,010 |
| – Loans to subsidiaries | 14,100 | 18,850 |
| – Loans to others | 11,913 | 12,160 |
| – Deposits granted to banks | 30,000 | 0 |
| Current loans | 6,669 | 195,459 |
| – Portion of non-current loans maturing next year | 5,140 | 4,163 |
| – Loans to subsidiaries | 888 | 1,055 |
| – Loans to others | 23 | 23 |
| – Deposits granted to banks | 0 | 190,264 |
| – Current interest receivables | 618 | -46 |
| Total loans | 62,682 | 226,469 |
The annual rate of interest agreed on conclusion of loan contracts within the Krka Group companies, is the rate of interest set by the Minister of Finance in accordance with the Corporate Income Tax Act that defines the interest rate for related parties. In 2022, the interest rate ranged from 0.0870% to 1.687%.
Non-current loans to other entities comprise loans that are extended to the employees in accordance with internal rules of the Company. These loans are used for the purchase or renovation of dwellings. The actual interest rate fluctuated between 0.281% and 3.652% in 2022 (2021: between 0.269% and 0.367%). The maximum repayment period is 15 years.
| € thousand | 31 Dec 2022 | 31 Dec 2021 |
|---|---|---|
| Non-current loans to subsidiaries | 14,100 | 18,850 |
| Current loans to subsidiaries, inclusive of the current amounts of non-current loans | Amount |
|---|---|
| KRKA Farmaceutici Milano, S.r.l., Milan, Italy | 14,100 |
| KRKA Bulgaria EOOD, Sofia, Bulgaria | 16,800 |
| TERME KRKA, d.o.o., Novo mesto, Slovenia | 4,349 |
| KRKA Farmaceutici Milano S.r.l., Milano, Italy | 2,502 |
| Krka France Eurl, Paris, France | 890 |
| SIA KRKA Latvija, Riga, Latvia | 601 |
| KRKA HELLAS E.P.E., Athens, Greece | 115 |
| HCS bvba*, Edegem, Belgium | 100 |
| KRKA Bulgaria EOOD, Sofia, Bulgaria | 50 |
| TAD Pharma GmbH, Cuxhaven, Germany | 9 |
| Krka FARMACÉUTICA, S.L., Madrid, Spain | 2 |
| KRKA Finland Oy, Espoo, Finland | 1 |
| KRKA Sverige AB, Stockholm, Sweden | 462 |
| KRKA Belgium, SA, Brussels, Belgium | 1 |
| KRKA PHARMA DUBLIN LIMITED, Dublin, Ireland | 1 |
| KRKA Farmacêutica, Unipessoal Lda., Estoril, Portugal | 1 |
| KRKA Pharma GmbH, Dunaj, Austria | 1 |
| 123 Acurae Pharma GmbH, Cuxhaven, Germany | 0 |
| € thousand | 31 Dec 2022 | 31 Dec 2021 |
|---|---|---|
| Non-current investments | 110,769 | 108,882 |
| – Investments at fair value through OCI (equity instruments) | 15,988 | 15,860 |
| – Investments at amortised cost (debt instruments) | 94,781 | 93,022 |
| Current investments including derivatives | 52,437 | 155,448 |
| – Investments at amortised cost (debt instruments) | 50,697 | 113,987 |
| – Derivatives | 1,740 | 1,491 |
| – Other current investments at fair value through profit or loss (debt instruments) | 0 | 39,970 |
| Total investments | 163,206 | 264,330 |
Investments at fair value through other comprehensive income (OCI) comprised €876 thousand of investments in shares and interests in companies in Slovenia (2021: €1,001 thousand), and €15,112 thousand of investments in shares of companies located abroad (2021: €14,859 thousand). Investments at amortised cost include investments in Slovenian government bonds which amounted to €6,533 thousand (2021: €4,455 thousand), while investments in foreign government bonds amounted to €138,945 thousand (2021: €202,554 thousand).
| € thousand | Financial assets at fair value through OCI | Investments at amortised cost | Investments at fair value through profit or loss |
|---|---|---|---|
| Balance at 1 Jan 2021 | 10,419 | 0 | 0 |
| Increase | 0 |
| € thousand | Assets | Liabilities |
|---|---|---|
| 2022 | 1,708 | 2,490 |
| 2021 | 1,727 | 2,466 |
| 1,687 | 1,484 | 0 | 0 |
|---|---|---|---|
| 33 | 19 | 0 | 0 |
|---|---|---|---|
| 7,728 | 11,978 | 0 | 0 |
|---|---|---|---|
| 11,156 | 15,208 | 2,490 | 2,466 |
|---|---|---|---|
| -2,490 | -2,466 | -2,490 | -2,466 |
|---|---|---|---|
| 8,666 | 12,742 | 0 | 0 |
|---|---|---|---|
| Balance at 1 Jan 2021 | Recognised in income statement | Recognised in OCI | Balance at 31 Dec 2021 | Recognised in income statement | Recognised in OCI | Balance at 31 Dec 2022 |
|---|---|---|---|---|---|---|
| Investments at fair value through OCI | 295 | 0 | -1,034 | -739 | -19 | -24 |
| -782 | 1,447 | 37 | 0 | 1,484 | 203 | 0 | 1,687 |
|---|---|---|---|---|---|---|---|
| 14 | 5 | 0 | 19 | 14 | 0 | 33 |
|---|---|---|---|---|---|---|
| 12,466 | 123 | -611 | 11,978 | -940 | -3,310 | 7,728 |
|---|---|---|---|---|---|---|
| 14,222 | 165 | -1,645 | 12,742 | -742 | -3,334 | 8,666 |
|---|---|---|---|---|---|---|
The relevant amount of deferred tax assets and liabilities was calculated using the 19% income tax rate.
| € thousand | 31 Dec 2022 | 31 Dec 2021 |
|---|---|---|
| Materials | 215,961 | 183,593 |
| Work in progress | 122,864 | 89,744 |
| Finished products | 122,144 | 108,124 |
| Merchandise | 12,711 | 10,773 |
| Advances for inventories | 19,298 | 2,089 |
| Total inventories | 492,978 |
The increase in inventories is the result of adapting to uncertain market conditions. By carefully planning our inventories and maintaining safety stocks, we ensure that we always have access to the intermediate goods that we require to produce our finished products. The planning of inventories of intermediate goods is based on sales forecasts. We also ensure optimal and adequate stocks of finished products throughout the distribution chain.
The write-downs and write-offs of inventories to their net realisable value amounted to €14,194 thousand in 2022 and €17,287 thousand in 2021.
The Company does not pledge inventories as security for a liability.
| € thousand | 31 Dec 2022 | 31 Dec 2021 |
|---|---|---|
| Current trade receivables | 357,889 | 424,588 |
| – Receivables due from subsidiaries | 196,166 | 234,064 |
| – Receivables due from customers other than Group companies | 161,723 | 190,524 |
| Current receivables for other dividends | 171 | 99 |
| Current receivables due from others | 12,468 | 17,282 |
| Total trade and other receivables | 370,528 | 441,969 |
97.3% of receivables due from customers other than Group companies were insured with a credit insurer, by taking into account 87.6% of the deductible (99.2% of such receivables were insured as at 31 December 2021, by taking into account 89.3% of the deductible).
| € thousand | 31 Dec 2022 | 31 Dec 2021 |
|---|---|---|
| KRKA-RUS LLC, Istra, Russian Federation | 76,254 | 104,394 |
| KRKA FARMA LLC, Istra, Russian Federation | 36,260 | 52,541 |
| Krka Sverige AB, Stockholm, Sweden | 16,395 | 16,508 |
| KRKA - POLSKA, Sp. z.o.o., Warsaw, Poland | 10,128 | 8,763 |
| LLC ‘KRKA Kazakhstan‘, Almaty, Kazakhstan | 9,981 | 7,667 |
| KRKA-FARMA DOOEL, Skopje, North Macedonia | 9,792 | 8,750 |
| Company | Gross Value (€ thousand) | Allowances for Receivables (€ thousand) |
|---|---|---|
| KRKA-FARMA DOO BEOGRAD, Belgrade, Serbia | 8,406 | |
| KRKA FARMACEUTICI MILANO S.r.l., Milan, Italy | 5,701 | 3,843 |
| KRKA UK Ltd, London, United Kingdom | 4,307 | 244 |
| KRKA Finland Oy, Espoo, Finland | 4,080 | 3,175 |
| KRKA Belgium, SA, Brussels, Belgium | 3,120 | 1,301 |
| KRKA-FARMA d.o.o., Zagreb, Croatia | 2,516 | 3,091 |
| TAD Pharma GmbH, Cuxhaven, Germany | 2,403 | 4,558 |
| KRKA France Eurl, Paris, France | 1,948 | 5,384 |
| KRKA FARMACÉUTICA, S.L., Madrid, Spain | 1,456 | 605 |
| KRKA Farmacêutica, Unipessoal Lda., Estoril, Portugal | 1,301 | 1,360 |
| KRKA Pharma GmbH, Wienna, Austria | 861 | 1,026 |
| Ningbo Krka Menovo Pharmaceutical Co. Ltd., Ningbo, China | 417 | 200 |
| KRKA PHARMA DUBLIN LIMITED, Dublin, Ireland | 334 | 1,137 |
| 123 Acurae Pharma GmbH, Cuxhaven, Germany | 278 | 0 |
| Receivables due from other Krka Group companies | 228 | 419 |
| Total current trade receivables due from subsidiaries | 196,166 | 234,064 |
| Current trade receivables due from customers other than Group companies |
| € thousand | 31 Dec 2022 | 31 Dec 2021 |
|---|---|---|
| Current trade receivables due from domestic customers other than Group companies | 9,323 | 10,381 |
| Current trade receivables due from foreign customers other than Group companies | 190,326 | 180,913 |
| Deferred revenue from contracts with foreign customers | -2,485 | -770 |
| Total current trade receivables due from customers other than Group companies | 197,164 | 190,524 |
The net amount of the receivable write-offs and impairment disclosed in operating expenses amounted in 2022 to €1,548 thousand (2021: €50 thousand).
Most of current receivables due from others in the total amount of €12,468 thousand (2021: €17,282 thousand) include primarily receivables due from the State, whereof VAT receivables amounted to €4,346 thousand (2021: €10,227 thousand). Advances for services were recorded at €859 thousand (2021: €777 thousand).
| € thousand | 31 Dec 2022 | 31 Dec 2021 |
|---|---|---|
| Cash in hand | 0 | 1 |
| Bank balances | 470,297 | 144,980 |
| Total cash and cash equivalents | 470,297 | 144,981 |
The share capital of the Company in the amount of €54,732 thousand is represented by 32,793,448 ordinary no-par value shares. The Company has solely one class of share. The share capital was fully paid in.
At the 26th Annual General Meeting on 9 July 2020, the Management Board was granted authorisation for the purchase of treasury shares. However, the total amount of treasury shares should not exceed the 10% of Company's share capital, i.e. 3,279,344 shares, whereby the total amount is inclusive of shares already held by the Company as at the date. The authorisation is valid for a period of 36 months from the date of the decision adoption.
| No. of shares | Weighted average share price (€) | Value of treasury shares (€ thousand) | |
|---|---|---|---|
| Balance at 31 Dec 2020 | 1,541,774 | 99,279 | |
| Repurchases in 2021 | 142,134 | 107.38 | 15,262 |
| Balance at 31 Dec 2021 | 1,683,908 | 114,541 | |
| Repurchases in 2022 | 101,941 | 98.35 | 10,025 |
| Balance at 31 Dec 2022 | 1,785,849 | 124,566 |
The performed repurchases of treasury shares refers to repurchases that were recorded in individual years. A subscription fee is included in the weighted average price of shares. The amount paid, including commission, is deducted from the total capital as treasury shares until such shares are withdrawn, reissued or sold.
The repurchases of treasury shares in 2022 in terms of days are outlined in Note 35 ‘Repurchase of treasury shares’.
The Company's reserves comprise reserves for treasury shares, the share premium, legal and statutory reserves, fair value reserve and translation reserves.
Reserves for treasury shares amounted as at the balance sheet date to €124,566 thousand and increased by €10,025 thousand based on their formation as a result of additional repurchase of treasury shares.
The share premium is to be used under the terms and purposes as defined by the applicable act. The share premium was recorded at €105,897 thousand as at 31 December 2022 and consisted of the general equity revaluation adjustment of €90,659 thousand that was included in share premium during the transfer to IFRS; the share premium of €10,844 thousand formed pursuant to a special regulation applicable in the ownership transformation of the Company; and €4,394 thousand of share premium resulting from reduction in the share capital due to the withdrawal of treasury shares. The amount may be used solely for the purpose of increasing share capital. In 2022, the value of share premium remained unchanged.
Legal reserves may be formed up to 30% of the share capital for the coverage of possible future losses. They amounted to €14,990 thousand as at 31 December 2022 and remained unchanged compared to the previous period.
Statutory reserves amounted to €30,000 thousand as at the reporting date and remained unchanged over the previous period. Statutory reserves are formed by the Company up to the amount of €30,000 thousand. Statutory reserves can be used for loss coverage, formation of reserves for treasury shares, for decreasing share capital by share withdrawal, and for regulating the dividend policy. Statutory reserves are available for drawdown.
The fair value reserve includes the cumulative change in the fair value of financial assets and post-employment benefits. Compared to the previous period, the fair value reserve increased by €23,311 thousand and amounted to €4,307 thousand as at 31 December 2022. The cumulative change is due to a €128 thousand increase in the fair value of financial assets through OCI (equity instruments); an increase due to the restatement of post-employment benefits of €26,517 thousand and a decrease for the impact of deferred taxes of €3,334 thousand.
Retained earnings grew based on the profit of €348,215 thousand. On the other hand, they declined as a result of allocation of accumulated profit to dividend payment (€175,025 thousand) in accordance with the resolution adopted by the 28th Annual General Meeting on 7 July 2022; an additional formation of reserves for treasury shares in total of €10,025 thousand on account of the treasury share repurchase in 2022 and changes in provisions for termination benefits amounting to €1,826 thousand.
The amount of the dividend payout reported in the statement of cash flows, differs from the figure confirmed by the Annual General Meeting and reported in the statement of changes in equity by €19 thousand of dividends paid in respect of previous periods (2021: €11 thousand).
In 2022, the declared gross dividend per share was €5.63 (2021: €5.00).
The table below is presented in €, unlike all other tables in the financial report hereof, where data is expressed in € thousand.
| € | 2022 | 2021 |
|---|---|---|
| Compulsory appropriation of profit | ||
| Net profit | 348,215,048.50 | 245,216,436.23 |
| – To cover the loss from previous periods | 0.00 | 0.00 |
| – Allocation to legal reserves | 0.00 | 0.00 |
| – Allocation to reserves for treasury shares | -10,025,534.49 | -15,261,862.79 |
| – Allocation to statutory reserves | 0.00 | 0.00 |
| Profit after compulsory appropriation | 338,189,514.01 | 229,954,573.44 |
| – Formation of other profit reserves under the resolution of the Management and Supervisory Boards | 0.00 | 0.00 |
| Surplus of profit | 338,189,514.01 | 229,954,573.44 |
| Identification of distributable profit | ||
| – Surplus of profit | 338,189,514.01 | 229,954,573.44 |
| – Profit brought forward | 69,973,616.13 | 88,670,552.72 |
| Distributable profit | 408,163,130.14 | 318,625,126.16 |
| € thousand | 31 Dec 2022 | 31 Dec 2021 |
|---|---|---|
| Current borrowings | 53,524 | 55,092 |
| – Borrowings from subsidiaries | 53,375 | 55,068 |
| – Current interest payable | 149 | 24 |
| Total borrowings | 53,524 | 55,092 |
| € thousand | 31 Dec 2022 | 31 Dec 2021 |
|---|---|---|
| Current borrowings from subsidiaries | 53,524 | 55,092 |
| TAD Pharma GmbH, Cuxhaven, Germany | 48,467 | 51,960 |
| KRKA Sverige AB, Stockholm, Sweden | 2,174 | 0 |
| KRKA FARMACÉUTICA, S.L., Madrid, Spain | 1,365 | 1,211 |
| KRKA Belgium, SA, Brussels, Belgium | 927 | 8 |
| TERME KRKA, d. o. o., Novo mesto, Slovenia | 424 | 1,575 |
| KRKA Pharma GmbH, Vienna, Austria | 144 | 337 |
| KRKA Farmacêutica, Unipessoal Lda., Estoril, Portugal | 18 | 0 |
| KRKA Finland Oy, Espoo, Finland | 3 | 0 |
| KRKA France Eurl, Paris, France | 1 | 1 |
| 123 Acurae Pharma GmbH, Cuxhaven, Germany | 1 |
53,524
55,092
Current loans were raised in euro for a period of up to one year and were not specifically collateralised.
| € thousand | Balance at 31 Dec 2021 | Transfer | Formation | Utilisation | Reversal | Balance at 31 Dec 2022 |
|---|---|---|---|---|---|---|
| Provisions for lawsuits | 543 | 10,000 | 0 | 0 | 0 | 10,543 |
| Provisions for post-employment benefits | 93,963 | 0 | -18,123 | -3,345 | -1,597 | 70,898 |
| Provisions for other non-current employee benefits | 18,630 | 0 | -1,851 | -1,382 | -230 | 15,167 |
| Total provisions | 113,136 | 10,000 | -19,974 | -4,727 | -1,827 | 96,608 |
| € thousand | Balance at 31 Dec 2021 | Formation | Utilisation | Reversal | Balance at 31 Dec 2022 |
|---|---|---|---|---|---|
| 2,100 | 543 | 0 | –2,100 | 543 |
|---|---|---|---|---|
| 98,516 | 318 | –3,879 | –992 | 93,963 |
|---|---|---|---|---|
| 19,214 | 1,136 | –1,480 | –240 | 18,630 |
|---|---|---|---|---|
| 119,830 | 1,997 | –5,359 | –3,332 | 113,136 |
|---|---|---|---|---|
The amounts of provisions for lawsuits referring to intellectual property are defined on the basis of the noted amount of the indemnification claim, or on the basis of anticipated amount, if the indemnification claim is not yet disclosed. External advisers for disputes referring to intellectual property are engaged for defining the anticipated amounts. Furthermore, the management each year verifies the calculated amount of provisions for each individual claim that is not yet closed.
In 2014, the European Commission found that Krka had infringed Article 101 of the Treaty on the Functioning of the EU, thereby distorting competition on the EU market for perindopril, and imposed a fine of €10,000 thousand on Krka. Krka paid the fine within the time limit set by the Commission. However, as it considered that its conduct did not infringe competition law rules, it brought an action against the decision before the EU General Court, which ruled in favour of Krka in December 2018.
The General Court's decision is not yet final and the Commission has lodged an appeal against it within the appeal period, which will be decided by the European Court of Justice. In 2022, the Company transferred the value from non-current operating liabilities to provisions for lawsuits.
The Company was in 2022 involved in intellectual property disputes and other areas of law (civil, labour, administrative disputes, etc.). The total value of the claims against Krka is estimated at €227 thousand. The Company has formed provisions of €543 thousand for this purpose. The reversal of provisions is disclosed in Note 4 ‘Other operating income’.
Provisions for obligations to employees arising from post-employment and other non-current benefits are based on actuarial calculation using the following assumptions:
| € thousand | 2022 | 2021 |
|---|---|---|
| Balance at 1 Jan | 93,963 |
| € thousand | Balance at 31 Dec 2021 | New deferred income received | Reversal of deferred income | Balance at 31 Dec 2022 |
|---|---|---|---|---|
| Grants received from the European Regional Development Fund and budget of the Republic of Slovenia intended for the |
98,516
5,364
6,030
1,204
726
-3,344
-3,879
-1,598
-992
-24,691
-6,438
-27,006
-7,562
2,315
1,124
70,898
93,963
| Discount rate | Increase in wages and salaries | Change in percentage points | Change by | |
|---|---|---|---|---|
| 0.5 | –0.5 | Impact on liabilities (€ thousand) | ||
| -4,721 | 5,185 | 5,261 | -4,828 |
| Subsidy for acquisition of electric drive vehicles | 3 | 0 | -1 | 2 |
|---|---|---|---|---|
| Property, plant and equipment received free of charge | 3 | 13 | -4 | 12 |
| Emission coupons | 10 | 10 | -10 | 10 |
| Subsidy for the purchase of joinery | 93 | 0 | -1 | 92 |
| Subsidy for acquisition of other equipment | 3 | 0 | -1 | 2 |
| Grants received from the European Regional Development Fund (Farma GRS) | 2,376 | 0 | -521 | 1,855 |
| Reserve fund assets (eko fund) | 0 | 2 | -2 | 0 |
| Total deferred income | 3,546 | 25 | -755 | 2,816 |
Production of pharmaceuticals in the new Notol 2 Plant and Farma GRS projects are partly funded by the European Union from the European Regional Development Fund. The Notol project is carried out within the framework of the Operational programme for strengthening regional development potentials for the period 2007-2013; Priority axis 1: Competitiveness and Research Excellence: main type of activity 1.1.: Improvement of competitiveness and research excellence. The Farma GRS project was eligible for co-financing of costs under R&D projects, including project management and investment in research and development and production activities.
The amounts of deferred income are decreased by the proportionate share of depreciation of assets to which the grants refer and by any other types of expenses incurred.
| € thousand | 31 Dec 2022 | 31 Dec 2021 |
|---|---|---|
| Non-current trade payables | 0 | 10,000 |
|---|---|---|
| Current trade payables | 194,143 | 178,143 |
| Payables to subsidiaries | 87,559 | 79,391 |
| Payables to domestic suppliers | 52,271 | 43,654 |
| Payables to foreign suppliers | 54,313 | 55,098 |
| Total trade payables | 194,143 | 188,143 |
| 31 Dec 2022 | 31 Dec 2021 | |
|---|---|---|
| KRKA-FARMA d.o.o., Zagreb, Croatia | 24,912 | 21,116 |
| KRKA FARMA LLC, Istra, Russian Federation | 17,555 | 17,042 |
| Ningbo Krka Menovo Pharmaceutical Co. Ltd., China | 5,306 | 1,466 |
| KRKA – POLSKA Sp. z.o.o., Warsaw, Poland | 5,009 | 6,612 |
| KRKA ROMANIA S.R.L., Bucharest, Romania | 4,689 | 4,459 |
| Krka-Rus LLC, Istra, Russian Federation | 3,761 | 2,403 |
| KRKA ČR, s. r. o., Prague, Czech Republic | 3,686 | 3,190 |
| TAD Pharma GmbH, Cuxhaven, Germany | 3,507 | 2,886 |
| KRKA UKRAINE LLC, Kiev, Ukraine | 3,199 | 3,081 |
| KRKA Magyarország Kft., Budapest, Hungary | 2,779 | 2,872 |
| KRKA Slovensko, s.r.o., Bratislava, Slovakia | 2,124 | 2,124 |
| KRKA Farmaceutici Milano, S.r.l., Milan, Italy |
| Company | Location | Revenue |
|---|---|---|
| UAB KRKA Lietuva | Vilnius, Lithuania | 1,799 |
| KRKA France Eurl | Paris, France | 1,556 |
| KRKA-FARMA DOO BEOGRAD | Belgrade, Serbia | 1,331 |
| SIA KRKA Latvija | Riga, Latvia | 1,060 |
| KRKA Bulgaria EOOD | Sofia, Bulgaria | 772 |
| KRKA Pharma GmbH | Vienna, Austria | 740 |
| KRKA FARMACÉUTICA, S.L. | Madrid, Spain | 602 |
| KRKA-FARMA DOOEL | Skopje, North Macedonia | 531 |
| KRKA Farmacêutica, Unipessoal Lda. | Estoril, Portugal | 512 |
| LLC 'KRKA Kazakhstan' | Almaty, Kazakhstan | 506 |
| KRKA HELLAS E.P.E. | Athens, Greece | 293 |
| KRKA Finland Oy | Espoo, Finland | 286 |
| KRKA Sverige AB | Stockholm, Sweden | 154 |
| KRKA Belgium, SA | Brussels, Belgium | 115 |
| KRKA UK Ltd | London, United Kingdom | 95 |
| HCS bvba | Edegem, Belgium* | 70 |
| KRKA FARMA, d.o.o. | Sarajevo, Bosnia and Herzegovina | 48 |
| TERME KRKA, d. o. o. | Novo mesto | 31 |
| KRKA PHARMA DUBLIN LIMITED | Dublin, Ireland | 18 |
KRKA USA LLC, Wilmington, USA
| € thousand | 31 Dec 2022 | 31 Dec 2021 | |
|---|---|---|---|
| 87,559 | 79,391 |
| € thousand | 31 Dec 2022 | 31 Dec 2021 | |
|---|---|---|---|
| Refund liabilities | 13,094 | 13,638 | |
| – Bonuses and volume rebates | 13,094 | 13,638 | |
| Contract liabilities | 8,593 | 5,839 | |
| – Contract liabilities – advances from other customers | 8,593 | 5,839 | |
| Total current contract liabilities | 21,687 | 19,477 |
Accrued bonuses and volume discounts include discounts to which the customers are entitled when the relevant terms and conditions are fulfilled; these discounts are not granted to customers in the year of the sale.
| € thousand | 31 Dec 2022 | 31 Dec 2021 | |
|---|---|---|---|
| Payables to employees – gross salaries, other receipts and charges | 55,304 | 53,446 | |
| Liabilities under repurchase transactions (repo-type operations) | 0 | 102,234 | |
| Other | 2,068 | 8,330 | |
| Total other current liabilities | 57,372 | 164,010 |
The item ‘Other’ also includes current liabilities to the State on account of VAT payable in the amount of €739 thousand (2021: €6,284 thousand).
| € thousand | 31 Dec 2022 | 31 Dec 2021 | |
|---|---|---|---|
| Guarantees issued | 15,195 | 13,695 | |
| Other | 1,935 |
The Company concludes lease agreements for various assets such as land, parking spaces and offices, apartments, warehouses, and equipment.
The lease terms are assessed according to the type of a lease:
The Company does not sub-lease the leased assets.
The Company has concluded lease contracts for various production and non-production equipment, temporary offices and parking spaces, with lease term of shorter than one year. In respect of those leases, the Company applied the practical expedient provided by the Standard.
| € thousand | Balance at 1 Jan 2021 | Increase/Decrease | Interest | Lease payments | Balance at 31 Dec 2021 |
|---|---|---|---|---|---|
| 2,822 | 1,210 | 47 | -991 | 3,088 | |
| – Current lease liabilities | 987 | – Non-current lease liabilities | 2,101 | ||
| Balance at 1 Jan 2022 | 3,088 | Increase/Decrease | 1,929 | Interest | 49 |
| Lease payments | -1,124 | Balance at 31 Dec 2022 | 3,942 | – Current lease liabilities | 1,033 |
| – Non-current lease liabilities | 2,909 |
| € thousand | 2022 | 2021 |
|---|---|---|
| Depreciation of right-of-use assets | 1,062 | 956 |
| Interest expenses on lease liabilities | 49 | 47 |
| Expenses relating to current leases | 1 | 39 |
| Expenses relating to leases of low-value assets | 12 | 6 |
| Total amount recognised in income statement | 1,124 | 1,048 |
| € thousand | Balance at 31 Dec 2021 | Monetary changes | Non-monetary changes | Balance at 31 Dec 2022 |
|---|---|---|---|---|
| Borrowings | 55,068 | -1,758 | 0 | 53,375 |
| Interest on borrowings | 24 | -1,856 | 1,981 | 149 |
| Dividends | 1,322 | -175,044 | 175,025 | 1,303 |
| Leases | 3,088 | -1,124 | 1,929 | 3,942 |
| Liabilities under repurchase |
| € thousand | Balance at 31 Dec 2020 | Monetary changes | Additions/disposals | Non-monetary changes | Balance at 31 Dec 2021 |
|---|---|---|---|---|---|
| Borrowings | 46,317 | 8,703 | 0 | 48 | 55,068 |
| Interest on borrowings | 28 | -444 | 440 | 0 | 24 |
| Dividends | 1,335 | -155,907 | 155,896 | -2 | 1,322 |
| Leases | 2,822 | -991 | 1,210 | 47 | 3,088 |
| Liabilities under repurchase transactions (repo-type operations) | 0 | 102,292 | 0 |
The key credit risk of the Company arises from trade receivables. This is the risk of customers failing to settle their liabilities by maturity dates.
The Krka Group introduced a centralised credit control process in 2004. The system includes all customers with credit limits exceeding €20,000. Receivables due from small customers accounted for less than 5% of total trade receivables. Control over small customers is decentralised in the sales network and under the constant supervision of the controlling company.
Credit control is a two-step process. The first step involves assessing the credit risk for each customer, determining risk mitigation instruments, and assigning relevant credit limits. We assess each new customer and review the credit ratings of all customers twice a year. Each credit rating includes many different financial and non-financial indicators, which fall into 4 categories (an assessment of the buyer's profitability, payment habits and payment discipline, an assessment of the buyer's financial statements, a qualitative assessment of the sales staff and an assessment of country risk) each of which carries a different weight in the final assessment.
Each customer is assigned a customised credit limit according to the credit rating and the expected shipment and payment dynamics.
The second step in the credit-control process involves regular dynamic monitoring of a customer's payment discipline. The information systems of the Company and other Krka Group companies engaged in sales monitor available limits and overdue receivables. Control is exercised for each shipment of products to customers. A shipment is automatically blocked if a customer is in arrears or if receivables together with the new shipment exceed the approved credit limit. Sales personnel are required to initiate a payment collection procedure or arrange hedging for the outstanding settlements.
Internal rules determine the process of credit control and authorisations for granting credit limits to customers. Credit control also avails of a system of regular reporting on trade receivables and the customer's payment discipline. The reporting system aids the early detection of customers at increased risk of defaulting on payments and facilitates effective credit risk management.
The credit control process employs uniform rules which apply to all customers. Due to specifics of sales markets, additional national controls have been introduced in individual subsidiaries. Credit control processes are regularly adjusted to changes in the sales markets.
Credit control guarantees permanent control over the quality of the trade receivables portfolio. The result is a low share of receivable write-offs and impairments in view of Company's sales.
The amount of receivable write-offs and impairments is also low because receivables are dispersed across many customers and sales markets, and the majority of outstanding receivables are due from customers with whom Krka has been doing business for several years.
The credit risk environment was due to the challenges related to the COVID-19 pandemic and the heightened situation in Ukraine, the Russian Federation and Belarus very challenging in 2022. We paid particular attention to these markets and further strengthened our activities to manage trade receivables. The credit risk management performance in 2022 was favourable. At the year-end, the value of trade receivables due from Company's customer was 16% lower than at the beginning of the year, while the amount of overdue and unpaid receivables remained within a range acceptable to Krka.
The carrying amount of financial assets represents the largest exposure to credit risk as illustrated below:
| € thousand | Notes | 31 Dec 2022 | 31 Dec 2021 |
|---|---|---|---|
| Loans | 13 | 62,682 |
| € thousand | 31 Dec 2022 | 31 Dec 2021 |
|---|---|---|
| Investments at amortised cost (debt instruments) | 226,469 | 145,478 |
| Trade receivables including those due from subsidiaries | 357,889 | 424,588 |
| Cash and cash equivalents | 470,297 | 144,981 |
| Total | 1,036,346 | 1,003,047 |
As for the financial assets exposed to credit risk, the loans, trade receivables and receivables due from subsidiaries are presented separately.
The loans include a €30,000 thousand deposit with a maturity of over one year with a Slovenian bank with a high credit rating.
Investments at amortised cost (debt instruments) represent investments in non-current and current bonds of EU countries. They are classified as a low credit risk financial instrument because their credit risk rating is equivalent to the globally understood definition of 'investment grade', which is equivalent to a rating of Baa2 or above by Moody's or BBB- or above by Standard & Poor's.
The majority of Krka's cash and cash equivalents refer to bank balances and deposits with maturities of less than 90 days with banks in the EU with a high credit rating (P-1 according to Moody's).
| € thousand | 31 Dec 2022 | 31 Dec 2021 |
|---|---|---|
| Region Slovenia | 60,419 | 121,027 |
| Region South-East Europe | 150 | 415 |
| Region East Europe | 40 | 41 |
| Region Central Europe | 121 | 115 |
| Region West Europe | 1,952 | 104,871 |
| Region Overseas Markets | 0 | 0 |
| Total | 62,682 | 226,469 |
| € thousand | 31 Dec 2022 | 31 Dec 2021 |
|---|---|---|
| Region Slovenia | 9,359 | 10,452 |
| Region South-East Europe | 81,760 | 83,873 |
|---|---|---|
| Region East Europe | 141,775 | 222,183 |
| Region Central Europe | 68,088 | 56,348 |
| Region West Europe | 50,955 | 46,877 |
| Region Overseas Markets | 5,952 | 4,855 |
| Total | 357,889 | 424,588 |
| € thousand | Gross value at 31 Dec 2022 | Allowance at 31 Dec 2022 | Gross value 31 Dec 2021 | Allowance at 31 Dec 2021 |
|---|---|---|---|---|
| Not past due | 62,673 | 0 | 226,456 | 0 |
| Past due up to 20 days | 0 | 0 | 0 | 0 |
| Past due from 21 to 50 days | 2 | 0 | 1 | 0 |
| Past due from 51 to 180 days | 2 | 0 | 3 | 0 |
| Past due more than 180 days | 5 | 0 | 9 | 0 |
| Total | 62,682 | 0 |
| € thousand | Gross value at 31 Dec 2022 | Allowance at 31 Dec 2022 | Net value at 31 Dec 2022 | Gross value at 31 Dec 2021 | Allowance at 31 Dec 2021 | Net value at 31 Dec 2021 |
|---|---|---|---|---|---|---|
| Not past due | 346,743 | 182 | 346,561 | 409,494 | 187 | 409,307 |
| Past due up to 20 days | 3,000 | 16 | 2,984 | 7,384 | 14 | 7,370 |
| Past due from 21 to 50 days | 2,782 | 8 | 2,774 | 4,597 | 67 | 4,530 |
| Past due from 51 to 180 days | 4,789 | 27 | 4,762 | 2,361 | 0 | 2,361 |
| Past due more than 180 days | 36,016 | 35,208 | 808 | 35,317 | 34,297 | 1,020 |
| Total | 393,330 | 35,441 | 357,889 | 459,153 |
The Company agrees extended terms with some customers. If the Company did not extend payment terms to some of its customers, receivable maturity structure would be as follows at the reporting date: not past due €343,445 thousand (2021: €404,494 thousand); past due up to 20 days €2,892 thousand (2021: €9,223 thousand); past due between 21 and 50 days €5,634 thousand (2021: €6,905 thousand); past due between 51 and 180 days €2,759 thousand (2021: €2,360 thousand); and past due more than 180 days €3,158 thousand (2021: €1,606 thousand).
| € thousand | Gross value at 31 Dec 2022 | Allowance at 31 Dec 2022 | Net value at 31 Dec 2022 | Gross value at 31 Dec 2021 | Allowance at 31 Dec 2021 | Net value at 31 Dec 2021 |
|---|---|---|---|---|---|---|
| Not past due | 331 | 0 | 331 | 3,405 | 0 | 3,405 |
| Past due up to 20 days | 0 | 0 | 0 | 0 | 0 | 0 |
| Past due from 21 to 50 days | 0 | 0 | 0 | 0 | 0 | 0 |
| Past due from 51 to 180 days | 0 | 0 | 0 | 0 | 0 | 0 |
| Past due more than 180 days | 0 | 0 | 0 | 0 | 0 | 0 |
All receivables in the Russian Federation were secured and, taking into account the own participation, the share of secured receivables was 80% (at 31 December 2021 all receivables were secured and, taking into account the own participation, the share of secured receivables was 90%). None of the receivables as at 31 December 2022 was past due.
Business partners value Krka for its excellent financial discipline and stable cash flows. In 2022, we settled all financial liabilities regularly. Company's exposure to liquidity risk was low.
The Company has agreements with two banks for the allowed negative balance on transaction accounts for a total amount of €5,688 thousand (in 2021, the Company had agreements with two banks for a total amount of €5,415 thousand). As there were no negative balances on transaction accounts at 31 December 2022, the bank overdraft remained fully unused.
As at 31 December 2022, the Company had an undrawn credit facility of €20,000 thousand (2021: €20,000 thousand).
At the end of 2022, the Company recorded excess liquidity, primarily as cash at bank or deposits with commercial banks with high credit ratings. The 2022 increase in excess liquidity resulted from surplus of cash flow from operating and investing activities over financing uses.
The European Central Bank started to gradually increase key interest rates in the second half of 2022. Low-risk cash investments have thus started to yield positive returns. In line with our internal investment diversification rules and taking into account interest rate, liquidity, credit and currency risks, we deposited most of our cash surpluses with commercial banks.
The Company manages liquidity risk centrally for the entire Krka Group. Subsidiaries are financed through intra-group loans and any potential cash surpluses are deposited with the controlling company. Excess cash from all Krka Group companies is transferred to the controlling company's master account either automatically daily (cash pooling) or manually through individual bank transfers. This allows for cash management optimisation, currency risk mitigation, an overview of liquidity of all Krka Group companies, and enhanced security of cash transactions.
The Company's liquidity ratios remain favourable and stable at the end of 2022.
Financial liabilities in terms of maturity are outlined in the tables below.
| € thousand | Carrying amount | Contractual cash flows | Total | Up to 6 months | 6 – 12 months | 1 – 2 years | 2 – 5 years | 5 – 10 years |
|---|---|---|---|---|---|---|---|---|
| Financial liabilities | Other current loans | 53,524 | 53,524 | 53,524 | 0 | 0 | 0 |
| Lease liabilities | 3,942 | 4,095 | 555 | 529 | 892 | 1,932 | 187 |
|---|---|---|---|---|---|---|---|
| Trade payables excluding advances | 194,143 | 194,143 | 194,143 | 0 | 0 | 0 | 0 |
| Contract liabilities excluding advances | 13,094 | 13,094 | 13,094 | 0 | 0 | 0 | 0 |
| Other liabilities excluding amounts owed to the State, to employees and advances | 1,328 | 1,328 | 1,328 | 0 | 0 | 0 | 0 |
| Total financial liabilities | 266,031 | 266,184 | 262,644 | 529 | 892 | 1,932 | 187 |
| Total derivative financial liabilities | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Total | 266,031 | 266,184 | 262,644 | 529 | 892 | 1,932 | 187 |
| € thousand | Carrying amount | Contractual cash flows | Total | Up to 6 months | 6 – 12 months | 1 – 2 years | 2 – 5 years | 5 – 10 years |
|---|---|---|---|---|---|---|---|---|
| Financial liabilities | Other current loans | 55,092 | 55,092 | 55,092 | 0 | 0 | 0 | 0 |
| Lease liabilities | 3,088 | 3,217 | 530 | 497 | 665 | 1,278 | 247 | |
| Trade payables excluding advances | 178,143 | 178,143 | 178,143 | 0 | 0 | 0 | 0 | |
| Contract liabilities excluding advances | 13,638 | 13,638 | 13,638 | 0 | 0 | 0 | 0 | |
| Repo liability | 102,234 | 102,234 | 102,234 | 0 | 0 | 0 | 0 | |
| Other liabilities excluding amounts owed |
| to the State, to employees and advances | 2,046 | 2,046 | 2,046 | 0 | 0 | 0 | 0 |
|---|---|---|---|---|---|---|---|
| Total financial liabilities | 354,241 | 354,370 | 351,683 | 497 | 665 | 1,278 | 247 |
| Total derivative financial liabilities | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Total | 354,241 | 354,370 | 351,683 | 497 | 665 | 1,278 | 247 |
The Company operates in diverse international environments and is exposed to foreign exchange risk in certain sales and purchase markets.
Currency exposure arises from the difference in the value of assets and liabilities in a particular currency in the financial position statement of the Krka Group and from differences between operating income and expenses generated in individual currencies.
The key accounting categories composing a currency position are trade receivables, trade payables, liquid financial assets in foreign currencies, derivatives for currency risk hedging, and recorded purchase orders.
The value of the rouble in euro terms increased by 8.8% from the beginning to the end of 2022, on average 18.7% higher than in 2021.
The value of the US dollar in euro terms rose by 6.2% from the beginning to the end of 2022, and was on average 12.3% higher than in 2021. The impact of the change in the value of the US dollar on Krka Group's net financial result was neutralised by financial instruments.
The Ukrainian hryvnia has lost around 20% of its value against the euro since the beginning of the Russian invasion of Ukraine.
The Polish zloty has been fairly stable, depreciating by 1.8% from the beginning to the end of 2022, while its average value was 2.6% lower than in 2021. The Romanian leu and the Croatian kuna, which were in the ERM in 2022, have been very stable. The value of the British pound decreased in 2022. The contribution of these currencies to Krka Group's net financial result was small.
The Company generally eliminates currency risks through natural methods, primarily by increasing purchases and payables in the currencies in which it invoices sales. Where this is not possible, financial instruments are used or the risk is left unhedged. As a rule, forward contracts are used for hedging.
possible from April 2022 onwards. The appreciation of the rouble against the euro resulted in net foreign exchange gains.
The increasing operational risk exposure and an interest rate difference between the euro and the US dollar that is favourable for Krka are two key reasons that contributed to partial hedging of the exposure in the US dollar with financial instruments also in 2022. Due to the short currency position, the dollar strengthening had a negative financial impact on the Krka Group result. In 2022 however, this was largely offset by income from the US dollar hedging instruments.
To hedge the risk of changes in the EUR/USD currency pair and to hedge additional risks in 2023, forward contracts of the controlling company with a principal amount of $45,000 thousand and a maturity of less than 2 months were open at the year-end of 2022.
| € thousand | 31 Dec 2022 | EUR* | RUB | PLN | USD | RON | |
|---|---|---|---|---|---|---|---|
| Loans | 62,682 | 0 | 0 | 0 | 0 | ||
| Trade receivables | 98,656 | 125,927 | 45,732 | 5,575 | 46,991 | ||
| Cash and cash equivalents | 451,763 | 49 | 823 | 7,665 | 528 | ||
| Borrowings | -53,524 | 0 | 0 | 0 | 0 | ||
| Current trade payables | -165,283 | -2,455 | -5,172 | -9,246 | -4,642 | ||
| Financial position exposure (net) | 394,293 | 123,520 | 41,384 | 3,994 | 42,877 |
*EUR is the functional currency and does not represent exposure to foreign currency risk.
2022 Annual Report – Financial Report
296
€ thousand
31 Dec 2021
| RUB | PLN | USD | RON |
|---|---|---|---|
| 226,469 | 0 | 0 | 0 |
| RUB | PLN | USD | RON |
|---|---|---|---|
| 128,233 | 176,785 | 42,897 | 5,118 |
| Total: 44,213 |
| RUB | PLN | USD | RON |
|---|---|---|---|
| 85,394 | 1,217 | 1,295 | 44,156 |
| 994 |
| RUB | PLN | USD | RON |
|---|---|---|---|
| -55,092 | 0 | 0 | 0 |
| RUB | PLN | USD | RON |
|---|---|---|---|
| -10,000 | 0 | 0 | 0 |
| RUB | PLN | USD | RON |
|---|---|---|---|
| -131,638 | -19,493 | -6,957 | -8,564 |
| -4,438 |
| RUB | PLN | USD | RON |
|---|---|---|---|
| 243,366 | 158,509 | 37,235 | 40,709 |
| 40,770 |
*EUR is the functional currency and does not represent exposure to foreign currency risk.
| Average Exchange Rate* | Final Exchange Rate* | 2022 | 2021 |
|---|---|---|---|
| RUB | 73.43 | 87.15 | 78.43 |
| PLN | 4.69 | 4.57 | 4.68 | 4.60 |
|---|---|---|---|---|
| USD | 1.05 | 1.18 | 1.07 | 1.13 |
| RON | 4.93 | 4.92 | 4.95 | 4.95 |
*Number of national currency units for one euro.
The above-stated exchange rates were used for the calculation of items in the financial statements as at 31 December and equal the reference exchange rates of the ECB effective on the last day of the year. Since the end of March 2022, the Bloomberg exchange rate is used to convert the Russian rouble.
A 1% change in the value of these currencies against euro as at 31 December 2022 or 31 December 2021 would increase or decrease the profit by the amounts stated below. The analysis, prepared in the same manner for both years, assumes that all other remaining variables, in particular interest rates, remain unchanged. The calculation of the above-stated exchange rate volatility impact took into account the balance of receivables, liabilities, loans and cash and cash equivalents denominated in the local currencies.
| € thousand | Impact on profit or loss before tax | 2022 | 2021 | |
|---|---|---|---|---|
| Currency fluctuations | +1% | –1% | +1% | –1% |
| RUB | 1,235 | -1,235 | 1,585 | -1,585 |
| PLN | 414 | -414 | 372 | -372 |
| USD | 40 | -40 | 407 | -407 |
| RON | 429 | -429 | 408 | -408 |
Any additional 1% increase/decrease of the euro exchange rate in respect of currencies stated above, would increase or decrease the profit or loss before tax in the above-stated amounts.
Interest rate risk is the risk of losses that result from a change in interest rates and is related to the Company’s non-current borrowings and investments. The interest rate risk with current borrowings and current investments is managed as part of the Krka Group's liquidity risk. In 2022, the Company raised non-current borrowings only from subsidiaries.
| € thousand | 31 Dec 2022 | 31 Dec 2021 |
|---|---|---|
| Financial instruments at fixed rate of interest | 464,464 | 226,043 |
| Financial assets | 464,464 | 226,043 |
| Financial liabilities | 0 | 0 |
| Financial instruments at variable rate of interest | -22,775 | -54,596 |
| Financial assets | 30,600 | 472 |
| Financial liabilities | -53,375 | -55,068 |
A 100 basis point increase in the variable interest rate for 2022 would reduce the result by €228 thousand (a decrease of the interest rate by 100 basis points would increase the result by €228 thousand). An increase of 100 basis points in the variable interest rate would reduce the 2021 result by €546 thousand (a decrease of the interest rate by 100 basis points would increase the result by €546 thousand). The analysis, which is carried out in the same way for both years, assumes that all variables, in particular the exchange rate, remain constant.
| € thousand | 31 Dec 2022 | 31 Dec 2021 |
|---|---|---|
| Current borrowings inclusive of current portion of non-current borrowings | 53,375 | 55,068 |
| – Other borrowings | 53,375 | 55,068 |
| Current borrowings exclusive of current portion of non-current borrowings | 53,375 | 55,068 |
| Average balance of current borrowings | 54,222 | 50,693 |
| Interest paid in the financial year | 720 | 280 |
| Other costs of raising current borrowings | 0 | 0 |
| Average effective cost of current borrowings |
| – EUR | 100% |
|---|---|
| – Fixed | 0% |
|---|---|
| – Variable | 100% |
The Company’s capital management is aimed at ensuring a high credit rating and relevant financing indicators in order to ensure the proper development of its operations and to generate a maximum value for its shareholders.
The Company follows the changes in the economic environment by managing and adjusting its equity structure. Dividends are paid out on an annual basis in line with the strategic policy adopted. The Company has no specific goals as regards the ownership share held by employees, and no share option plans.
There were no changes in Company’s approach to capital management in 2022 or 2021.
The Company monitors capital using a gearing ratio, which is net debt divided by total net debt plus total equity. Within net debt, the Company includes interest bearing borrowings and trade and other current payables less cash and cash equivalents.
| € thousand | 31 Dec 2022 | 31 Dec 2021 |
|---|---|---|
| Borrowings | 53,524 | 55,092 |
| Trade payables and other current liabilities | 273,202 | 371,630 |
| Cash and cash equivalents | 470,297 | 144,981 |
| Net indebtedness | -143,571 | 281,741 |
| Equity | 2,060,792 | 1,876,142 |
| Equity and net indebtedness | 1,917,221 | 2,157,883 |
| Financial leverage (debt/equity) ratio | -7.5% | 13.1% |
The following table shows the carrying amounts and fair values of financial assets and financial liabilities. The table does not include disclosures about the fair values of financial assets and liabilities not measured at fair value, where the carrying amount is a reasonable approximation of fair value.
| € thousand | 31 Dec 2022 | 31 Dec 2021 |
|---|---|---|
| Carrying amount |
| Category | Carrying amount | Fair value |
|---|---|---|
| Non-current financial assets | ||
| Loans | 56,013 | 31,010 |
| Investments at fair value through OCI | 15,988 | 15,988 |
| Investments at amortised cost | 94,781 | 93,022 |
| Current financial assets | ||
| Loans | 6,669 | 195,459 |
| Investments through profit or loss | 0 | 0 |
| Investments at amortised cost | 50,697 | 113,987 |
| Derivatives | 1,740 | 1,740 |
| Trade receivables | 357,889 | 424,588 |
| Cash and cash equivalents | 470,297 | 144,981 |
| Non-current financial liabilities | ||
| Trade payables | 0 | -10,000 |
| Lease liabilities | -2,909 | -2,101 |
| Current financial liabilities | ||
| Borrowings | -53,524 | -55,092 |
| Lease liabilities | -1,033 | -987 |
| Trade payables excluding advances | -194,143 | -178,143 |
| Contract liabilities excluding advances | -13,094 | -13,638 |
| -102,234 | |
|---|---|
| Other current liabilities excluding amounts owed to the State, to employees and advances | -1,328 |
| -2,046 | |
| Total | 788,043 |
| 17,728 | |
| 696,127 | |
| 57,321 |
There were no transfers between fair value levels in 2022.
| € thousand | 31 Dec 2022 | 31 Dec 2021 |
|---|---|---|
| Level 1 | 14,602 | 14,474 |
| Level 2 | 0 | 0 |
| Level 3 | 1,386 | 1,386 |
| Total | 15,988 | 15,860 |
| Investments at fair value through OCI | ||
| Investments through profit or loss | 0 | 39,970 |
| Derivatives | 0 | |
| 1,740 |
Transactions (turnover) with subsidiaries in 2022 are presented below.
| € thousand | Sales | Purchases | Borrowings | Loans |
|---|---|---|---|---|
| TERME KRKA, d. o. o., Novo mesto, Slovenia* | 334 | 656 | 0 | 0 |
| KRKA-FARMA d.o.o., Zagreb, Croatia | 7,736 | 27,592 | 0 | 0 |
| KRKA ROMANIA S.R.L., Bucharest, Romania | 104 | 18,887 | 0 | 0 |
| KRKA-FARMA DOO BEOGRAD, Belgrade, Serbia | 29,361 | 4,173 | 0 | 0 |
| KRKA-FARMA DOOEL, Skopje, North Macedonia | 24,591 | 1,882 | 0 | 0 |
| KRKA Bulgaria EOOD, Sofia, Bulgaria | 56 | 3,307 | 0 | 0 |
| KRKA HELLAS E.P.E., Athens, Greece | 16 | 1,487 | 0 | 0 |
| KRKA FARMA, d.o.o., Sarajevo, Sarajevo, Bosnia and Herzegovina | 4 | 480 |
| Company Name | Location | Value 1 | Value 2 | Value 3 |
|---|---|---|---|---|
| Krka-Rus LLC | Istra, Russian Federation | 167,101 | 12,554 | 0 |
| KRKA FARMA LLC | Istra, Russian Federation | 146,322 | 58,225 | 0 |
| KRKA UKRAINE LLC | Kiev, Ukraine | 144 | 12,830 | 0 |
| LLC 'KRKA Kazakhstan' | Almaty, Kazakhstan | 20,860 | 2,896 | 0 |
| KRKA – POLSKA Sp. z.o.o. | Warsaw, Poland | 30,280 | 27,480 | 0 |
| KRKA ČR, s. r. o. | Prague, Czech Republic | 155 | 12,397 | 0 |
| KRKA Magyarország Kft. | Budapest, Hungary | 60 | 10,891 | 0 |
| KRKA Slovensko, s.r.o. | Bratislava, Slovakia | 297 | 7,562 | 0 |
| UAB KRKA Lietuva | Vilnius, Lithuania | 26 | 4,613 | 0 |
| SIA KRKA Latvija | Riga, Latvia | 21 | 3,011 | 0 |
| KRKA Finland Oy | Espoo, Finland | 12,901 | 1,706 | 0 |
| TAD Pharma GmbH | Cuxhaven, Germany |
| Company | Location | Value 1 | Value 2 | Value 3 | Value 4 |
|---|---|---|---|---|---|
| KRKA Sverige AB | Stockholm, Sweden | 71,710 | 10,854 | 0 | 0 |
| KRKA Pharma GmbH | Vienna, Austria | 36,354 | 1,967 | 0 | 0 |
| KRKA Farmacêutica, Unipessoal Lda. | Estoril, Portugal | 8,347 | 1,633 | 0 | 0 |
| KRKA FARMACÉUTICA, S.L. | Madrid, Spain | 17,100 | 1,942 | 0 | 0 |
| KRKA Farmaceutici Milano, S.r.l. | Milan, Italy | 12,491 | 2,767 | 0 | 0 |
| KRKA France Eurl | Paris, France | 15,247 | 7,587 | 0 | 0 |
| KRKA PHARMA DUBLIN LIMITED | Dublin, Ireland | 5,954 | 5,220 | 0 | 40 |
| KRKA Belgium, SA | Brussels, Belgium | 8,048 | 95 | 0 | 0 |
| KRKA UK Ltd | London, United Kingdom | 12,921 | 771 | 0 | 0 |
| 123 Acurae Pharma GmbH | Cuxhaven, Germany | 15,504 | 773 | 0 | 0 |
| Ningbo Krka Menovo Pharmaceutical Co. Ltd. | China | 913 | 0 | 0 | 485 |
| KRKA USA LLC, Wilmington, USA | Total | 645,805 | 266,371 | 0 | 525 |
|---|---|---|---|---|---|
| * Including the subsidiary Golf Grad Otočec, d.o.o. | |||||
| ** Including the subsidiary HCS bvba |
The transactions between the Company and the above-mentioned subsidiaries were based on sales contracts, which included rendering products and services at market prices.
Loans received and granted do not include turnover from daily automatic cash pooling. The balance of loans to subsidiaries is presented in Note 13 ‘Loans’, the balance of borrowings from subsidiaries is presented in Note 21 ‘Borrowings’, the balance of receivables due from subsidiaries is presented in Note 17 ‘Trade receivables’ and the balance of current trade payables to subsidiaries is presented in Note 24 ‘Trade and other payables’.
By the end of the year, members of the Management Board of the Company held 37,040 Krka shares i.e. 0.1129% of total equity or 0.1195% of voting rights.
Members of the Supervisory Board of the Company held 3,347 shares i.e. 0.0102% of total equity or 0.0108% of voting rights.
| Members of the Management Board | No. of shares | Equity share (%) | Share in voting rights (%) | No. of shares | Equity share (%) | Share in voting rights (%) |
|---|---|---|---|---|---|---|
| Jože Colarič | 22,500 | 0.0686 | 0.0726 | 22,500 | 0.0686 | 0.0723 |
| Aleš Rotar | 13,915 | 0.0424 | 0.0449 |
| Vinko Zupančič | 120 | 0.0004 | 0.0004 |
|---|---|---|---|
| David Bratož | 0 | / | / |
| Milena Kastelic | 505 | 0.0015 | 0.0016 |
| Total Members of the Management Board | 37,040 | 0.1129 | 0.1195 |
| Members of the Supervisory Board (owner representatives) | |||
| Jože Mermal | 0 | / | / |
| Matej Lahovnik | 600 | 0.0018 | 0.0019 |
| Julijana Kristl | 230 | 0.0007 | 0.0007 |
| Borut Jamnik | 0 | / |
| Mojca Osolnik Videmšek | 617 | 0.0019 | 0.0020 |
|---|---|---|---|
| Boris Žnidarič | 0 | / | / |
| Franc Šašek | 1,400 | 0.0043 | 0.0045 |
| Tomaž Sever | 500 | 0.0015 | 0.0016 |
| Mateja Vrečer | 0 | / | / |
| 3,347 | 0.0102 | 0.0108 |
|---|---|---|
| 40,387 | 0.1232 | 0.1302 |
|---|---|---|
| € thousand | 31 Dec 2022 | 31 Dec 2021 |
|---|---|---|
| Members of the Management Board | 4,163 | 3,560 |
| Member of the Supervisory Board | 274 | 303 |
| Total gross remuneration paid to groups of persons | 4,437 | 3,863 |
Remuneration paid to members of the Company`s Management Board included wages and salaries, fringe benefits and any other earnings. For each year, they are shown on a cost basis and therefore differ from the remuneration shown in the Report on Remuneration of the Members of the Management Board and Supervisory Board of the Company for 2022, where they are shown by payments in each year.
Gross earnings paid to persons employed under individual employment contracts in 2022 amounted to €12,571 thousand (2021: €11,919 thousand).
| € thousand | Salary – fixed part | Salary – variable part | Total | Gross | Net payout | Net fringe benefits and other earnings | Gross | Net |
|---|---|---|---|---|---|---|---|---|
| Jože Colarič | 521 | 214 | 19 | 849 | 341 | 1,370 | 574 | |
| Aleš Rotar | 390 | 165 | 15 | 549 | 221 | 939 | 401 | |
| Vinko Zupančič | 311 | 132 | 16 | 457 | 184 | 768 | 332 |
| David Bratož | 333 | 142 | 16 | 449 | 181 | 782 | 339 |
|---|---|---|---|---|---|---|---|
| Milena Kastelic | 219 | 94 | 13 | 85 | 35 | 304 | 142 |
| Total | 1,774 | 747 | 79 | 2,389 | 962 | 4,163 | 1,788 |
| Net fringe benefits and other earnings | Executive health insurance | Supplementary pension insurance | Anniversary bonuses | Other bonuses | Refund of work-related costs | Pay for annual leave | Total |
|---|---|---|---|---|---|---|---|
| Jože Colarič | 10.00 | 2.89 | 3.18 | 1.19 | 0.04 | 1.92 | 19.23 |
| Aleš Rotar | 5.00 | 2.89 | 0.00 | 3.87 | 1.02 | 1.92 |
Vinko Zupančič
5.00
2.89
0.00
5.31
0.84
1.92
15.97
David Bratož
5.00
2.89
0.00
5.59
1.03
1.92
16.43
Milena Kastelic
5.00
2.89
1.92
0.06
1.09
1.92
12.88
30.00
14.45
5.11
16.02
4.01
9.62
79.20
| € thousand | Salary – fixed part | Salary – variable part | Total | Gross | Net payout | Net fringe benefits and other earnings | Gross | Net |
|---|---|---|---|---|---|---|---|---|
| Jože Colarič | 430 | 178 | 7 | 734 | 306 | 1,164 | 491 |
| Member | Net fringe benefits and other earnings | Executive health insurance | Supplementary pension insurance | Anniversary bonuses | Other bonuses | Refund of work-related costs |
|---|---|---|---|---|---|---|
| Aleš Rotar | 342 | 141 | 11 | 465 | 194 | 807 |
| Vinko Zupančič | 289 | 120 | 13 | 387 | 161 | 676 |
| David Bratož | 283 | 120 | 11 | 380 | 159 | 663 |
| Milena Kastelic | 170 | 78 | 6 | 80 | 34 | 250 |
| Total remuneration paid to Members of the Management Board | 1,514 | 637 | 48 | 2,046 | 854 | 3,560 |
| Name | Column 1 | Column 2 | Column 3 | Column 4 | Column 5 | Total |
|---|---|---|---|---|---|---|
| Jože Colarič | 0.00 | 2.82 | 0.00 | 1.79 | 0.05 | 6.64 |
| Aleš Rotar | 0.00 | 2.82 | 0.00 | 4.80 | 1.05 | 10.65 |
| Vinko Zupančič | 0.00 | 2.82 | 0.00 | 7.15 | 0.91 | 12.86 |
| David Bratož | 0.00 | 2.82 | 1.34 | 3.59 | 1.08 | 10.81 |
| Milena Kastelic | 0.00 | 2.82 | 0.00 | 0.44 | 1.08 | 6.32 |
Total remuneration paid to Members of the Management Board
| 0.00 | 14.10 | 1.34 | 17.77 | 4.17 | 9.90 | 47.28 |
|---|---|---|---|---|---|---|
Other bonuses refer to the use of a company car for private purposes and other similar bonuses. Refund of work-related costs consists of commuting and meal allowances. Members of the Management Board do not receive attendance fees or any other income for exercising their functions in the Management and Supervisory Boards in subsidiaries.
| Members of the Supervisory Board (owner representatives) | Gross | Net | Gross | Net | Gross | Net | Gross | Net |
|---|---|---|---|---|---|---|---|---|
| Jože Mermal | 30.00 | 21.82 | 1.65 | 1.20 | 0.00 | 0.00 | 31.65 | 23.02 |
| Matej Lahovnik | 27.75 | 20.18 | 2.75 | 2.00 | 0.85 | 0.62 | 31.35 | 22.80 |
| Borut Jamnik | 28.13 | 20.46 | 3.25 | 2.36 | 0.00 | 0.00 | 31.38 | 22.82 |
| Julijana Kristl | 26.25 | 19.09 | 2.59 | 1.88 | 0.41 | 0.30 | 29.25 | 21.27 |
| Mojca Osolnik Videmšek | 26.25 | 19.09 | 3.25 | 2.36 |
| Boris Žnidarič | 0.43 | 0.31 | 28.13 | 20.46 | 2.59 | 1.88 |
|---|---|---|---|---|---|---|
| Franc Šašek | 0.00 | 0.00 | 27.75 | 20.18 | 3.25 | 2.36 |
| Tomaž Sever | 0.43 | 0.32 | 26.25 | 19.09 | 2.59 | 1.88 |
| Mateja Vrečer | 0.00 | 0.00 | 26.25 | 19.09 | 2.31 | 1.68 |
| 246.76 | 179.46 | 24.23 | 17.60 | 2.55 | 1.86 | 273.54 | 198.92 |
|---|---|---|---|---|---|---|---|
For each individual member amounts to 80% of the attendance fee for Supervisory Board sessions. The attendance fee for participating in correspondence sessions amounts to 80% of the general attendance fee. Notwithstanding the foregoing, and irrespective of the number of attendees at the meetings, a member of the Supervisory Board shall be entitled to the payment of attendance fees in an individual financial year until the total amount of the attendance fees reaches 50% of the basic remuneration for exercising the function of a Member of the Supervisory Board on an annual basis.
Notwithstanding the foregoing, and irrespective of the number of attendances at meetings of the Supervisory Board and the Commissions in any financial year, a member of the Supervisory Board who is a member of a Commission or Commissions of the Supervisory Board shall be entitled to the payment of attendance fees until the total amount of the attendance fees for attendance at sessions of the Supervisory Board and the Commissions reaches 75% of the basic remuneration for exercising the function of a Member of the Supervisory Board on an annual basis.
In addition to attendance fees, member of the Company's Supervisory Board receives on an annual basis also a basic pay for exercising the function in the amount of €15,000.00 gross. The President of the Supervisory Board is further entitled to an extra fee in the amount of 50% of the basic pay for exercising the function of Member of NS, whereas Deputy President of the Supervisory Board is entitled to an extra fee of 10% of the basic pay for exercising the function of a Member of the Supervisory Board. Members of the Supervisory Board Commission are further entitled to a bonus corresponding to 25% of the basic fee for exercising the function of a member of the Supervisory Board. The President of the Commission is entitled to a bonus corresponding to 37.5% of the extra fee for exercising the function of a member of the Supervisory Board Commission.
A member of the Supervisory Board Commission is in every financial year entitled – regardless of the above-mentioned or the number of Commissions he/she is a member of or presides over – to receive bonuses until the total amount of these bonuses reaches 50% of the basic pay for exercising the function of the Supervisory Board member on an annual level. Notwithstanding the above, if the term of office of a member of the Supervisory Board is shorter than a financial year, and irrespective of the number of Commissions of which he/she is a member or presides over, a member of a Commission of the Supervisory Board shall be entitled to pay-outs of extra fees for the performance of his/her duties in a financial year, until the total amount of such pay-outs for exercising the function reaches 50% of the basic pay for of a member of the Supervisory Board in respect of the eligible payments for the period of his/her term of office in the financial year.
Members of the Supervisory Board are also entitled to extra fees for special tasks. Special tasks are those which involve the actual performance of unusual tasks of above-average complexity over a prolonged period of time, normally lasting at least one month. The Supervisory Board is authorised to take decisions with the agreement of the Supervisory Board member on the assignment of special tasks to that member, the duration of the special tasks and the extra fees for the special tasks in accordance with this Assembly Decision. The Supervisory Board is also authorised to take decisions on extra fees for special tasks of the Supervisory Board members due to objective circumstances in the company.
Extra fees for special tasks are only admissible for the time when the special tasks are actually carried out, which may exceptionally be decided retrospectively by the Supervisory Board (in particular in the case of special tasks due to objective circumstances in the company), but not more than for the previous financial year. The extra fees for special tasks that a member may receive in a given year may amount to a maximum of 50% of the basic pay for exercising the functions of a member of the Supervisory Board (irrespective of the number of special tasks). The amount of the additional payment shall take into account the complexity of the special task and the increased workload and responsibility involved. The extra fee rate shall be calculated according to the time actually spent on the special task.
Members of the Company's Supervisory Board receive a basic pay and an extra fee for exercising the function and a bonus for special tasks, in proportionate monthly payments which they are entitled while they are performing a function and/or a special task. The monthly payment amounts to one twelfth of the aforesaid annual amounts. Depending on the circumstances, the bonus for special tasks may also be made in a single lump sum when the specific task is completed.
The limitation of the amount of the total amount of the attendance fees and the payment of the extra fees to a member of the Supervisory Board shall in no way affect his/her duty to actively participate in all sessions of the Supervisory Board and of the sessions of the Commissions of which he/she is a member, nor his/her statutory responsibility.
In 2021 and 2022, the members of the Management Board and the Supervisory Board, the employee representatives, did not receive any loans from the Company. Loans to staff employed under individual employment contracts amounted to €152 thousand at 31 December 2022 (2021: €179 thousand). In 2022, repayments of loans by staff employed under individual employment contracts reached €27 thousand (2021: €26 thousand). The loans to the above-mentioned persons are meant for housing purposes.
We conduct our business activities in Ukraine and the Russian Federation, which are part of the Eastern Europe sales region, through three subsidiaries and our controlling company Krka, d.d., Novo mesto.
Krka’s subsidiary in Ukraine is only involved in marketing. It does not carry out distribution and production activities and therefore had no receivables from customers outside the Krka Group, but had other assets of €1,658 thousand (2021: €2,492 thousand), the largest item whereof are property, plant and equipment (office premises and vehicles). The Company has no significant exposure to credit risk (Note 30 ‘Credit risk‘) and no exposure to foreign exchange risk (Note 30 ‘Foreign exchange risk’). At the end of 2022, the number of employees in the Ukrainian subsidiary was 367, and at the end of 2021 it was 395. Ukraine is one of the Company's important markets (Note 3 ‘Revenue from contracts with customers‘).
We have two subsidiaries in the Russian Federation. Krka-Rus LLC is engaged in the manufacture of pharmaceuticals. It produces the vast majority of all the products we sell on the Russian market. Production there runs smoothly. Krka Farma LLC is engaged in marketing and sales activities. In line with our business continuity plan, we have immediately started to implement the necessary activities to ensure uninterrupted production in the future. The largest increases compared to the previous year are in inventories, property, plant and equipment and cash. As at 31 December 2022, the number of employees in the Russian Federation subsidiaries was 1,925, compared to 1,952 at the end of 2021. The exposure to foreign exchange rate risk is disclosed in Note 30 ‘Foreign exchange risk‘. The Russian Federation is the Company's largest single market (Note 3 ‘Revenue from contracts with customers‘).
As at 31 December 2022, the Company's investment in the subsidiary in Ukraine amounted to €9 thousand and the investments in the subsidiary in the Russian Federation totalled to €134,086 thousand. In 2022, the Company did not increase its investments in its subsidiaries in Ukraine and the Russian Federation. The Russian-Ukrainian situation has increased uncertainty, which has also resulted in a significant increase in the weighted average cost of capital (discount rate), which management has determined to be an indicator of impairment. After performing an impairment test, it was concluded that there was no need for impairment (Note 12 ‘Investments in subsidiaries‘).
As at 31 December 2022, the Company recorded €162 thousand of receivables from customers and subsidiaries in Ukraine (2021: €39,194 thousand), whereof €30 thousand from the subsidiary (2021: €35 thousand) and €132 thousand from customers outside the Krka Group (2021: €39,159 thousand). As for the Russian Federation, the Company recorded €143,005 thousand of receivables due from customers and subsidiaries (2021: €160,340 thousand), whereof €142,674 thousand to subsidiaries (2021: €156,935 thousand) and €331 thousand from customers outside the Krka Group (2021: €3,405 thousand) (Note 30 ‘Credit risk‘). The exposure to exchange rate risk is outlined in Note 30 ‘Foreign exchange rate risk‘.
In 2022, all payments between the subsidiaries in the Russian Federation and the controlling company were made without specificity. The payment of dividends from companies in the Russian Federation is not prohibited, but it is subject to conditions or lengthy procedures. Special requests are required, which are treated by the Russian government (Ministry of Finance) in accordance with the going concern principle in relation to the subsidiary that is to pay the dividends. Given that these are pharmaceutical companies, we consider that the Russian Federation has an interest in their continued operation.
| 2022 | 2021 | Average headcount | Share (%) | Average headcount | Share (%) |
|---|---|---|---|---|---|
| PhD |
The contract value of auditing the financial statements performed in 2022 by the audit firm KPMG Slovenija, d.o.o. was €118 thousand and includes the verification of the compliance of the electronic financial statements with the requirements of the Delegated Regulation No 2019/815 on a single electronic reporting format (ESEF). KPMG Slovenija also performs the verification of the Report on Remuneration of Members of Management and Supervision, which has to be verified in accordance with the requirements of the legislation. The contract value of verifying the Report on the Management Board's remuneration amounted to €9 thousand.
The contract value of the audit services performed in 2021 by the audit firm ERNST & YOUNG, Revizija, poslovno svetovanje, d.o.o. was €118 thousand.
The cost of the audit performed by ERNST & YOUNG in 2022 was €71 thousand (2021: €114 thousand) and the cost of the audit performed by KPMG Slovenija was €54 thousand (no such cost in 2021).
| Date | No. of shares | Average share price (€) | Value of treasury shares (€ thousand) |
|---|---|---|---|
| 3 Jan 2022 | 1,089 | 118.69 | 129 |
| 4 Jan 2022 | 1,073 | 118.38 | 127 |
| 5 Jan 2022 | 981 | 119.61 | |
| 22 Aug 2022 | 925 | 99.87 | 92 |
| 23 Aug 2022 | 849 | 99.14 | 84 |
| 29 Sep 2022 | 1,372 | 85.97 | 118 |
| 30 Sep 2022 | 1,374 | 85.89 | 118 |
| 24 Aug 2022 | 787 | 98.36 |
|---|---|---|
| 3 Oct 2022 | 1,529 | 86.12 |
| 6 Jan 2022 | 735 | 119.35 |
| 25 Aug 2022 | 898 | 99.57 |
| 4 Oct 2022 | 1,131 | 87.02 |
| 7 Jan 2022 | 989 | 118.19 |
| 26 Aug 2022 | 941 | 99.07 |
| 5 Oct 2022 | 1,524 | 88.84 |
| 10 Jan 2022 | 800 | 117.94 |
| 29 Aug 2022 | 511 | 98.21 |
| 6 Oct 2022 | 1,100 | 89.93 |
| 11 Jan 2022 | 1,002 | 119.19 |
| 30 Aug 2022 | 846 | 98.78 |
| 7 Oct 2022 | 1,781 | 90.11 |
| 12 Jan 2022 |
| 688 | 119.19 | 82 | 31 Aug 2022 |
|---|---|---|---|
| 852 | 98.86 | 84 | 10 Oct 2022 |
| 1,802 | 89.64 | 162 | 28 Jan 2022 |
| 1,085 | 115.03 | 125 | 1 Sep 2022 |
| 876 | 98.43 | 86 | 11 Oct 2022 |
| 1,646 | 90.11 | 148 | 31 Jan 2022 |
| 1,329 | 115.61 | 154 | 2 Sep 2022 |
| 450 | 97.98 | 44 | 12 Oct 2022 |
| 475 | 90.58 | 43 | 1 Feb 2022 |
| 1,392 | 115.94 | 161 | 5 Sep 2022 |
| 885 | 96.10 | 85 | 13 Oct 2022 |
| 1,902 | 90.36 | 172 | 2 Feb 2022 |
| 1,466 | 115.22 | 169 | 6 Sep 2022 |
| 932 | 95.79 | 89 | 14 Oct 2022 |
| 779 | 91.20 |
| Date | Value 1 | Value 2 |
|---|---|---|
| 3 Feb 2022 | 1,523 | 115.14 |
| 7 Sep 2022 | 400 | 94.55 |
| 17 Oct 2022 | 1,919 | 91.06 |
| 4 Feb 2022 | 1,563 | 114.73 |
| 8 Sep 2022 | 962 | 93.90 |
| 17 Nov 2022 | 1,053 | 96.51 |
| 9 Feb 2022 | 1,562 | 115.33 |
| 9 Sep 2022 | 1,022 | 94.59 |
| 18 Nov 2022 | 454 | 98.51 |
| 10 Feb 2022 | 1,581 | 114.28 |
| 12 Sep 2022 | 601 | 93.30 |
| 21 Nov 2022 | 1,234 | 98.14 |
| 11 Feb 2022 | 1,182 | 114.28 |
| 13 Sep 2022 | 855 | 93.95 |
| 22 Nov 2022 |
| 1,269 | 95,88 | 122 | 14 Feb 2022 |
|---|---|---|---|
| 1,649 | 110.80 | 183 | 14 Sep 2022 |
| 324 | 92.55 | 30 | 23 Nov 2022 |
| 695 | 94,32 | 66 | 21 Jul 2022 |
| 1,275 | 95.42 | 122 | 15 Sep 2022 |
| 734 | 93.67 | 69 | 24 Nov 2022 |
| 1,244 | 94,78 | 118 | 22 Jul 2022 |
| 1,196 | 96.09 | 115 | 16 Sep 2022 |
| 1,037 | 93.05 | 96 | 25 Nov 2022 |
| 1,247 | 94,59 | 118 | 25 Jul 2022 |
| 1,349 | 96.65 | 130 | 19 Sep 2022 |
| 1,166 | 92.86 | 108 | 28 Nov 2022 |
| 919 | 92,75 | 85 | 26 Jul 2022 |
| 1,228 | 96.91 | 119 | 20 Sep 2022 |
| 946 | 92.53 |
| Date | Value 1 | Value 2 |
|---|---|---|
| 29 Nov 2022 | 210 | 94,15 |
| 27 Jul 2022 | 1,328 | 97.47 |
| 21 Sep 2022 | 1,153 | 92.18 |
| 30 Nov 2022 | 1,402 | 93,90 |
| 28 Jul 2022 | 1,338 | 97.54 |
| 22 Sep 2022 | 1,161 | 91.73 |
| 1 Dec 2022 | 1,426 | 93,93 |
| 16 Aug 2022 | 1,094 | 99.36 |
| 23 Sep 2022 | 1,105 | 90.85 |
| 2 Dec 2022 | 1,417 | 94,15 |
| 17 Aug 2022 | 967 | 99.88 |
| 26 Sep 2022 | 1,147 | 88.82 |
| 5 Dec 2022 | 1,003 | 94,49 |
| 18 Aug 2022 | 874 | 99.96 |
| 27 Sep 2022 |
| Date | No. of shares | Average share price (€) | Value of treasury shares (€ thousand) |
|---|---|---|---|
| 6 Dec 2022 | 1,216 | 87.64 | 107 |
| 19 Aug 2022 | 350 | 94.44 | 33 |
| 28 Sep 2022 | 350 | 99.96 | 35 |
| 7 Dec 2022 | 1,319 | 86.53 | 114 |
| 8 Dec 2022 | 1,374 | 94.86 | 130 |
| 14 Dec 2022 | 590 | 93.32 |
| 20 Dec 2022 | 985 | 93,10 | 92 |
|---|---|---|---|
| 9 Dec 2022 | 1.085 | 94.41 | 102 |
| 15 Dec 2022 | 975 | 93.59 | 91 |
| 21 Dec 2022 | 995 | 93,14 | 93 |
| 12 Dec 2022 | 1.074 | 94.29 | 101 |
| 16 Dec 2022 | 1,005 | 93.32 | 94 |
| 22 Dec 2022 | 973 | 93,04 | 91 |
| 13 Dec 2022 | 1.063 | 93.69 | 100 |
| 19 Dec 2022 | 600 | 93.22 | 56 |
Total purchases in 2022
| 101,941 | 98,35 | 10,025 |
|---|---|---|
The average share price includes also the commission paid.
The 2022 financial statements were not impacted by the event after the end of the period.
From 1 January 2023 to 20 March 2023, we acquired 25,852 of treasury shares. At the end of this period, Krka held 1,811,701 treasury shares (5.525% of total shares).
President and members of Krka's Management Board are aware of the content of the integral parts of the 2022 Annual Report of Krka and the Krka Group, and hence the 2022 Annual Report in its entirety. We hereby acknowledge the Report by our signatures.
Jože Colarič
President of the Management Board and CEO
dr. Aleš Rotar
Member of the Management Board
dr. Vinko Zupančič
Member of the Management Board
David Bratož
Member of the Management Board
Milena Kastelic
Member of the Management Board – Worker Director
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