Quarterly Report • Jul 26, 2018
Quarterly Report
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Novo mesto, July 2018
| Introduction | 3 |
|---|---|
| Business Performance Highlights for the First Two Quarters | 3 |
| Financial Highlights of the Krka Group and Krka, d. d. |
4 |
| Information on the Controlling Company | 5 |
| ID Card of the Krka Group |
5 |
| Profile of the Krka Group | 6 |
| Krka Group Development Strategy |
7 |
| Business Report |
9 |
| Financial Risk | 9 |
| Investor and Share Information | 10 |
| Business Operations Analysis | 12 |
| Marketing and Sales |
14 |
| Research and Development | 26 |
| Investments | 28 |
| Employees |
30 |
| Condensed consolidated financial statements of the Krka Group with notes |
32 |
| Consolidated statement of financial position of the Krka Group | 32 |
| Consolidated income statement of the Krka Group | 33 |
| Consolidated statement of other comprehensive income of the Krka Group |
33 |
| Consolidated statement of changes in equity of the Krka Group |
34 |
| Consolidated statement of cash flows of the Krka Group | 36 |
| Segment reporting of the Krka Group |
37 |
| Notes to the consolidated financial statements of the Krka Group |
38 |
| Condensed financial statements of Krka, d. d., Novo mesto with notes |
45 |
| Statement of financial position of Krka, d. d., Novo mesto | 45 |
| Income statement of Krka, d. d., Novo mesto |
46 |
| Statement of other comprehensive income of Krka, d. d., Novo mesto |
46 |
| Statement of changes in equity of Krka, d. d., Novo mesto |
47 |
| Statement of cash flows of Krka, d. d., Novo mesto | 49 |
| Segment reporting of Krka, d. d., Novo mesto |
50 |
| Notes to the financial statements of Krka, d. d., Novo mesto | 51 |
| Statement of compliance | 58 |
The condensed consolidated financial statements of the Krka Group and the condensed financial statements of Krka, d. d., Novo mesto (the Company) for the first two quarters of 2018 and the first two quarters of 2017 are unaudited, while the financial statements for the full 2017 business year are audited. Krka, d. d., Novo mesto has no authorised capital and has not made any conditional share capital increase.
The Company promptly announces all significant changes of the data in its listing prospectus in the Ljubljana Stock Exchange electronic information dissemination system (SEOnet), in the Polish Financial Supervision Authority electronic information dissemination system (ESPI), and/or in the Delo daily newspaper. Reports on the performance of the Krka Group and Krka, d. d. are available on the Krka website www.krka.si.
At its regular meeting of 25 July 2018, the Company's supervisory board discussed the Krka Group and Krka, d. d. unaudited interim report for the first two quarters of 2018.
Accounting for a 32.1% share in total sales, the Company's largest sales region was Region East Europe.
The Krka Group generated operating profit in total of €135.5 million, or 9% more than in the same period last year. The Company's operating profit amounted to €118.0 million.
| Krka Group | Krka Company | ||||||
|---|---|---|---|---|---|---|---|
| In € thousand | 1–6/2018 | 1–6/2017 | 1–6/2018 | 1–6/2017 | |||
| Revenues | 680,475 | 655,046 | 631,086 | 615,010 | |||
| Operating profit (EBIT)1 | 135,459 | 124,078 | 117,972 | 112,833 | |||
| EBITDA | 190,930 | 177,279 | 159,509 | 152,999 | |||
| Net profit | 101,738 | 91,663 | 92,446 | 83,573 | |||
| R&D expenses | 64,257 | 62,219 | 66,974 | 64,438 | |||
| Investments | 43,524 | 52,568 | 34,337 | 44,289 | |||
| 30 June 2018 | 31 Dec 2017 | 30 June 2018 | 31 Dec 2017 | ||||
| Non-current assets | 1,017,002 | 1,033,008 | 1,020,351 | 1,032,595 | |||
| Current assets | 964,348 | 886,123 | 888,726 | 804,887 | |||
| Equity | 1,577,882 | 1,487,699 | 1,580,459 | 1,493,325 | |||
| Non-current liabilities | 121,808 | 121,182 | 89,176 | 87,911 | |||
| Current liabilities | 281,660 | 310,250 | 239,442 | 256,246 | |||
| RATIOS | 1–6/2018 | 1–6/2017 | 1–6/2018 | 1–6/2017 | |||
| EBIT margin | 19.9% | 18.9% | 18.7% | 18.3% | |||
| EBITDA margin | 28.1% | 27.1% | 25.3% | 24.9% | |||
| Net profit margin | 15.0% | 14.0% | 14.6% | 13.6% | |||
| Return on equity (ROE)2 | 13.3% | 12.3% | 12.0% | 11.3% | |||
| Return on assets (ROA)3 | 10.4% | 9.5% | 9.9% | 9.0% | |||
| Liabilities/Equity | 0.256 | 0.288 | 0.208 | 0.246 | |||
| R&D expenses/Revenues | 9.4% | 9.5% | 10.6% | 10.5% | |||
| NUMBER OF EMPLOYEES | 30 June 2018 | 31 Dec 2017 | 30 June 2018 | 31 Dec 2017 | |||
| Balance as at | 11,212 | 10,832 | 5,319 | 5,020 | |||
| SHARE INFORMATION | 1–6/2018 | 1–6/2017 | |||||
| Total number of shares issued | 32,793,448 | 32,793,448 | |||||
| Earnings per share (EPS) in €4 | 6.35 | 5.68 | |||||
| Closing price at end of period in € | 57.80 | 55.00 | |||||
| Price/Earnings ratio (P/E) | 9.10 | 9.68 | |||||
| Book value in €6 | 48.12 | 46.52 | |||||
| Price/Book value (P/B) | 1.20 | 1.18 | |||||
| Market capitalisation in € thousand (end of the period) | 1,895,461 | 1,803,640 |
1 The difference between operating income and operating expenses
2 Net profit, annualised/Average shareholders' equity in the period
3 Net profit, annualised/Average total assets in the period
4 Net profit attributable to equity holders of the Group, annualised/Average number of shares issued in the period exclusive of treasury shares
5 Share price on the Ljubljana Stock Exchange
6 Equity at the end of the period/Total shares issued
The controlling company in the Krka Group is Krka, tovarna zdravil, d. d., Novo mesto (Krka, d. d. or the Company).
Registered office Šmarješka cesta 6, 8501 Novo mesto, Slovenia Telephone ++386 (0) 7 331 21 11 Fax ++386 (0) 7 332 15 37 E-mail [email protected] Website www.krka.si Core business Production of pharmaceutical preparations Business classification code 21.200 Year established 1954 Registration entry 1/00097/00, Okrožno sodišče Novo mesto (District Court in Novo mesto) Tax number 82646716 VAT number SI82646716 Company ID number 5043611 Share capital €54,732,264.71 Total number of shares issued 32,793,448 ordinary registered no-par value shares, KRKG trading code. Krka has been listed on the Ljubljana Stock Exchange under KRKG trading code since 1997, and since April 2012
The Krka Group consists of the controlling company, Krka, d. d., Novo mesto, two subsidiaries in Slovenia, i.e. Terme Krka, d. o. o., Novo mesto and Farma GRS, d. o. o., and 29 subsidiaries outside Slovenia. The controlling company, Krka, d. d., Novo mesto, holds 100% interests in all subsidiaries stated above, except in Ningbo Krka Menovo (60%), Farma GRS (99.7%) and Krka Belgium (95%) – the remaining 5% in the latter is held by the subsidiary Krka France.
additionally on the Warsaw Stock Exchange under KRK trading code.
The Krka Group engages in development, production, marketing and sales of medicines for human use (prescription pharmaceuticals and nonprescription products), animal health products, and health resort and tourist services.
Production takes place in the controlling company in Slovenia and in 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. Other subsidiaries outside Slovenia deal with marketing and/or sales of Krka products, but do not have production capacities.
Terme Krka, d. o. o., Novo mesto deals with health resort and tourist services; and comprises 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.
Farma GRS, d. o. o. was established in partnership with companies from pharmaceutical and process manufacturing industries. The company develops new pharmaceutical products, new technological products for pharmaceutical production and contributes to more efficient pharmaceutical production in terms of energy, environment, and business operations. Farma GRS is the sole owner of six micro companies: GRS TEHFARMA, d. o. o., GRS VIZFARMA, d. o. o., GRS PREK FARMA, d. o. o., GRS EKO FARMA, d. o. o., GRS TREN FARMA, d. o. o., and GRS VRED FARMA, d. o. o.
The EU project: research and development company
The Krka Group updates its development strategy every two years. In November 2017, the Management Board of Krka adopted the 2018–2022 development strategy for the Krka Group, and presented it to the Supervisory Board.
The achievement of strategic objectives is measured at three levels: i) the Krka Group, ii) product and service groups, and iii) business functions. The Group's performance criteria are
monitored by the Management Board, while criteria at the levels of product and service groups and business functions are monitored by the relevant committees. The guiding principle in managing the system of criteria is to increase the competitiveness of the Krka Group as a whole and also of individual companies within the Group.
The key Krka Group objectives and strategies until 2022 are set out below.
acquisitions, and various types of long-term partnerships (joint ventures) in selected markets with the primary objective of attaining new products and thus entering new therapeutic areas and/or markets.
To strengthen the pharmaceutical and chemical industries and increase the range of medicines in three key therapeutic areas of prescription pharmaceuticals (medicines for the treatment of cardiovascular diseases, the central nervous system, and the alimentary tract and metabolism) as well as in other promising therapeutic areas (analgesics and oncology medicines, antidiabetics, antivirals, and antibiotics) while entering new therapeutic areas. We intend to introduce innovative products in key therapeutic areas (innovative fixed-dose combinations of two or three substances, new strengths, pharmaceutical dosage forms, and new delivery systems).
when determining the net profit share for dividend payout each year, as well as to allocate at least 50% of the net profit of controlling company's equity holders for dividend payout.
total number of regular employees is projected to exceed 11,200.
According to the plan, €135 million will be allocated to investments, primarily for extension and modernisation of production, research-anddevelopment capacities and infrastructure. We expect the final value of investments to be lower than planned, but the investments remains within the planned frameworks.
The Krka Group operates in diverse international environments and is exposed to foreign exchange risks in certain markets. Currency exposure arises from an excess of assets over liabilities in a particular currency in the financial position statement of the Group, and from differences between operating income and expenses generated in various currencies.
The key policy of the Krka Group remains to mitigate foreign currency exposure primarily by natural hedging. We also use derivative financial instruments; however, only to a limited extent.
The key currency exposure of the Krka Group arises from exposure to the Russian rouble. Krka intends to continue its policy of partial hedging against the rouble-related risk also in 2018.
In the first two quarters of 2018, the value of the Russian rouble was unstable. In the past periods,
In the first two quarters of 2018, the Krka Group was not exposed to changes in reference interest
The key credit risk of the Krka Group is related to receivables payable by buyers. This means that clients might fail to settle them by maturity dates.
The Krka Group has introduced a centralised credit control process for all clients to whom Krka sells products and services in total exceeding €100,000 annually. At the end of the second quarter of 2018, trade receivables included in the credit control process accounted for more than 90% of total receivables, and involved more than 400 clients.
The Krka Group recorded a low value of receivable write-offs and impairments also because credit control is effective, receivables are dispersed across a large number of clients and sales markets, and the majority of outstanding receivables are payable by clients with whom Krka has been doing business the Russian rouble grew less dependent on oil prices. In the first two quarters of 2018, the price of oil saw a 19% increase in the US dollars, while the value of the rouble expressed in the euro declined by 5.1%, and in the US dollar by 7.8%. In the first two quarters of 2018, the value of the Russian rouble was primarily impacted by constant currency interventions of the Russian monetary authorities, gradual decrease in inflation and interest rates in the Russian Federation, introduction of additional economic sanctions against certain Russian legal and natural entities in April, and changes in the global financial markets.
In consideration of net foreign exchange losses in total of -€13.9 million, net income or expenses relating to derivative financial instruments, interest rate gains or losses and other financial revenues and expenses, net financial result totalled -€14.9 million.
rates, because the Group had no non-current loans.
Our credit risk management policy remained unchanged in the first two quarters of 2018. We especially closely monitored and adequately insured trade receivables from clients in the markets with less favourable macroeconomic environment and markets in which we detected increased risks relating to distribution of medicines.
At the end of the second quarter of 2018, more than 60% of trade receivables were insured with a credit insurance company, and only a small portion of trade receivables was secured with banking instruments.
Total trade receivables expressed in the euro declined compared to the beginning of the year, and
were lower than at the end of the second quarter of 2017.
The maturity structure of receivables remained
In the first two quarters of 2018, risks related to the Krka Group's liquidity were managed by effective short-term cash flow planning. Short-term liquidity was ensured by pre-agreed short-term revolving and fixed borrowings from banks, and the daily, rolling weekly, monthly and longer-term planning and monitoring of cash inflows and outflows. Cashpooling operations in selected subsidiaries have stable. The percentage of overdue receivables relative to total trade receivables remained low also at the end of the second quarter of 2018.
already notably optimized liquidity managementin the Krka Group, which is reflected in lower costs, faster execution and improved safety of transactions.
Liquidity risk is estimated to be low. All our liabilities in the period were settled regularly and on time.
The Krka Group concluded new insurance contracts in view of insurance optimisation and consideration of bids. Total insurance premium lagged behind the increase in insured asset value. All group companies are also insured locally in order to provide for optimum protection of property and protect them from indemnity claims.
The controlling company again concluded a directors and officers liability insurance policy to provide insurance coverage for investment projects. In certain countries, we stopped taking out casco car insurance policies. The termination of casco insurance policies generated significant savings, reduced administrative work, and increased availability of cars.
In the first two quarters of 2018, the price of Krka's share on the Ljubljana Stock Exchange increased by 0.5%. In that period, the number of treasury shares and the stake of Slovenian companies and funds increased, while the share of individual Slovenian investors and international investors slightly dropped. At the end of June 2018, Krka had 51,020 shareholders.
| 30 June 2018 | 31 December 2017 | |
|---|---|---|
| Individual Slovenian investors | 39.1 | 39.2 |
| Slovenian Sovereign Holding (Slovenski državni holding) and the Republic of Slovenia |
16.2 | 16.2 |
| KAD fund and PPS | 11.0 | 11.0 |
| Slovenian companies and funds | 7.8 | 7.7 |
| International investors | 23.5 | 23.8 |
| Treasury shares | 2.4 | 2.1 |
| Total | 100.0 | 100.0 |
In the first two quarters of 2018, Krka acquired 102,396 treasury shares totalling €5,938,714.
As at 30 June 2018, Krka had 794,113 treasury shares, accounting for 2.422% of share capital.
| Number of | Equity share | Share of voting | ||
|---|---|---|---|---|
| Country | shares | (%) | rights (%) | |
| KAPITALSKA DRUŽBA, D. D. | Slovenia | 3,493,030 | 10.65 | 10.92 |
| SLOVENSKI DRŽAVNI HOLDING, D. D. | Slovenia | 2,949,876 | 9.00 | 9.22 |
| REPUBLIC OF SLOVENIA | Slovenia | 2,365,126 | 7.21 | 7.39 |
| SPLITSKA BANKA D. D. | Croatia | 1,662,968 | 5.07 | 5.20 |
| ADDIKO BANK D. D. | Croatia | 1,196,138 | 3.65 | 3.74 |
| CLEARSTREAM BANKING SA | Luxembourg | 717,313 | 2.19 | 2.24 |
| KDPW | Poland | 466,344 | 1.42 | 1.46 |
| UNICREDIT BANK AUSTRIA AG | Austria | 445,270 | 1.36 | 1.39 |
| LUKA KOPER, D. D. | Slovenia | 433,970 | 1.32 | 1.36 |
| ZAVAROVALNICA TRIGLAV, D. D. | Slovenia | 388,300 | 1.18 | 1.21 |
| Total | 14,118,335 | 43.05 | 44.12 |
As at 30 June 2018, Krka's ten largest shareholders held 14,118,335 shares, or 43.05% of all issued shares.
As at 30 June 2018, members of the Krka Management Board and Supervisory Board held a total of 39,170 Krka shares, or 0.12% of all issued shares. Since the end of 2017, their shareholdings have not changed.
| Number of | Equity share | Share of voting | |
|---|---|---|---|
| shares | (%) | rights (%) | |
| Members of the Management Board | |||
| Jože Colarič | 22,500 | 0.069 | 0.070 |
| David Bratož | 0 | 0 | 0 |
| Aleš Rotar | 13,915 | 0.042 | 0.043 |
| Vinko Zupančič | 120 | 0 | 0 |
| Milena Kastelic | 505 | 0.002 | 0.002 |
| Total Members of the Management Board | 37,040 | 0.113 | 0.115 |
| Members of the Supervisory Board | |||
| Jože Mermal | 0 | 0 | 0 |
| Hans-Helmut Fabry | 0 | 0 | 0 |
| Borut Jamnik | 0 | 0 | 0 |
| Julijana Kristl | 230 | 0.001 | 0.001 |
| Andrej Slapar | 0 | 0 | 0 |
| Boris Žnidarič | 0 | 0 | 0 |
| Tomaž Sever | 500 | 0.002 | 0.002 |
| Franc Šašek | 1,400 | 0.004 | 0.004 |
| Mateja Vrečer | 0 | 0 | 0 |
| Total Members of the Supervisory Board | 2,130 | 0.007 | 0.007 |
In the first two quarters of the year, Krka's share price on the Ljubljana Stock Exchange peaked in mid-May, when it traded at €59.80, and reached its low at the beginning of January, when it amounted to €55.80. On 30 June 2018, Krka's shares traded at €57.80 per share.
On 30 June 2018, Krka's market capitalisation on the Ljubljana Stock Exchange amounted to €1.9 billion. In that period, deals in Krka's share generated an average daily trading volume of €0.3 million. Since April 2012, Krka shares have been listed on the Warsaw Stock Exchange as well.
The business operations analysis includes data for the Krka Group and the Company, whereas the notes relate primarily to the Krka Group.
Compared to the same period last year, Krka's revenues at the Group level increased by 4%. The Company sold €631.1 million worth of prescription pharmaceuticals, non-prescription products and animal health products, while the Krka Group generated revenues in total of €680.5 million from sales of the said products and health resort and tourist services. The Group generated 93% of its sales revenues in markets outside Slovenia.
Taking into account other operating and financial income, the Krka Group generated total revenues in the amount of €689.0 million, and the Company €637.3 million.
Please see chapter 'Marketing and Sales' for a more detailed analysis of sales results by individual
Total Krka Group expenses amounted to €568.4 million, or 2% more than in the same period last year.
The Krka Group incurred operating expenses in total of €551.0 million, or 3% more than in the same period last year, which included: €280.8 million for costs of goods sold; €167.2 million for selling and distribution expenses; €64.3 million for R&D expenses; and €38.7 million for general and administrative expenses.
The Krka Group's assets amounted to €1,981.4 million at the end of June 2018, a 3% increase compared to the end of 2017.
Non-current assets represented slightly over 51% of total assets, down 2.5 percentage points from the beginning of the year. Non-current assets totalled €1,017.0 million. The largest item under non-current assets was property, plant and equipment in total of €847.9 million, a 2% drop compared to 2017 year end, and accounted for 42.8% of total Krka Group assets.
The Krka Group's equity increased by 6% compared to the end of 2017, to €1,577.9 million, and accounted for 79.6% of total equity and liabilities.
markets and groups of products and services.
Compared to the same period last year, the Krka Group recorded a 4% increase in costs of goods sold, accounting for 41.3% of revenues. Selling and distribution expenses increased by 2%, and accounted for 24.6% of revenues. R&D expenses are recognised as expenses for the period in full as the Group does not capitalise them. They increased by 3%, and accounted for 9.4% of revenues. General and administrative expenses decreased by 4%, and accounted for 5.7% of revenues.
The Krka Group recorded operating profit of €135.5 million, a 9% rise compared to the same period last year.
Profit before tax amounted to €120.6 million, a 9% increase compared to the same period last year. Income tax totalled €18.8 million, and the effective tax rate was 15.6%.
The Krka Group recorded net profit in total of €101.7 million, an 11% increase compared to the same period of 2017.
Intangible assets amounted to €109.3 million, a 2% decrease compared to the 2017 year end.
Current assets increased by 9% in the first two quarters of the year, to €964.3 million. Inventories saw an 8% increase, reaching €334.2 million in the first two quarters of the year. Receivables went down by 6% to €497.6 million, (of that trade receivables amounted to €470.0 million, down 6% compared to the 2017 year end).
Amounting to €121.8 million, non-current liabilities accounted for 6.1% of the Krka Group's balance sheet total. At the end of the period, provisions amounted to €99.4 million (of that €94.1 million for
provisions for post-employment benefits and other non-current employee benefits, €4.3 million for provisions for lawsuits, and €1.0 million for other provisions), which was 1% higher than at the end of 2017.
Current liabilities decreased by 9% compared to the end of 2017 and totalled €281.7 million, or 14.2% of the Krka Group's balance sheet total. Among current liabilities of the Krka Group, trade payables amounted to €110.4 million, a 2% increase over the 2017 year end, while other current liabilities decreased by 11% to €164.5 million.
All performance ratios improved in the first two quarters of 2018 over the same period last year.
The Krka Group net profit margin for the first two quarters of 2018 was 15.0% (the Company 14.6%), its EBIT margin 19.9% (the Company 18.7%), and its EBITDA margin 28.1% (the Company 25.3%).
Annualised ROE at the level of the Krka Group was 13.3% (the Company 12.0%), with annualised ROA at 10.4% (the Company 9.9%).
In the first two quarters of 2018, Krka Group sales amounted to €680.5 million, up €25.4 million, or 4% more than in the same period last year. Sales in markets outside Slovenia reached €636.1 million and accounted for 93% of the total Group sales. In
Region East Europe reached the highest sales figure in the Krka Group, i.e. €218.4 million or 32.1% of total group sales. Region Central Europe recorded the second highest sales at €161.5 million or 23.7% of total Krka Group sales. The third largest area in terms of sales was Region West Europe, generating sales in total of €146.0 million, or 21.5% of total Krka Group sales. Sales in Region Southterms of quantity, we increased sales by 6% over the same period last year. In the same period, the Company generated €631.1 million from sales, a 3% increase.
East Europe totalled €88.4 million (13.0%) and in Overseas Markets €21.8 million (3.2%). Sales in Slovenia amounted to €44.4 million, which is 6.5% of the total Krka Group sales.
All regions recorded growth in sales.
| Krka Group | Krka Company | |||||||
|---|---|---|---|---|---|---|---|---|
| In € thousand | 1–6/2018 | 1–6/2017 | Index | 1–6/2018 | 1–6/2017 | Index | ||
| Slovenia | 44,389 | 42,978 | 103 | 28,130 | 27,234 | 103 | ||
| South-East Europe | 88,356 | 79,797 | 111 | 87,479 | 79,093 | 111 | ||
| East Europe | 218,388 | 213,984 | 102 | 193,765 | 205,862 | 94 | ||
| Central Europe | 161,518 | 154,399 | 105 | 165,244 | 155,961 | 106 | ||
| West Europe | 146,002 | 143,233 | 102 | 136,585 | 128,445 | 106 | ||
| Overseas Markets | 21,822 | 20,655 | 106 | 19,883 | 18,415 | 108 | ||
| Total | 680,475 | 655,046 | 104 | 631,086 | 615,010 | 103 |
In Slovenia, one of Krka's key markets, in the first two quarters, sales of products and services reached €44.4 million. Sales of products totalled €26.0 million accounting for just short of 3% growth compared to the same period last year. Sales of prescription pharmaceuticals generated €19.7 million, the most significant proportion of the sales value. The sales of non-prescription products rose to €5.0 million, or 10% more than in the same period last year. In the domestic market, our market share was 8.6%, and we retained the leading position among pharmaceutical manufacturers. Sales of animal health products generated €1.3 million, accounting for an 8% growth. Sales of health resort and tourist services reached €17.3 million, or 5% more than in the same period last year.
Sales of Krka's prescription pharmaceuticals were driven by: Prenewel (perindopril/indapamide), Sorvasta (rosuvastatin), Prenessa (perindopril), Nalgesin (naproxen), and Nolpaza (pantoprazol). The key therapeutic group further remained medicines for the treatment of cardiovascular disease with the leading brand names as follows: Prenessa (perindopril), fixed-dose combinations Prenewel (perindopril/indapamide), Amlessa (perindopril/amlodipine), and Amlewel (perindopril/amlodipine/indapamide). We supplemented leading medicines for lowering cholesterol and triglyceride blood levels, Sorvasta (rosuvastatin) and the already established Rosmela (rosuvastatin/amlodipine), with Ravalsya (rosuvastatin/valsartan). Nolpaza (pantoprazole) and Emozul (esomeprazole) were leaders among pharmaceuticals for alimentary and metabolic diseases. We added Bismuth oxide Krka to the portfolio. From our range of medicines for the treatment of diseases of the central nervous system, we primarily focused on the antidepressant Dulsevia (duloxetine); antipsychotic Kventiax (quetiapine), including prolonged-release tablets;
and two anti-dementia medicines, Memaxa (memantine) and Yasnal (donepezil). Among medicines for relieving pain, we paid most attention to marketing Doreta (tramadol/paracetamol) and Roticox (etoricoxib). We were also strengthening brand awareness of Krka's antimicrobial agents, primarily Betaklav (amoxicillin/clavulanic acid). To our first antiviral medicine for the treatment of HIV infections, Emtricitabine/Tenofovir disoproxil Krka (emtricitabine/tenofovir), we added another, Darunavir Krka (darunavir).
Besides the already established brand names from our non-prescription product range, we were also increasing awareness of the newly launched Flebaven (diosmin) 500 mg and 1000 mg tablets, the first medicine from our new therapeutic area of chronic venous insufficiency treatment.
Region South-East Europe generated €88.4 million and recorded the steepest 11% growth in terms of sales among our sales regions. Serbia, Bosnia and Herzegovina, and Croatia recorded highest sales growth in terms of value. All regional markets recorded sales growth, except Romania and Albania.
Even though Romania saw a 5% decline in sales compared to the same period last year, it remained the most important regional market, and also Krka's key market. Prescription pharmaceuticals contributed most to its total sales of €25.7 million placing Krka first among primarily foreign suppliers of generic medicines in the market. Sales of Krka's prescription pharmaceuticals were driven by: Atoris (atorvastatin), Co-Prenessa (perindopril/indapamide), Karbis (candesartan), Ciprinol (ciprofloxacin), Roswera (rosuvastatin), Doreta (tramadol/paracetamol), and Oprymea (pramipexole). Our top-ranking non-prescription product was Bilobil (ginkgo leaf extract), and we paid special attention to marketing flu and cold products, primarily Septolete Omni (benzydamine/cetylpyridinium); Herbion brand products, and our pain-relieving medicine, Nalgesin (naproxen). Among animal health products, our topselling products were those for protection of companion animals against parasites, including Fypryst (fipronil), Ataxxa (permethrin/imidacloprid), and Milprazon (milbemycin oxime/praziquantel).
Croatia is also one of Krka's key markets. We generated sales of €17.7 million there, recorded Our food supplement, Magnezij Krka 300 (magnesium citrate) and the already established brand name, Nalgesin S (naproxen), further remained in the field of our marketing endeavour. Sales of Krka's non-prescription products were driven by: Nalgesin S (naproxen); Magnezij Krka 300; Magnesol; and the Septolete brand products.
Our most promoted animal health products were those marketed under the From ears to tail brand name, including Ataxxa (permethrin/imidacloprid); Fypryst Combo (fipronil/S-methoprene); Milprazon (milbemycin oxime/praziquantel); and Dehinel (pyrantel embonate/praziquantel). Sales of Krka's animal health products were driven by Fypryst (fipronil), Amatib (amoxicillin), and Grovit.
12% growth, and retained fourth place among suppliers of generic medicines, and second place among suppliers of animal health products. All product groups contributed to the growth, but prescription pharmaceuticals most significantly again. Of them, we should mention Co-Perineva (perindopril/indapamide), Atoris (atorvastatin), Helex (alprazolam), Roswera (rosuvastatin), Emanera (esomeprazole), Dalneva (perindopril/amlodipine), and Doreta (tramadol/paracetamol). Key nonprescription products included Nalgesin (naproxen) and B-complex. Sales of Krka's animal health products were driven by Fypryst (fipronil), and Enroxil (enrofloxacin).
After a period of quick growth, Serbia took third place among regional markets. Sales amounted to €11.1 million, an increase of 38% compared to the same period last year. All three product groups saw growth. Prescription pharmaceuticals, however, remained most important, among them: Nolpaza (pantoprazole), Roxera (rosuvastatin), Atoris (atorvastatin), Ampril (ramipril), Valsacor (valsartan), Valsacombi (valsartan/hydrochlorothiazide), and Co-Amlessa (perindopril/amlodipine/indapamide). The leading non-prescription products in terms of sales were Bilobil (ginkgo leaf extract) and Nalgesin (naproxen). Among animal health products, Fypryst (fipronil) and Enroxil (enrofloxacin) recorded strongest sales.
In Macedonia, Krka retained high growth, generated €10.3 million from sales of products, recorded an 11% growth, and was leading among
the foreign suppliers of medicines. We recorded growth in all product groups, and as expected, prescription pharmaceuticals led again. Sales of Krka's medicines were driven by: Enap (enalapril), Roswera (rosuvastatin), Atoris (atorvastatin), Tanyz (tamsulosin), Nolpaza (pantoprazole), and Lorista (losartan). The leading non-prescription products in terms of sales were Bilobil (ginkgo leaf extract), Daleron (paracetamol), and Septanazal (xylometazoline/dexpanthenol).
Sales in Bosnia and Herzegovina totalled €9.4 million, or 37% more than in the first two quarters last year. Prescription pharmaceuticals contributed most to sales, which were driven by Enap H and Enap HL (enalapril/ hydrochlorothiazide), Roswera (rosuvastatin), Enap (enalapril), Atoris (atorvastatin), and Lexaurin (bromazepam). Our non-prescription product sales were driven by Nalgesin (naproxen) and B-complex. Among animal health products, our sales drivers were Fypryst (fipronil) and Rycarfa (carprofen).
We increased our sales in Bulgaria by 18% over first two quarters last year. Sales of prescription pharmaceuticals in total of €7.9 million accounted for the largest share in sales, and above all we should mention sales drivers as follows: Roswera (rosuvastatin), Flosteron (betamethasone), and Co-
Region East Europe generated a total of €218.4 million and remained Krka's leading sales region. Many of the regional markets contributed to the 2% sales increase, but not the Russian. Due to the depreciation of the Russian rouble, it recorded a slight drop in sales value expressed in the euro, even though the sales value expressed in the national currency advanced.
The Russian Federation remained Krka's largest individual market and also a key one. Krka's sales of products reached €153.2 million, or 2% less over the same period last year, despite the 12% growth both in sales volume and value expressed in the Russian rouble. We strengthened our market share by sales growth dynamics that surpassed average growth in the entire Russian pharmaceutical market.
Prescription pharmaceuticals accounted for the largest share in sales, and sales were driven in particular by: Lorista (losartan), Lorista H and Lorista HD (losartan/hydrochlorothiazide), Atoris (atorvastatin), Nolpaza (pantoprazole), Perineva Valsacor (valsartan/hydrochlorothiazide). The following agents recorded highest growth rates: Flosteron (betamethasone), Nolpaza (pantoprazole), Emanera (esomeprazole), and Roswera (rosuvastatin). Also non-prescription products recorded strong sales.
In Kosovo, we generated product sales in the amount of €3.4 million, or 3% more than in the same period a year ago. Prescription products accounted for the largest share in sales, including Lorista H (losartan/hydrochlorothiazide), and Enap H and Enap HL (enalapril/ hydrochlorothiazide). Daleron (paracetamol) and the Septolete brand products drove sales of nonprescription products.
The sales in Albania totalled €1.9 million, down 8% compared to the same period last year. The decrease resulted from the reduction of prices of medicines in the Albanian market. Sales of pharmaceuticals were driven by Atoris (atorvastatin), Ultop (omeprazole), and Lorista (losartan). Sales of non-prescription products were driven by Daleron (paracetamol) and the Pikovit brand products.
In Montenegro, our smallest regional market, we sold €0.9 million worth of products.
(perindopril), Valsacor (valsartan), Roxera (rosuvastatin), Zyllt (clopidogrel), Vamloset (valsartan/amlodipine), and Enap (enalapril). New pharmaceuticals, such as Co-Dalneva (perindopril/amlodipine/indapamide), Dalneva (perindopril/amlodipine), Dilaxa (celecoxib), Lortenza (losartan/amlodipine), and Telmista (telmisartan) also presented quick growth.
Sales of non-prescription products were up 2%, and sales drivers were Herbion cough syrup and Septolete Total (benzydamine chloride/ cetylpyridinium chloride). Our recently launched Flebaven (diosmin/hesperidin) and Ulcavis (bismuth), and newest Panatus (butamirate) and Magnesol, all presented strong sales. Sales of our animal health products were lower this year than in the same period of 2017 due to a drop recorded in the group of medicines for farm animals. Enroxil (enrofloxacin) was the leading pharmaceutical in terms of sales.
In the first two quarters of 2018, the share of products manufactured by the Krka Rus plant and sold in the Russian Federation, reached 64%.
In Ukraine, Krka's second largest key regional market, pharmaceuticals first recorded growth last year and the trend continued also this year. Krka maintained the position of the leading foreign supplier of generic medicines there, and generated sales worth €23.7 million, a 22% growth. Prescription products accounted for the leading proportion in total sales, and presented a 22% sales growth. Key pharmaceuticals included Co-Prenessa (perindopril/indapamide), Dexamethason (dexamethasone), Nolpaza (pantoprazole), and Atoris (atorvastatin). Sales of non-prescription products saw a 27% increase, and animal health products a 1% rise.
In East Europe B, which includes Belarus, Mongolia, Armenia, and Azerbaijan, sales of our products generated €14.4 million. The growth was 20%. The sales went up in all four markets quarter over quarter, and reached two-digit growth in three of them.
In Belarus, sales in terms of value went up by 10%. Prescription pharmaceuticals constituted the largest part of total sales with €5.6 million, in particular Lorista H and Lorista HD (losartan/ hydrochlorothiazide), Nolpaza (pantoprazole), and Co-Amlessa (perindopril/amlodipine/indapamide). Sales of Krka's non-prescription products were driven by products of the Septolete and Duovit brands. We should also mention strong sales of the newly launched Septanazal (xylometazoline/ dexpanthenol). We retained third place among foreign suppliers of generic medicines.
In Mongolia, the economic environment remained unstable. New prices for pharmaceuticals from the reimbursement list have still not been determined, so sales of our products generated a total of €4.7 million, or 53% more than in the same period last year. The rise was particularly high in sales of prescription pharmaceuticals Valsacor (valsartan), Amlessa (perindopril/amlodipine), and Nolpaza (pantoprazole), and non-prescription products Septanazal (xylometazoline/dexpanthenol) and Nalgesin (naproxen). We retained the position of the leading foreign supplier of medicines in the market.
In Armenia, we sold €1.7 million worth of products and reached a 16% growth. Most of it was generated by sales of prescription pharmaceuticals, primarily Captopril (captopril), Nolpaza (pantoprazole), and Co-Amlessa (perindopril/ amlodipine/indapamide). Among non-prescription products, sales were driven by products of the Herbion and Septolete brands.
Our sales in Azerbaijan totalled €2.4 million. Key prescription pharmaceuticals contributed most to the 3% increase, among them Amlessa (perindopril/amlodipine), Co-Prenessa (perindopril/ indapamide), Nolpaza (pantoprazole), Enap H and Enap HL (enalapril/hydrochlorothiazide), and Enap (enalapril). Sales of our non-prescription products and animal health products were lower this year than in the same period last year.
East Europe K comprises markets of Kazakhstan, Moldova, and Kyrgyzstan, and generated a total of €14.1 million from product sales. This was similar to the comparable period last year.
In Kazakhstan we generated a total of €8.7 million, which was the same amount as last year. The sales value of prescription pharmaceuticals reached €6.4 million, a 6% drop compared to the same period last year. A decrease in tender sales, which give exclusive priority to domestic pharmaceuticals, represented the main reason for the fall. The following prescription products accounted for the largest share in sales: Enap (enalapril), Atoris (atorvastatin) and Valsacor (valsartan). Leaders among other medicines were: Nolpaza (pantoprazole), Valodip (amlodipine/valsartan), Roxera (rosuvastatin), Dexamethasone (dexamethasone), Emanera (esomeprazole), and Co-Prenessa (perindopril/indapamide). The sales of non-prescription products amounted to €2.2 million, up 20%, and animal health product sales advanced by 51%.
In Moldova, sales reached €4 million and were 9% higher than in the same 2017 period. We increased our market share and ranked second among all suppliers of medicines. Sales of prescription pharmaceuticals totalled €3.1 million, an 11% rise. Sales of non-prescription products amounted to €0.8 million, and was the same as last year. Ampril (ramipril), Lorista (losartan), and Rawel (indapamide) were most important prescription pharmaceuticals in terms of sale. Sales were also
driven by our non-prescription products Nalgesin (naproxen), Septanazal (xylometazoline/ dexpanthenol), and products sold under Herbion and Septolete brands. Our animal health products recorded a 43% growth.
In Kyrgyzstan, sales reached €1.4 million, a 21% drop compared to the same period of 2017. Prescription pharmaceuticals accounted for 80% of total sales and went up 6%, while non-prescription products recorded a fall due to bad seasonal sales in winter, and saw a significant drop compared to the same period last year. Sales drivers included Hiconcil (amoxicillin), Lorista (losartan), and Atoris (atorvastatin).
East Europe U consists of Uzbekistan, Georgia, Tajikistan, and Turkmenistan. We generated €12.9 million by sales of our products there and recorded an 8% increase compared to the same period last year. While sales saw a rise in Uzbekistan, Georgia, and Tajikistan, they dropped in Turkmenistan.
In Uzbekistan, the sales volume amounted to €9.4 million, or 31% more quarter over quarter. The increase was mostly driven by prescription pharmaceuticals Amlessa (perindopril/amlodipine), Lorista (losartan), and Nolpaza (pantoprazole); and by products of Pikovit and Septolete brands among non-prescription products. In the period, we
The sales dynamics of Region Central Europe remained the same as in the first quarter, and the region recorded a 5% growth. Two key markets, Poland and the Czech Republic (19% growth), contributed the most to sales value total of €161.5 million. Sales increased also in other regional markets, except in Lithuania and Latvia.
In Poland, Krka's key and leading regional market, sales totalled €74.7 million, a 2% rise over the same period in 2017. Krka ranked fourth among foreign suppliers of generic medicines, and sixth among all suppliers of generic pharmaceuticals. As expected, prescription pharmaceuticals accounted for the major part of sales total. We should mention Atoris (atorvastatin), Roswera (rosuvastatin), Doreta (tramadol/paracetamol), Valsacor (valsartan), Co-Valsacor (valsartan/hydrochlorothiazide), and Nolpaza (pantoprazole). Non-prescription products successfully launched Bravadin (ivabradine), Nalgesin Forte (naproxen), and Bilobil Intense (ginkgo leaf extract).
In Georgia, we ranked second among foreign suppliers of generic medicines, and generated €2.0 million by sales of our products, or 14% more than in the same period last year. In the leading group of prescription pharmaceuticals, the most important contributors were Lorista H and Lorista HD (losartan/hydrochlorothiazide), Enap H and Enap HL (enalapril/hydrochlorothiazide), and Co-Amlessa (perindopril/amlodipine/indapamide). Products of the Herbion and Panzynorm brands drove sales of non-prescription products.
Sales in Tajikistan totalled €0.8 million, a 36% increase over the same period last year. We launched Co-Amlessa (perindopril/amlodipine/ indapamide), Lortenza (losartan/amlodipine), and Maruxa (memantine) there. The following medicines presented significant sales growth: Amlessa (perindopril/amlodipine) from the group of prescription pharmaceuticals; and Herbion brand syrups from the group of non-prescription products.
In Turkmenistan, prescription pharmaceuticals constituted the largest part of total sales with €0.7 million, in particular Nolpaza (pantoprazole) and Amlessa (perindopril/amlodipine). Sales of Krka's non-prescription products were driven by products of the Herbion and Pikovit brands.
lagged behind the last year's sales figure by 15% because the unfavourable situation persisted. Our leading non-prescription products were the Septolete brand products and Bilobil (ginkgo leaf extract). Among animal health products, our topselling products were Fypryst (fipronil) and Floron (florfenicol).
In the Czech Republic, Krka's key and second largest regional market, sales totalled €26.2 million, a 19% rise. We ranked third among foreign suppliers of generic medicines in the market. Prescription pharmaceuticals contributed the most to sales, especially Atoris (atorvastatin), Lexaurin (bromazepam), and Asentra (sertraline). They were followed by Pragiola (pregabalin), Tonanda (perindopril/amlodipine/indapamide), Tonarssa (perindopril/amlodipine), Sorvasta (rosuvastatin), and Doreta (tramadol/paracetamol). Key non-
prescription products included Nalgesin (naproxen), products of the Septolete brand, and Bisacodyl-K (bisacodyl). Fypryst (fipronil) and Dehinel Plus (febantel/pyrantel embonate/praziquantel) drove sales of animal health products.
The third key regional market is Hungary. Sales amounted to €23.9 million, an increase of 4% compared to the same period last year. Krka held fifth place among suppliers of generic medicines in Hungary. As expected, prescription pharmaceuticals led again, and of them Co-Prenessa (perindopril/indapamide) generated strongest sales. Atoris (atorvastatin), Roxera (rosuvastatin), Zyllt (clopidogrel), Co-Dalnessa (perindopril/amlodipine/i ndapamide), Emozul (esomeprazole) and Fromilid (clarithromycin) followed. Sales were driven among non-prescription products by Bilobil (ginkgo leaf extract), and among animal health products by Fypryst (fipronil) and Milprazon (milbemycin oxime/praziquantel).
In Slovakia, we generated €18.3 million by product sales, a 4% increase. Prescription pharmaceuticals contributed to the increase the most, above all: Atoris (atorvastatin), Nolpaza (pantoprazole), Co-Prenessa (perindopril/indapamide), Prenessa (perindopril), Co-Amlessa (perindopril/amlodipine/ indapamide), and Amlessa (perindopril/amlodipine). Among non-prescription products Nalgesin led in terms of sales, and among animal health products Fypryst (fipronil) and Enroxil (enrofloxacin).
In Lithuania, changes introduced to the system for setting prices of prescription pharmaceuticals included in the reimbursement list impacted our business operations in the period. Krka ranked third among the suppliers of generic medicines in the Lithuanian market, even though we recorded a 6%
We consider whole Region West Europe as our key market. Our product sales there generated €146.0 million, or 2% more than in the same period last year. Germany remained our primary regional market, and was followed by markets of Scandinavia, Spain, and France. In terms of sales, we focused on our products marketed through Krka's subsidiaries under our own brand names. They saw a 9% increase, and accounted for a 70% share in total regional sales. Sales through unrelated parties decreased by 10% in comparison to the same period last year.
drop in sales, which totalled €8.2 million. Sales were driven by prescription pharmaceuticals, above all by Atoris (atorvastatin), Nolpaza (pantoprazole), Valsacombi (valsartan/hydrochlorothiazide), Prenewel (perindopril/indapamide), and Co-Amlessa (perindopril/amlodipine/indapamide). Sales were driven by products of the Septolete brand and Nalgesin (naproxen) among nonprescription products, and Fypryst (fipronil) and Enroxil (enrofloxacin) among animal health products drove.
In Latvia we generated €6.5 million by product sales, or 1% less over the second quarter last year. Krka ranked second among the suppliers of generic medicines in Latvia. In terms of sales, prescription pharmaceuticals were most important, above all Atoris (atorvastatin), Sorvasta (rosuvastatin), Prenewel (perindopril/indapamide), Nolpaza (pantoprazole), and Co-Amlessa (perindopril/amlodipine/indapamide). Sales were driven among non-prescription products by the Septolete brand products and Daleron (paracetamol), and among animal health products by Fypryst (fipronil) and Milprazon (milbemycin oxime/praziquantel).
In Estonia, the smallest market of this region, we generated €3.9 million by product sales and recorded a 9% sales growth. The following prescription pharmaceuticals accounted for the largest share in sales: Co-Prenessa (perindopril/indapamide), Roswera (rosuvastatin), Atoris (atorvastatin), and Co-Dalnessa (perindopril/amlodipine/indapamide). Sales were driven by products of the Septolete brand from the non-prescription product group, and by Fypryst (fipronil) from the animal health product group.
Prescription pharmaceuticals generated a sales total of €130.0 million, and accounted for the most significant 89% of total sales in the region. They were driven primarily by medicines containing esomeprazole, clopidogrel, and pantoprazole. Sales of animal health product amounted to €13.9 million, a 10% rise compared to the same period last year. Sales were driven by generic medicines for internal parasite treatment and control containing milbemycin oxime and praziquantel. Sales generated by non-prescription products reached €2.2 million, and saw a 44% increase.
Despite a 12% drop in sales, sales generated in Germany amounted to €38.6 million. Germany therefore remained our most important regional market. Sales through our subsidiary TAD Pharma accounted for more than 90% of the regional sales. The decrease resulted from the expiry of tender sales of pharmaceuticals for alimentary and metabolic diseases. Sales were driven by pharmaceuticals containing valsartan, candesartan, and pantoprazole. The share of fixed-dose combinations, especially those containing ramipril and amlodipine, rose significantly. In Germany, this placed us among the leading suppliers of fixed-dose combinations for the treatment of cardiovascular diseases.
In Scandinavia, sales saw a 37% growth and totalled €18.7 million. Our product sales were most substantial in Sweden, followed by Finland, Denmark and Norway. Finland was the fastest growing Krka's market in Scandinavia. Product sales there advanced by 87% over the same period last year, and we more than doubled sales through our subsidiary Krka Finland. Sales through our subsidiary Krka Sverige went up by 24%, and sales through subsidiaries in the Scandinavian markets reached a total of 93%. Sales were driven by medicines containing candesartan, losartan, esomeprazole, pantoprazole, and duloxetine. In Norway, we retained our marketing position by many medicines, above all those containing esomeprazole, pantoprazole, and pramipexole.
In Spain, our product sales generated €18.4 million, and growth reached 15%. We successfully supplied our products to the market through our subsidiary, Krka Farmaceutica. It was awarded tenders for medicine supplies to Andalusia, where we increased the share of products sold under our own brand names. Their share amounted to 87% of total Krka sales in the Spanish market. Sales were driven by medicines containing donepezil; a fixed-dose combination of tramadol and paracetamol; bisoprolol, quetiapine, and pramipexole.
The sales in France totalled €18.1 million, down 11% compared to the same period last year. Sales through unrelated parties dropped, but still represented the largest part of our total sales in the French market. However, we partly compensated for the drop by a 16% increase in sales of products marketed under Krka's own brands. Their share has already exceeded 20% of total Krka sales in France. Sales were driven by medicines containing milbemycin oxime and praziquantel, esomeprazole, clopidogrel, and gliclazide.
In Italy, we recorded a 26% rise in sales, which amounted to €15.5 million. Sales were driven by medicines containing clopidogrel, esomeprazole, and pantoprazole. Sales through our subsidiary, Krka Farmaceutici Milano, went up by 26% and accounted for 60% of Krka's total sales in the market.
In Portugal, product sales totalled €10.1 million, or 7% less over the same period last year. Sales through unrelated parties dropped, and we increased sales through our subsidiary, Krka Farmacêutica, by 9%, accounting for 70% of Krka sales in the Portuguese market. Sales were driven by medicines containing esomeprazole, olanzapine, and a fixed-dose combination of perindopril and indapamide. We should also mention the increase in sales of non-prescription products and animal health products.
In the United Kingdom, we generated product sales in the amount of €9.3 million, or 3% more than in the same period a year ago. Sales were driven by prescription pharmaceuticals, above all those containing quetiapine, perindopril, and irbesartan. Our subsidiary, Krka UK, more than doubled its sales relative to the same period last year, and accounted for 15% of total Krka sales in the market.
Krka sales in Benelux amounted to €5.0 million, and saw a 26% increase. We increased our sales through unrelated parties by 11%, and sales through our subsidiary, Krka Belgium, by 89%.
In Ireland, product sales totalled €4.8 million, which was the same as last year. Sales though our subsidiary, Krka Pharma Dublin, went up by 3%, and accounted for 85% of total sales value in the market. We further remained the leading supplier of medicines containing pregabalin, duloxetine, and aripiprazole in the Irish market.
Krka product sales in Austria went up by 9% and totalled €4.0 million. We generated over 90% of sales in the Austrian market through our subsidiary, Krka Pharma Wien.
In other European countries, the majority of sales were made through unrelated parties, and sales amounted to €3.5 million.
In the middle of July 2018 an arbitration award was issued with regard to the dispute between Krka and Ceva Sante Animale S.A, France over an alleged breach of the distribution contract on distribution of Krka's milbemicin and praziquantel in the countries of the European Union and the European Economic Area. The arbitration found that Krka allegedly
Sales in the markets of our sales region Overseas Markets amounted to €21.8 million. All three regional sales offices contributed to the 6% increase in sales. Prescription pharmaceuticals, in most markets marketed under our own brands, accounted for the major part of sales in terms of value.
The Middle East remains locked in a complex situation. Our business operations remained hindered also in this quarter. Even so, sales value totalled €11.6 million, up 8% compared to the same period last year. Our leading markets were Iran, Iraq, and Lebanon, and sales were driven by Asentra (sertraline), Nolpaza (pantoprazole), Vizarsin (sildenafil), Letizen (cetirizine), and Yasnal (donepezil).
violated the distribution agreement in a certain part, and therefore should paid Ceva Sante Animale S.A. compensation in the amountof €1.385 million. Krka will examine the legal remedies available to protect its interests. Krka has already made a provision for this lawsuit last year.
In the markets of the Far East and Africa we recorded overall sales of €9.7 million, and a 2% growth. Our product sales were most substantial in the Republic of South Africa, and were followed by Vietnam, China, Malaysia, and Ghana. Sales were driven by Lanzul (lansoprazole), Palprostes (fruit extract of dwarf fan palm), Emanera (esomeprazole), Tenox (amlodipine), and Coryol (carvedilol).
The smallest of the three regional offices is the one that operates in the Americas. It recorded total product sales of €0.6 million, up 13%, which were primarily generated in the markets of Central America. Sales were driven by prescription pharmaceuticals, among them Valsacor (valsartan), Valsaden (valsartan/hydrochlorothiazide), Emanera (esomeprazole), Vizarsin (sildenafil), and Rawel (indapamide).
In the period from January to June 2018, human health products were the most important product group in the sales structure of the Krka Group, and accounted for 92.1% of overall sales in the period. Prescription pharmaceuticals constituted 83.5% of the Krka Group's total sales, and were followed by non-prescription products (8.6%), and animal health products (5.2%).
All product and service groups presented an increase in sales. In comparison to the same period last year, the sales of prescription pharmaceuticals increased by 4%, non-prescription products by 8%, and animal health products by 1%.
Sales of health resort and tourist services constituted 2.5% of total Krka Group sales, a 5% increase over the last year.
| Krka Group | Krka Company | |||||||
|---|---|---|---|---|---|---|---|---|
| In € thousand | 1–6/2018 | 1–6/2017 | Index | 1–6/2018 | 1–6/2017 | Index | ||
| Human health products | 626,875 | 602,411 | 104 | 593,235 | 578,453 | 103 | ||
| – Prescription pharmaceuticals | 568,333 | 548,184 | 104 | 538,735 | 526,562 | 102 | ||
| – Non-prescription products | 58,542 | 54,227 | 108 | 54,500 | 51,891 | 105 | ||
| Animal health products | 35,186 | 34,987 | 101 | 35,698 | 34,654 | 103 | ||
| Health resort and tourist services | 17,300 | 16,536 | 105 | |||||
| Other | 1,114 | 1,112 | 100 | 2,153 | 1,903 | 113 | ||
| Total | 680,475 | 655,046 | 104 | 631,086 | 615,010 | 103 |
Prescription pharmaceuticals recorded sales in total of €568.3 million, a 4% rise. All regions saw an increase in sales, but the increment was most significant in the following regions: South-East Europe (10%), Overseas Markets (9%), Central Europe (4%), and East Europe (3%).
Among the largest Krka's markets, sales went up the most in Poland, by 3%, but saw a 2% decline in the Russian Federation. However, sales in roubles growth by 12%. Compared to the same 2017 period, the sales of prescription pharmaceuticals in other major markets went up by: 28% in the Scandinavian countries; 22% in Ukraine; 20% in Italy; 18% in the Czech Republic; 11% in Croatia; 11% in Spain; 3% in Slovakia; and 1% in Slovenia.
The medium-sized markets recorded sales increases as follows: 40% in both Serbia, and Bosnia and Herzegovina; 35% in Uzbekistan; 20% in Bulgaria; and 10% Macedonia.
Among the small markets, sales of prescription pharmaceuticals recorded the steepest growth in Finland, where it doubled. It went up by 62% in Mongolia; 57% in Montenegro; 35% in Tajikistan; 26% in Georgia; 19% in Armenia; 13% in Belarus; 11% in Moldova; 9% in Austria; and 8% in Estonia.
In West Europe, we have been strengthening our position through our subsidiaries. They have recorded significant growth rates, the highest in Finland and in Belgium, where sales more than doubled. Other markets of the region presented growth rates as follows: Sweden 24%, Italy 22%, Spain 14%, and France 13%.
Ten leading prescription pharmaceuticals in terms of sales included medicines containing perindopril (Prenessa*, Co-Prenessa*, Amlessa*, Co-Amlessa*), losartan (Lorista*, Lorista H*, Tenloris*), atorvastatin (Atoris, Atordapin*), valsartan (Valsacor, Valsacombi*, Vamloset*, Co-Vamloset*, Valarox*), pantoprazole (Nolpaza*), rosuvastatin (Roswera*, Rosudapin*), esomeprazole (Emanera*), enalapril (Enap, Enap H*, Elernap*), clopidogrel (Zyllt), and candesartan (Karbis*, Karbicombi*).
Compared to the same period last year, Krka recorded the highest absolute sales growth with Valsacor (valsartan), Roswera* (rosuvastatin), Roticox* (etoricoxib), Co-Amlessa (perindopril/amlodipine/indapamide), Prenessa* (perindopril), Zyllt* (clopidogrel), Kventiax* (quetiapine); Asentra (sertraline), Ezoleta* (ezetimibe), and Atoris (atorvastatin).
In the first half of the year, we launched a completely new medicine, Valarox* (valsartan/rosuvastatin). It is now available in Poland, Lithuania, Slovenia, and Hungary. The medicine allows for concomitant treatment of high blood pressure and high cholesterol levels. We expanded our range of medicines for the treatment of hypertension by launching a triple combination Co-Vamloset (valsartan/amlodipine/ hydrochlorothiazide), which is available in the Russian Federation.
We extended our range of products for treatment of HIV infections with two completely new medicines: Efavemten (efavirenz/emtricitabine/tenofovir) launched in Germany, and darunavir launched in Latvia, Slovakia, and Slovenia.
In June, we also supplemented our portfolio of prescription pharmaceuticals with a new antipsychotic, Parnido* (paliperidone), available in Hungary, Portugal, Spain, and Scandinavia.
The sales value of non-prescription products reached €58.5 million, an 8% increase compared to the same period last year.
Sales increased in the following regions: Slovenia (10%), South-East Europe (21%), East Europe (3%), Central Europe (12%), and West Europe (44%).
In addition to these, we also launched several existing medicines on new markets:
Region East Europe contributed more than 50% to total sales. Of that, majority was generated by the Russian Federation, where a 2% rise in sales was recorded. Also other markets of the region recorded growth. Among the large markets of this region, increments were as follows: Belarus 2%, Kazakhstan 20%, Uzbekistan 16%, Mongolia 34%, and Ukraine 27%.
Also other markets recorded growth rates as follows: Croatia 26%, Serbia 44%, Macedonia 17%, Bosnia and Herzegovina 22%, Romania 21%, the Czech Republic 40%, Slovakia 30%, Hungary 63%, Germany 26%, and Portugal 183%.
Sales of our animal health products amounted to €35.2 million, up 1% compared to the same period last year.
All regions saw an increase in sales except Region East Europe and Overseas Markets. The highest sales growth was recorded by Region West Europe (10%).
As regards individual markets, we recorded most substantial sales growth in: Croatia, Lithuania, the Czech Republic, Hungary, the United Kingdom, Benelux, Italy, and Spain.
In the first two quarters of 2018, Terme Krka generated a total of €17.3 million from sales, or 5% more than in the same period last year. The number of overnight stays was roughly the same over 2017 second quarter with domestic guests accounting for 76%. Among foreign guests, Italians accounted for 25% of overnight stays, and were followed by Russians (10%), Austrians, Germans, and Dutch.
We had good sales with key brand products Septolete (a 32% increase), Nalgesin (a 26% increase), and Bilobil (an 8% increase) presented. Also our new products, Flebaven (diosmin/hesperidin) and Magnezij Krka 300 (magnesium citrate), generated good sales figures.
The five top-ranking animal health products in terms of sales were: Fypryst* (fipronil; fipronil/ S-methoprene), Milprazon* (milbemycin oxime/praziquantel), Enroxil* (enrofloxacin), Floron* (florfenicol), and Dehinel plus (febantel/pyrantel embonate/praziquantel). Sales were driven by Fypryst* and Milprazon*, and their sales figures advanced by more than 20%. Products for companion animals accounted for more than 50% of total animal health products.
At the beginning of 2018, Krka as the first generic manufacturer launched Fypryst Combo (fipronil/ S-methoprene) onto the markets of West Europe, in Italy.
Business units recoded sales increase as follows: Dolenjske Toplice 7%, Talaso Strunjan 2%, and Šmarješke Toplice 4%. Sales generated by Hoteli Otočec matched the sales levels of the first two quarters last year.
** Products marketed under different brand names in individual markets are marked with an asterisk.
In the first two quarters of 2018, we obtained marketing authorisations for 8 new products in 18 dosage forms and strengths.
Krka obtained marketing authorisations under the European decentralised procedures for Parnido (paliperidone) prolonged-release tablets in three strengths. The medicine is an atypical antipsychotic and is taken only once daily. Krka has introduced OROS, the new laser technology for production of tablets from which active ingredients are released by osmosis.
We extended our portfolio of oncology medicines. Under the centralised procedure, we obtained marketing authorisations for Pemetrexed Krka (pemetrexed) powder for solution for infusion in two strengths. This medicine of choice is used for the treatment of patients with locally advanced or metastatic non-small cell lung cancer.
We also obtained the marketing authorisation for everolimus tablets. The medicine regulates blood supply to tumour and inhibits cancer cell growth and distribution. It is indicated for the treatment of breast cancer and renal cancer. This is a medicine of choice for the treatment of certain types of neuroendocrine tumours.
Under the European decentralised procedure we obtained relevant marketing authorisations in three European countries for an antihistamine doxylamine (doxylamine succinate) 15 mg filmcoated tablets. It is used as a short-term treatment for sleep problems in adults. It helps to reduce difficulty in falling asleep and improves quality of sleep.
Krka's key therapeutic group are medicines for the treatment of cardiovascular diseases. Our range of anti-hypertensives was extended with two new strengths of the perindopril/amlodipine fixed-dose combination in tablet form. The 2.85 mg/2.5 mg and 5.7 mg/5 mg tablets are indicated for the initial treatment of hypertension. We obtained marketing authorisations for them under the European decentralised procedure in 15 countries.
In the Russian Federation, Krka obtained the first marketing authorisation for Co-Vamloset
In the same period, we obtained 400 new marketing authorisations in various markets for 84 products.
(valsartan/amlodipine/hydrochlorothiazide) filmcoated tablets in three strengths. The fixed-dose combination controls blood pressure in patients with severe hypertension.
The registration procedure for eplerenone filmcoated tablets in two strengths has been completed. The medicine is used in combination with other medicines for the treatment of heart failure. The active ingredient is one of the new aldosterone receptor antagonists. The risk of adverse reactions is lower than with the older active ingredient, spironolactone.
We also obtained marketing authorisations for an antiviral medicine, Entecavir TAD (entecavir) filmcoated tablets in two strengths. It is used to treat chronic hepatitis B virus infection. According to the guidelines, it is one of the medicines of choice for the treatment of that disease.
We added an antipsychotic, Aripipan (aripiprazole) 20 mg tablets, to our portfolio of pharmaceuticals for diseases of the central nervous system. The medicine is now available in five strengths. Due to its wide dosing range, the treatment can be adjusted to the needs of patients with serious diseases, for example schizophrenia.
We carried out a new bioequivalence study with naproxen in the markets of Western Europe to obtain new marketing authorisations for Naproxen 550 (naproxen) film-coated tablets for relieving pain and inflammation and reducing fever.
In the European markets, we extended marketing opportunities by obtaining new marketing authorisations for our medicines. In Denmark, Sweden, and Finland, we also obtained marketing authorisations for an anti-infective for systemic use, Moxifloxacin Krka (moxifloxacin) solution for infusion, and in Iceland for clarithromycin filmcoated tablets.
In Iceland, we also obtained marketing authorisations for the well-established medicine for lowering cholesterol and triglyceride blood levels, atorvastatin 10 mg, 20 mg, and 40 mg film-coated tablets.
In European markets, we obtained marketing authorisations for an antipsychotic from our range of medicines for the treatment of diseases of the central nervous system, Quetiapine Krka (quetiapine) prolonged-release tablets in five strengths. In Iceland, we also obtained marketing authorisations for an antidepressant Sertraline Krka (sertraline) film-coated tablets in two strengths.
In Iceland, we obtained a marketing authorisation for antifungal capsules, fluconazole.
In various Eastern European countries, we obtained new marketing authorisations for medicines for the treatment of cardiovascular diseases. We were granted marketing authorisations for Lortenza (losartan/amlodipine) film-coated tablets in Kyrgyzstan, and Vamloset (valsartan/amlodipine) film-coated tablets in Mongolia. In Moldova, we obtained marketing authorisations for Valarox (rosuvastatin/valsartan) film-coated tablets, Atordapin (amlodipine/atorvastatin) film-coated tablets, and Niperten Combi (bisoprolol/amlodipine). In Kazakhstan, we were granted a marketing authorisation for Bloxazoc (metoprolol) prolonged-release tablets.
In Ukraine, we obtained new marketing authorisations for Zylaxera (aripiprazole) tablets and Quentiax (quetiapine) film-coated tablets, both from the range for the treatment of diseases of the central nervous system. In Moldova, we launched Elicea (escitalopram) film-coated tablets, Elicea Q-Tab (escitalopram) orodispersible tablets, and Alventa (venlafaxine) prolonged-release capsules.
We put our antibiotics on new markets as follows: Azibiot (azithromycin) powder for oral suspension in Ukraine, Kazakhstan and Georgia; Betaklav (amoxicillin/clavulanic acid) tablets and powder for oral suspension in Turkmenistan; Moflaxa (moxifloxacin) solution for infusion in Azerbaijan. In Azerbaijan and Mongolia, we also introduced Levaxela (levofloxacine) solution for infusion, and in Mongolia, Levaxela (levofloxacine) film-coated tablets. We also obtained marketing authorisations for Cefamezin (cefazolin) powder for solution for injection in Mongolia; and for Emtricitabine/Tenofovir Krka
(emtricitabine/tenofovir) fixed-dose combination filmcoated tablets for the treatment of HIV infections in Kazakhstan.
We obtained new marketing authorisations: in Moldova for an agent used for controlling gastric acid, Zulbex (rabeprazole) gastro-resistant tablets, and a non-steroidal anti-inflammatory drug (NSAID), Etoxib (etoricoxib) film-coated tablets; in Azerbaijan for a corticosteroid, Flosteron (betamethasone) suspension for injection; and in Mongolia for an antidiabetic agent for the treatment of type II diabetes, Gliclada (gliclazide) prolonged-release tablets.
In the markets of South-Eastern Europe, we increased the number of marketing authorisations for medicines from key therapeutic groups. From our range of medicines for the treatment of cardiovascular diseases, we obtained new marketing authorisations for Rameam (ramipril/amlodipine) capsules in Serbia and Bosnia and Herzegovina; Amlessa (perindopril/amlodipine) tablets in Kosovo; Co-Amlessa (perindopril/amlodipine/indapamide) tablets in Albania, and Teldipin (telmisartan/amlodipine) tablets in Serbia.
We obtained new marketing authorisations: in Kosovo for our opioid analgesics, Adolax (oxycodone/naloxone) prolonged-release tablets; and in Albania for a glucocorticoid, Dexamethasone (dexamethasone) tablets, and a fixed-dose combination, Emtricitabin/Tenofovir Krka film-coated tablets for the treatment of HIV infections.
In Serbia, we introduced a medicine for the treatment of depression and generalised anxiety disorder, Dulsevia (duloxetine) gastro-resistant capsules, and in Bosnia and Herzegovina an antidementia medicine Yasnal (donepezil) orodispersible tablets.
We obtained marketing authorisations in Serbia for a medicine used to treat erectile dysfunction, Tadorsyo (tadalafil) film-coated tablets, and in Bosnia and Herzegovina for a non-steroidal antiinflammatory drug (NSAID), Etoxib (etoricoxib) filmcoated tablets.
We expanded marketing opportunities in the overseas markets for many Krka's established products. From the group of medicines for the treatment of cardiovascular diseases, we have
already introduced Tolucombi (telmisartan/ hydrochlorothiazide) tablets, Valsaden (valsartan/hydrochlorothiazide) film-coated tablets, Atoris (atorvastatin) film-coated tablets, Rawel SR (indapamide) prolonged-release tablets, and Coryol (carvedilol) tablets. We also introduced a medicine for controlling gastric acid, Nolpaza (pantoprazol)
We completed the marketing authorisation procedure for Flebaven 450 mg/50 mg (diosmin/hesperidin) film-coated tablets in Azerbaijan, Kyrgyzstan, and Uzbekistan. We further extended markets for Flebaven (diosmin) 500 mg film-coated tablets and 1 000 mg tablets to the countries of South-Eastern Europe, Bosnia and Herzegovina, and Macedonia.
We obtained notifications for Magnezij Krka 300/Magnezij B2 Krka 300 (magnesium
In the first two quarters of 2018, we extended marketing opportunities by obtaining new marketing authorisations for Fyperix/Amflee/Fypermid Combo (fipronil/S-methoprene) spot-on solution, an animal health product. The fixed-dose combination protects dogs, cats and ferrets from parasitic skin infections and infestations. Krka obtained marketing authorisations for the product under the decentralised procedure in the UK, Italy, Finland, Ireland, Portugal and Cyprus. In most countries, we obtained authorisations for marketing it as a nonprescription animal health product. In Serbia, we obtained the marketing authorisation for Dehinel (pyrantel embonate/praziquantel) film-coated tablets for cats. The fixed-dose combination is used for the treatment of gastrointestinal infestations in cats.
In the group of medicines for the treatment of farm animals, we increased the number of marketing authorisations and strengthened the existing
In the first six months of 2018, the Krka Group allocated €43.5 million to investments, of that €34.3 million to the controlling company. We invested primarily in increasing and updating production, and in development-and-research capacities.
Krka's key investment is the product development and quality control facility, Razvojno-kontrolni center powder for solution for injection; an antihistamine Aller Tec (levocetirizine) film-coated tablets; and Vizarsin (sildenafil) film-coated tablets for the treatment of erectile dysfunction. As a marketing authorisation holder, we launched the medicines in Saudi Arabia, Lebanon, Sudan, Jamaica, and Trinidad and Tobago.
citrate) in Macedonia and Hungary. We launched Ulcamed (bismuth) film-coated tablets in Albania, and Pikovit Unique chewable tablets in Mongolia.
In Serbia, Bosnia and Herzegovina, Ukraine, Turkmenistan and Moldova, we obtained new marketing authorisations for Septolete Total (benzydamine chloride/cetylpyridinium chloride) lozenges available in two flavours, elder and lemon, and honey and lemon.
brands. In Moldova, we obtained a marketing authorisation for Toltarox (toltrazuril) oral solution used to treat Coccidia spp. infestations in different poultry species. In Azerbaijan, we obtained marketing authorisations for Amatib (amoxicillin) oral powder for the treatment of infections in pigs and poultry, and Doxatib (doxycycline) powder for use in drinking water.
In Kazakhstan, we obtained the marketing authorisations for a fixed-dose combination, Fypryst (fipronil) cutaneous spray for the treatment of and protection against external parasites in dogs and cats; general tonic and rehydrate, Calfoset solution for injection, for the treatment and prevention of digestive disorders, Tyavalt (tiamulin) granules for the preparation of drinking water for pigs and poultry, and non-steroidal antiinflammatory agent, Rycarfa (carprofen).
4 (RKC 4), at the production site in Novo mesto. The building has been built in the vicinity of the other three similar laboratories for product development and control.
Preparation works for the €54 million building started at the end of June 2015, and the building was completed and glazed in the autumn of 2016.
The connection structure between the two buildings, RKC 3 and RKC 4, has also been also built. Setting up of the laboratory rooms was finished in the summer of 2017, and the facilities were put to use. Additional furnishing of the rooms intended for development is in its final stage. According to the plan, the supply and setting up of the pharmaceutical equipment are due by the autumn of 2018, and the installation and start up by the end of 2018. The completion of facilities for analytics development is due at the end of 2018, and installation of the equipment is planned for the first half of 2019.
In October 2017, Krka started building a multipurpose warehouse on the same site to ensure additional storage room for incoming materials and finished products. This will increase the speed and flexibility of production, and improve product availability and market supply. The construction of the building, installation of the logistic and other equipment, equipment and system qualifications and start-ups will take two years. By the end of March 2019, the building should be roofed and shelving racks constructed. According to the plan, final integration with Raw Materials Warehouse and weighing rooms should be finished by the end of 2019. The investment is estimated at €36 million.
Notol 2, the advanced facility for manufacturing solid dosage forms, which started running in 2015, is also at this site. We have been acquiring additional technological equipment in order to meet the market demand and manufacture new products, and have allocated €10 million for that this year. When the plant is fully equipped, it will be able to operate at its planned volume, i.e. 4.5 billion tablets, film-coated tablets and capsules per year. So far, we have invested €202 million in it.
Investing in the new plant in Krško has provided facilities for hydrogenation and further increased capacities for the independent production of pharmaceutical ingredients. Construction of a €4.5 million hydrogenation plant, Hidrogeniranje 2, started in June 2017, and trial production at the beginning of 2018.
The plant for production of animal health products with biocidal effect in Bršljin, Novo mesto, has been extended. The investment is estimated at €4.6 million. Production on new lines will start at the end of 2018.
Krka has started constructing a new office building in Ljubljana. The building will be connected to the existing one and ready for use in mid-2019. The building will have four floors underground and four above the ground. The preparation works for construction started in October 2017. According to the plan, the building should be constructed and glazed by the end of this year, and finishing works should be completed by March 2019.
Krka-Rus 2 plant in Istra in the Russian Federation is one of the most important investments in Krka's subsidiaries. We have completed the second stage of equipping the plant, which has cost Krka €22 million. All technological and production equipment has been installed and operates. Production capacity has been increased to two thirds of the planned final capacity, a total of 2.5 billion tablets and capsules a year. We expect to obtain all the required documents to start constructing a water treatment plant by the autumn of 2018. The investment is estimated at €2.6 million. In 2018, Krka plans to invest €1.8 million in increasing laboratory capacities. Krka-Rus manufactures 64% of products intended for the Russian market, which gives Krka the status of a domestic producer in the Russian Federation.
We completed a €5.5-million investment in Krka's subsidiary, Farma GRS. We arranged additional capacities for research and development at the Chemical development centre, and increased capacities for the small-scale production of pharmaceutical ingredients in line with the good manufacturing practice. Production was started in February.
Several low investments in the total value of more than €3 million are in progress in all business units of the subsidiary Terme Krka.
We have established a joint venture Ningbo Krka Menovo with our long-term Chinese partner Menovo in the city of Ningbo. The initial share capital of €30 million has been allocated to financing development activities, land purchases and building production capacities. The new company engages in development, production and marketing of finished products. Its first job is to obtain as many marketing authorisations in China for products from Krka's portfolio as possible in two to three years, and to manufacture them there. In three years, we expect first sales results in China.
At the end of June 2018, the Krka Group employed 11,212 persons, of that 5,758 abroad, or 51% of the total Krka Group headcount. Of all employees in the Krka Group, 54% have completed at least university level education.
employees or 4% more than at the end of 2017. Together with agency workers was in the Krka Group 12,364 employees, 2% more than at the end of 2017.
At the end of June, the Krka Group had 380
| 30 June 2018 | 31 December 2017 | |||
|---|---|---|---|---|
| Number of | Share | Number of | Share | |
| employees | (%) | employees | (%) | |
| PhD | 183 | 1.6 | 175 | 1.6 |
| Master of Science | 376 | 3.4 | 364 | 3.4 |
| University degree | 5,528 | 49.3 | 5,472 | 50.5 |
| Higher professional education | 1,577 | 14.1 | 1,485 | 13.7 |
| Vocational college education | 280 | 2.5 | 267 | 2.5 |
| Secondary school education | 2,126 | 19.0 | 1,927 | 17.8 |
| Other | 1,142 | 10.1 | 1,142 | 10.5 |
| Krka Group | 11,212 | 100.0 | 10,832 | 100.0 |
We ensure a continuous inflow of new employees by giving study grants. At the end of June 2018, there were 56 Krka scholarship holders, primarily pharmacy and chemistry students. We also grant scholarships to exceptional students from other fields of interest to Krka. In the first two quarters of 2018, we granted 13 new scholarships.
Krka has always been investing in knowledge and development of its employees. Employees are eager to learn and get promoted also by extending their education grades. Krka has been supporting 55 employees, who have enrolled into postgraduate studies (specialist, master's or doctoral degrees), and a total of 151 have enrolled into part-time graduate studies.
Krka is the only certificate-awarding body in Slovenia with authority to examine and approve candidates taking the National Vocational Qualification (NVQ) exams in the area of pharmaceutics. In the period from 2002 until June 2018, we awarded 1,490 certificates: 1,348 to Krka employees, and 142 to employees of other companies and pharmacies. At the moment, 65 employees are included in the process of obtaining national vocational qualification (NVQ).
Through various activities, the Krka Group has been endorsing employees' initiatives, innovations, cooperation, team work, loyalty, and commitment.
For decades, we have been awarding recognitions to employees, who have been employed at the Krka Group for 10, 20, 30, 35, and 40 years. This year, 800 employees from Slovenia and abroad received rewards for their contributions.
Every year, we also select the best employees and managers. This is one of the ways in which we strengthen the loyalty of the employees and the positive atmosphere in the company. This year, 49 best employees and 19 best managers were selected at the level of organisational units, while at the Group level ten best employees and five best managers were chosen from 140 award winners.
In May employee innovations for the year 2017 were awarded. Ideas presented by employees significantly contribute to cost reduction and work process improvement. In 2017, 469 colleagues contributed 614 useful proposals, and we awarded 550 of them. In the first two quarters of 2018, 250 colleagues handed in 282 useful proposals. At this year's ceremony, the Chamber of Commerce of Dolenjska and Bela krajina conferred on innovators from Krka four gold awards and one silver award.
With preventive and curative healthcare for employees, and with a wide range of activities, we provide for comprehensive quality of work and life of our employees, which contributes to their satisfaction, increases the Company's employment appeal attracting top experts, and contributes to successful performance. Employees get together on Krka Sports Day, when we reward our best athletes and organisational units for their mass participation and results. We also organised the traditional Krka Day for more than 2,300 attendants, primarily Krka employees and their family members. Active socialising of the employees helps us live up to Krka's value of partnership and trust and provide for loyalty and good interpersonal relationships in the Krka Group.
| In € thousand | 30 June 2018 | 31 Dec 2017 | Index |
|---|---|---|---|
| Assets | |||
| Property, plant and equipment | 847,858 | 864,842 | 98 |
| Intangible assets | 109,272 | 110,992 | 98 |
| Loans | 10,978 | 9,543 | 115 |
| Investments | 9,600 | 8,815 | 109 |
| Deferred tax assets | 38,842 | 38,475 | 101 |
| Other non-current assets | 452 | 341 | 133 |
| Total non-current assets | 1,017,002 | 1,033,008 | 98 |
| Assets held for sale | 41 | 41 | 100 |
| Inventories | 334,222 | 310,671 | 108 |
| Trade receivables | 470,003 | 500,735 | 94 |
| Other receivables | 27,636 | 27,302 | 101 |
| Loans | 40,609 | 1,426 | 2,848 |
| Investments | 5,665 | 0 | |
| Cash and cash equivalents | 86,172 | 45,948 | 188 |
| Total current assets | 964,348 | 886,123 | 109 |
| Total assets | 1,981,350 | 1,919,131 | 103 |
| Equity | |||
| Share capital | 54,732 | 54,732 | 100 |
| Treasury shares | -46,536 | -40,588 | 115 |
| Reserves | 109,434 | 111,477 | 98 |
| Retained earnings | 1,456,941 | 1,361,107 | 107 |
| Total equity holders of the controlling company | 1,574,571 | 1,486,728 | 106 |
| Non-controlling interests within equity | 3,311 | 971 | 341 |
| Total equity | 1,577,882 | 1,487,699 | 106 |
| Liabilities | |||
| Provisions | 99,436 | 98,075 | 101 |
| Deferred revenues | 10,375 | 10,953 | 95 |
| Deferred tax liabilities | 11,997 | 12,154 | 99 |
| Total non-current liabilities | 121,808 | 121,182 | 101 |
| Trade payables | 110,420 | 108,340 | 102 |
| Borrowings | 1 | 0 | |
| Income tax payable | 6,703 | 16,142 | 42 |
| Other current liabilities | 164,536 | 185,768 | 89 |
| Total current liabilities | 281,660 | 310,250 | 91 |
| Total liabilities | 403,468 | 431,432 | 94 |
| Total equity and liabilities | 1,981,350 | 1,919,131 | 103 |
| In € thousand | 1–6/2018 | 1–6/2017 | Index |
|---|---|---|---|
| Sales revenues | 680,475 | 655,046 | 104 |
| Costs of goods sold | -280,845 | -269,353 | 104 |
| Gross profit | 399,630 | 385,693 | 104 |
| Other operating income | 5,982 | 5,126 | 117 |
| Selling and distribution expenses | -167,215 | -164,434 | 102 |
| R&D expenses | -64,257 | -62,219 | 103 |
| General and administrative expenses | -38,681 | -40,088 | 96 |
| Operating profit | 135,459 | 124,078 | 109 |
| Financial income | 2,553 | 10,415 | 25 |
| Financial expenses | -17,442 | -23,715 | 74 |
| Net financial result | -14,889 | -13,300 | 112 |
| Profit before tax | 120,570 | 110,778 | 109 |
| Income tax | -18,832 | -19,115 | 99 |
| Net profit | 101,738 | 91,663 | 111 |
| Attributable to: | |||
| – equity holders of the controlling company | 101,782 | 91,662 | 111 |
| – non-controlling interest | -44 | 1 | |
| Basic earnings per share (in €) | 3.18 | 2.84 | 112 |
| Diluted earnings per share (in €) | 3.18 | 2.84 | 112 |
* Net profit for the period/Average number of shares issued in the period exclusive of treasury shares.
** All shares issued by the controlling company are ordinary shares, hence the diluted earnings per share ratio equalled the basic earnings per share.
| In € thousand | 1–6/2018 | 1–6/2017 | Index |
|---|---|---|---|
| Net profit | 101,738 | 91,663 | 111 |
| Other comprehensive income for the period | |||
| Other comprehensive income for the period reclassified to profit or loss at a future date |
|||
| Translation reserves | -8,584 | -5,097 | 168 |
| Change in fair value of available-for-sale financial assets | 785 | -2,462 | |
| Deferred tax effect | -149 | 468 | |
| Net other comprehensive income for the period reclassified to profit or loss at a future date |
-7,948 | -7,091 | 112 |
| Other comprehensive income for the period that will not be reclassified to profit or loss at a future date |
|||
| Recalculation of post-employment benefits | -2 | 0 | |
| Net other comprehensive income for the period that will not be reclassified to profit or loss at a future date |
-2 | 0 | |
| Total other comprehensive income for the period (net of tax) | -7,950 | -7,091 | 112 |
| Total comprehensive income for the period (after tax) | 93,788 | 84,572 | 111 |
| Attributable to: | |||
| – equity holders of the controlling company | 93,791 | 84,571 | 111 |
| – non-controlling interest | -3 | 1 |
| Reserves | Retained earnings | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Share | Treasury | Reserves for treasury |
Share | Legal | Statutory | Fair value |
Translation | Other profit |
Retained | Profit for | Total equity holders of the controlling |
Non controlling interests |
Total | |
| In € thousand | capital | shares | shares | premium | reserves | reserves | reserves | reserves | reserves | earnings | the period | company | within equity | equity |
| Balance at 1 Jan 2018 | 54,732 | -40,588 | 40,588 | 105,897 | 14,990 | 30,000 | -12,523 | -67,475 | 1,129,172 | 90,233 | 141,702 | 1,486,728 | 971 | 1,487,699 |
| Net profit | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 101,782 | 101,782 | -44 | 101,738 |
| Total other comprehensive income for the period (net of tax) |
0 | 0 | 0 | 0 | 0 | 0 | 634 | -8,625 | 0 | 0 | 0 | -7,991 | 41 | -7,950 |
| Total comprehensive income for the period (net of tax) |
0 | 0 | 0 | 0 | 0 | 0 | 634 | -8,625 | 0 | 0 | 101,782 | 93,791 | -3 | 93,788 |
| Transactions with owners recognised in equity |
||||||||||||||
| Transfer of previous period's profit to retained earnings |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 141,702 | -141,702 | 0 | 0 | 0 |
| Purchase of treasury shares | 0 | -5,948 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | -5,948 | 0 | -5,948 |
| Formation of reserves for treasury shares |
0 | 0 | 5,948 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | -5,948 | 0 | 0 | 0 |
| Acquisition of non controlling interests |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 2,343 | 2,343 |
| Total transactions with owners recognised in equity |
0 | -5,948 | 5,948 | 0 | 0 | 0 | 0 | 0 | 0 | 141,702 | -147,650 | -5,948 | 2,343 | -3,605 |
| Balance at 30 June 2018 | 54,732 | -46,536 | 46,536 | 105,897 | 14,990 | 30,000 | -11,889 | -76,100 | 1,129,172 | 231,935 | 95,834 | 1,574,571 | 3,311 | 1,577,882 |
| Reserves | Retained earnings | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Share | Treasury | Reserves for treasury |
Share | Legal | Statutory | Fair value |
Translation | Other profit |
Retained | Profit for | Total equity holders of the controlling |
Non controlling interests |
Total | |
| In € thousand | capital | shares | shares | premium | reserves | reserves | reserves | reserves | reserves | earnings | the period | company | within equity | equity |
| Balance at 1 Jan 2017 | 54,732 | -29,690 | 29,690 | 105,897 | 14,990 | 30,000 | -11,802 | -59,097 | 1,102,165 | 107,670 | 98,833 | 1,443,388 | 1,056 | 1,444,444 |
| Net profit | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 91,662 | 91,662 | 1 | 91,663 |
| Total other comprehensive income for the period (net of tax) |
0 | 0 | 0 | 0 | 0 | 0 | -1,994 | -5,097 | 0 | 0 | 0 | -7,091 | 0 | -7,091 |
| Total comprehensive income for the period (net of tax) |
0 | 0 | 0 | 0 | 0 | 0 | -1,994 | -5,097 | 0 | 0 | 91,662 | 84,571 | 1 | 84,572 |
| Transactions with owners recognised in equity |
||||||||||||||
| Transfer of previous period's profit to retained earnings |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 98,833 | -98,833 | 0 | 0 | 0 |
| Purchase of treasury shares | 0 | -3,503 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | -3,503 | 0 | -3,503 |
| Formation of reserves for treasury shares |
0 | 0 | 3,503 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | -3,503 | 0 | 0 | 0 |
| Total transactions with owners recognised in equity |
0 | -3,503 | 3,503 | 0 | 0 | 0 | 0 | 0 | 0 | 98,833 | -102,336 | -3,503 | 0 | -3,503 |
| Balance at 30 June 2017 | 54,732 | -33,193 | 33,193 | 105,897 | 14,990 | 30,000 | -13,796 | -64,194 | 1,102,165 | 206,503 | 88,159 | 1,524,456 | 1,057 | 1,525,513 |
| In € thousand | 1–6/2018 | 1–6/2017 |
|---|---|---|
| CASH FLOWS FROM OPERATING ACTIVITIES | ||
| Net profit | 101,738 | 91,663 |
| Adjustments for: | 71,599 | 74,000 |
| – amortisation/depreciation | 55,471 | 53,201 |
| – foreign exchange differences | -3,079 | -1,548 |
| – investment income | -3,734 | -10,985 |
| – financial income | 2,913 | 13,336 |
| – investment expenses | -57 | 0 |
| – interest expenses and other financial expenses | 1,253 | 881 |
| – income tax | 18,832 | 19,115 |
| Operating profit before changes in net operating current assets | 173,337 | 165,663 |
| Change in trade receivables | 29,669 | 8,878 |
| Change in inventories | -23,551 | -20,134 |
| Change in trade payables | 1,326 | -3,965 |
| Change in provisions | 589 | 491 |
| Change in deferred revenues | -578 | -607 |
| Change in other current liabilities | -20,890 | -28,437 |
| Income tax paid | -29,273 | -4,075 |
| Net cash from operating activities | 130,629 | 117,814 |
| CASH FLOWS FROM INVESTING ACTIVITIES | ||
| Interest received | 223 | 268 |
| Proceeds from sale of current investments | 0 | 2 |
| Dividends received | 959 | 1 |
| Proceeds from sale of property, plant and equipment | 2,494 | 749 |
| Purchase of intangible assets | -1,967 | -2,292 |
| Purchase of property, plant and equipment | -40,594 | -47,161 |
| Non-current loans | -1,390 | -1,266 |
| Proceeds from repayment of non-current loans | 645 | 724 |
| Payments to acquire non-current investments | -120 | -33 |
| Proceeds from sale of non-current investments | 7 | 8 |
| Payments in connection with current investments and loans | -44,817 | -24,835 |
| Payments in connection with derivative financial instruments | -2,278 | -25,820 |
| Proceeds from derivative financial instruments | 1,294 | 0 |
| Net cash from investing activities | -85,544 | -99,655 |
| CASH FLOWS FROM FINANCING ACTIVITIES | ||
| Interest paid | -482 | -167 |
| Proceeds in connection with current borrowings | 1 | 0 |
| Dividends and other profit shares paid | 0 | -91 |
| Purchase of treasury shares | -5,948 | -3,503 |
| Proceeds of payments from non-controlling interests | 2,343 | 0 |
| Net cash used in financing activities | -4,086 | -3,761 |
| Net increase in cash and cash equivalents | 40,999 | 14,398 |
| Cash and cash equivalents at the beginning of the period | 45,948 | 38,630 |
| Effect of exchange rate fluctuations on cash held | -775 | 0 |
| Net cash and cash equivalents at the end of the period | 86,172 | 53,028 |
| European Union | South-East Europe | East Europe | Other | Elimination | Total | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| In € thousand | 1–6/2018 | 1–6/2017 | 1–6/2018 | 1–6/2017 | 1–6/2018 | 1–6/2017 | 1–6/2018 | 1–6/2017 | 1–6/2018 | 1–6/2017 | 1–6/2018 | 1–6/2017 |
| Revenues to non-group | 399,745 | 385,607 | 37,012 | 30,123 | 218,388 | 213,984 | 25,330 | 25,332 | 0 | 0 | 680,475 | 655,046 |
| companies | ||||||||||||
| Revenues between Group companies |
112,623 | 115,747 | 19,827 | 14,174 | 115,812 | 127,940 | 0 | 0 | -248,262 | -257,861 | 0 | 0 |
| Other operating income | 2,714 | 2,694 | 19 | 101 | 3,249 | 2,331 | 0 | 0 | 0 | 0 | 5,982 | 5,126 |
| Operating expenses | -338,942 | -328,924 | -25,599 | -21,988 | -171,515 | -171,061 | -14,942 | -14,121 | 0 | 0 | -550,998 | -536,094 |
| Operating expenses to Group companies |
-184,021 | -183,467 | -21,543 | -16,851 | -247,185 | -249,225 | -4 | -5 | 452,753 | 449,548 | 0 | 0 |
| Operating profit | 63,517 | 59,377 | 11,432 | 8,236 | 50,122 | 45,254 | 10,388 | 11,211 | 0 | 0 | 135,459 | 124,078 |
| Interest income | 106 | 100 | 0 | 0 | 122 | 168 | 1 | 0 | 0 | 0 | 229 | 268 |
| Interest revenues to Group companies |
134 | 405 | 0 | 0 | 2 | 1 | 0 | 0 | -136 | -406 | 0 | 0 |
| Interest expenses | -13 | -157 | 0 | 0 | -2 | 2 | 0 | 0 | 0 | 0 | -15 | -155 |
| Interest expenses to Group companies |
-156 | -126 | 0 | 0 | -24 | -214 | 0 | 0 | 180 | 340 | 0 | 0 |
| Net financial result | -3,004 | 1,567 | -367 | 313 | -11,756 | -15,125 | 238 | -55 | 0 | 0 | -14,889 | -13,300 |
| Income tax | -8,428 | -9,061 | -1,318 | -1,155 | -8,142 | -7,647 | -944 | -1,252 | 0 | 0 | -18,832 | -19,115 |
| Net profit | 52,085 | 51,883 | 9,747 | 7,394 | 30,224 | 22,482 | 9,682 | 9,904 | 0 | 0 | 101,738 | 91,663 |
| Investments | 41,293 | 50,812 | 189 | 126 | 1,833 | 1,630 | 209 | 0 | 0 | 0 | 43,524 | 52,568 |
| Depreciation | 36,154 | 33,126 | 1,039 | 915 | 14,273 | 15,157 | 371 | 174 | 0 | 0 | 51,837 | 49,372 |
| Amortisation | 2,289 | 2,294 | 156 | 127 | 1,090 | 1,303 | 99 | 105 | 0 | 0 | 3,634 | 3,829 |
| 30 June | 31 Dec | 30 June | 31 Dec | 30 June | 31 Dec | 30 June | 31 Dec | 30 June | 31 Dec | 30 June | 31 Dec | |
| 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | |
| Total assets | 1,517,909 | 1,461,851 | 44,173 | 40,855 | 403,132 | 405,694 | 16,136 | 10,731 | 0 | 0 | 1,981,350 | 1,919,131 |
| Goodwill | 42,644 | 42,644 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 42,644 | 42,644 |
| Trademark | 37,739 | 38,163 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 37,739 | 38,163 |
| Total liabilities | 294,779 | 327,324 | 10,398 | 9,453 | 79,760 | 77,273 | 18,531 | 17,382 | 0 | 0 | 403,468 | 431,432 |
| In € thousand | 1–6/2018 | 1–6/2017 | Index |
|---|---|---|---|
| Cost of goods and material | 179,263 | 192,231 | 93 |
| Cost of services | 121,363 | 120,540 | 101 |
| Employee benefit cost | 184,528 | 173,986 | 106 |
| Amortisation and depreciation | 55,471 | 53,201 | 104 |
| Inventory write-off and allowances | 9,445 | 7,730 | 122 |
| Receivables impairment and write-off | 573 | 1,209 | 47 |
| Formation of provisions for lawsuits | 44 | 0 | |
| Other operating expenses | 18,368 | 17,463 | 105 |
| Total costs | 569,055 | 566,360 | 100 |
| Change in the value of inventories of products and work in progress |
-18,057 | -30,266 | 60 |
| Total | 550,998 | 536,094 | 103 |
| In € thousand | 1–6/2018 | 1–6/2017 | Index |
|---|---|---|---|
| Gross wages and salaries and continued pay | 142,168 | 135,064 | 105 |
| Social security contributions | 12,180 | 10,083 | 121 |
| Pension insurance contributions | 18,952 | 18,907 | 100 |
| Payroll tax | 514 | 546 | 94 |
| Post-employment benefits and other non-current employee benefits |
2,409 | 2,388 | 101 |
| Other employee benefits cost | 8,305 | 6,998 | 119 |
| Total employee benefit costs | 184,528 | 173,986 | 106 |
| In € thousand | 1–6/2018 | 1–6/2017 | Index |
|---|---|---|---|
| Grants and assistance for humanitarian and other purposes | 859 | 814 | 106 |
| Environmental protection expenses | 2,128 | 2,000 | 106 |
| Other taxes and levies | 12,829 | 12,279 | 104 |
| Loss on sale of property, plant and equipment and intangible assets |
635 | 185 | 343 |
| Other expenses | 1,917 | 2,185 | 88 |
| Total other operating expenses | 18,368 | 17,463 | 105 |
Other taxes and levies include taxes (claw-back and similar) that have recently been imposed in certain markets, where the Krka Group operates.
| In € thousand | 1–6/2018 | 1–6/2017 | Index |
|---|---|---|---|
| Interest income | 229 | 268 | 85 |
| Gains on disposal of available-for-sale financial assets | 0 | 2 | 0 |
| Financial instruments income | 2,265 | 10,144 | 22 |
| – realised income | 1,294 | 0 | |
| – change in fair value | 971 | 10,144 | 10 |
| Income from dividends and other shares of the profit | 1 | 1 | 100 |
| Other financial income | 58 | 0 | |
| Total financial income | 2,553 | 10,415 | 25 |
| Net foreign exchange differences | -13,906 | -9,587 | 145 |
| Interest expenses | -15 | -155 | 10 |
| Financial instruments expenses | -2,278 | -13,150 | 17 |
| – incurred expenses | -2,278 | -25,820 | 9 |
| – change in fair value | 0 | 12,670 | 0 |
| Other financial expenses | -1,243 | -823 | 151 |
| Total financial expenses | -17,442 | -23,715 | 74 |
| Net financial result | -14,889 | -13,300 | 112 |
Income tax amounted to €19,602 thousand, or 16.3% of profit before tax. Together with deferred tax of €-770 thousand, total income tax expenses in
Income tax €18,832 thousand
the income statement equalled €18,832 thousand. The effective tax rate was 15.6%.
| In € thousand | 30 June 2018 | 31 Dec 2017 | Index |
|---|---|---|---|
| Land | 40,048 | 38,863 | 103 |
| Buildings | 395,267 | 409,682 | 96 |
| Equipment | 352,402 | 375,115 | 94 |
| Property, plant and equipment being acquired | 55,704 | 36,650 | 152 |
| Advances for property, plant and equipment | 4,437 | 4,532 | 98 |
| Total property, plant and equipment | 847,858 | 864,842 | 98 |
The value of property, plant and equipment accounted for good 43% of the Krka Group's balance sheet total. Please see the chapter 'Investments' in the Business Report for details on
Krka's major investments.
| In € thousand | 30 June 2018 | 31 Dec 2017 | Index |
|---|---|---|---|
| Goodwill | 42,644 | 42,644 | 100 |
| Trademark | 37,739 | 38,163 | 99 |
| Concessions, patents, licences and similar rights | 24,909 | 26,644 | 93 |
| Intangible assets being acquired | 3,980 | 3,541 | 112 |
| Total intangible assets | 109,272 | 110,992 | 98 |
| In € thousand | 30 June 2018 | 31 Dec 2017 | Index |
|---|---|---|---|
| Non-current loans | 10,978 | 9,543 | 115 |
| – loans to others | 10,978 | 9,543 | 115 |
| Current loans | 40,609 | 1,426 | 2.848 |
| – portion of non-current loan maturing next year | 491 | 1,330 | 37 |
| – loans to others | 40,118 | 94 | 42,679 |
| – current interest receivable | 0 | 2 | 0 |
| Total loans | 51,587 | 10,969 | 470 |
Non-current loans constitute 21% of total loans.
Non-current loans to other entities comprise noncurrent loans that are extended by the Krka Group in accordance with internal acts to its employees. These loans are used for the purchase or renovation of housing facilities.
Non-current loans to other entities comprise bank deposits of the controlling company with a maturity exceeding 90 days in total of €40,000 thousand.
| In € thousand | 30 June 2018 | 31 Dec 2017 | Index |
|---|---|---|---|
| Non-current investments | 9,600 | 8,815 | 109 |
| – available-for-sale financial assets | 9,600 | 8,815 | 109 |
| Current investments including derivative financial instruments |
5,665 | 0 | |
| – derivative financial instruments | 686 | 0 | |
| – other current investments | 4,979 | 0 | |
| Total investments | 15,265 | 8,815 | 173 |
Available-for-sale financial assets comprised shares and interests in companies in Slovenia in total of €810 thousand, and €8,790 thousand of investments in shares and interests in companies abroad.
| In € thousand | 30 June 2018 | 31 Dec 2017 | Index |
|---|---|---|---|
| Material | 123,329 | 119,775 | 103 |
| Work in progress | 89,106 | 77,743 | 115 |
| Products | 104,850 | 102,211 | 103 |
| Merchandise | 11,328 | 8,070 | 140 |
| Advances for inventories | 5,609 | 2,872 | 195 |
| Total inventories | 334,222 | 310,671 | 108 |
| In € thousand | 30 June 2018 | 31 Dec 2017 | Index |
|---|---|---|---|
| Current trade receivables | 470,003 | 500,735 | 94 |
| Other current receivables | 27,636 | 27,302 | 101 |
| Total receivables | 497,639 | 528,037 | 94 |
Bank balances comprise also bank deposits of controlling company with a maturity to 90 days in total of €13,470 thousand.
| In € thousand | 30 June 2018 | 31 Dec 2017 | Index |
|---|---|---|---|
| Share capital | 54,732 | 54,732 | 100 |
| Treasury shares | -46,536 | -40,588 | 115 |
| Reserves | 109,434 | 111,477 | 98 |
| – reserves for treasury shares | 46,536 | 40,588 | 115 |
| – share premium | 105,897 | 105,897 | 100 |
| – legal reserves | 14,990 | 14,990 | 100 |
| – statutory reserves | 30,000 | 30,000 | 100 |
| – fair value reserves | -11,889 | -12,523 | 95 |
| – translation reserves | -76,100 | -67,475 | 113 |
| Retained earnings | 1,456,941 | 1,361,107 | 107 |
| Total equity holders of the controlling company | 1,574,571 | 1,486,728 | 106 |
| Non-controlling interests within equity | 3,311 | 971 | 341 |
| Total equity | 1,577,882 | 1,487,699 | 106 |
| In € thousand | 30 June 2018 | 31 Dec 2017 | Index |
|---|---|---|---|
| Provisions for lawsuits | 4,286 | 4,507 | 95 |
| Provisions for post-employment benefits and other non-current employee benefits |
94,124 | 92,710 | 102 |
| Other provisions | 1,026 | 858 | 120 |
| Total provisions | 99,436 | 98,075 | 101 |
| In € thousand | 30 June 2018 | 31 Dec 2017 | Index |
|---|---|---|---|
| The project 'Production of pharmaceuticals in the new Notol 2 | |||
| plant' is partly funded by the European Regional Development | 1,984 | 2,117 | 94 |
| Fund and budget of the Republic of Slovenia. | |||
| Grants from the budget for Dolenjske and Šmarješke Toplice | 3,715 | 3,785 | 98 |
| health resorts and for Golf Grad Otočec | |||
| Grants from the European Regional Development Fund for | 197 | 242 | 81 |
| developing new technologies (a FBD project) | |||
| Grants from the European Regional Development Fund for | 8 | 10 | 80 |
| setting up information and technology solutions system GEN-I | |||
| Grants from the European Regional Development Fund for | 4,437 | 4,752 | 93 |
| Development Centres of the Slovene Economy | |||
| Subsidy for acquisition of electric vehicles | 6 | 7 | 86 |
| Property, plant and equipment received for free | 27 | 31 | 87 |
| Emission coupons | 1 | 9 | 11 |
| Total deferred revenues | 10,375 | 10,953 | 95 |
The Development Centres of the Slovene Economy and FBD projects are partly funded by the European Union from the European Regional Development Fund. The projects are 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.
| In € thousand | 30 June 2018 | 31 Dec 2017 | Index |
|---|---|---|---|
| Payables to domestic suppliers | 41,421 | 43,256 | 96 |
| Payables to foreign suppliers | 68,057 | 61,790 | 110 |
| Payables from advances | 942 | 3,294 | 29 |
| Total trade payables | 110,420 | 108,340 | 102 |
| In € thousand | 30 June 2018 | 31 Dec 2017 | Index |
|---|---|---|---|
| Accrued contractual discounts on products sold | 90,491 | 125,680 | 72 |
| Payables to employees – gross salaries, other receipts and charges |
46,879 | 38,551 | 122 |
| Derivative financial instruments | 0 | 284 | 0 |
| Other | 27,166 | 21,253 | 128 |
| Total other current liabilities | 164,536 | 185,768 | 89 |
| In € thousand | 30 June 2018 | 31 Dec 2017 | Index |
|---|---|---|---|
| Guarantees issued | 17,520 | 18,396 | 95 |
| Other | 620 | 620 | 100 |
| Total contingent liabilities | 18,140 | 19,016 | 95 |
| 30 June 2018 | 31 Dec 2017 | |||
|---|---|---|---|---|
| Carrying | Carrying | |||
| In € thousand | amount | Fair value | amount | Fair value |
| Non-current loans | 10,978 | 10,978 | 9,543 | 9,543 |
| Available-for-sale financial assets | 9,600 | 9,600 | 8,815 | 8,815 |
| Current loans | 40,609 | 40,609 | 1,426 | 1,426 |
| Current investments | 5,665 | 5,665 | 0 | 0 |
| – derivative financial instruments | 686 | 686 | 0 | 0 |
| – other investments | 4,979 | 4,979 | 0 | 0 |
| Trade receivables | 470,003 | 470,003 | 500,735 | 500,735 |
| Cash and cash equivalents | 86,172 | 86,172 | 45,948 | 45,948 |
| Current borrowings | -1 | -1 | 0 | 0 |
| Trade payables and other liabilities excluding amounts owed to the state, to employees and advances |
-218,647 | -218,647 | -241,876 | -241,876 |
| Other current liabilities | 0 | 0 | -284 | -284 |
| – derivative financial instruments | 0 | 0 | -284 | -284 |
| Total | 404,379 | 404,379 | 324,307 | 324,307 |
In terms of fair value, investments are classified into three levels:
The fair value of securities held for trading is computed on the basis of the stock exchange quotation of the respective securities as at reporting date, and it is not decreased by any costs that may arise upon the sale or purchase of securities.
| 30 June 2018 | 31 Dec 2017 | |||||||
|---|---|---|---|---|---|---|---|---|
| In € thousand | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total |
| Assets at fair value | ||||||||
| Available-for-sale financial assets | 8,220 | 0 | 1,380 | 9,600 | 7,434 | 0 | 1,381 | 8,815 |
| Derivative financial instruments | 0 | 0 | 686 | 686 | 0 | 0 | 0 | 0 |
| Other investments | 0 | 0 | 4,979 | 4,979 | 0 | 0 | 0 | 0 |
| Total assets at fair value | 8,220 | 0 | 7,045 | 15,265 | 7,434 | 0 | 1,381 | 8,815 |
| Assets for which fair value is disclosed |
||||||||
| Non-current loans | 0 | 0 | 10,978 | 10,978 | 0 | 0 | 9,543 | 9,543 |
| Current loans | 0 | 0 | 40,609 | 40,609 | 0 | 0 | 1,426 | 1,426 |
| Trade receivables | 0 | 0 | 470,003 | 470,003 | 0 | 0 | 500,735 | 500,735 |
| Cash and cash equivalents | 0 | 0 | 86,172 | 86,172 | 0 | 0 | 45,948 | 45,948 |
| Total assets for which fair value is disclosed |
0 | 0 | 607,762 | 607,762 | 0 | 0 | 557,652 | 557,652 |
| Total | 8,220 | 0 | 614,807 | 623,027 | 7,434 | 0 | 559,033 | 566,467 |
| 30 June 2018 | 31 Dec 2017 | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| In € thousand | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |
| Liabilities at fair value | |||||||||
| Derivative financial instruments | 0 | 0 | 0 | 0 | 0 | 0 | 284 | 284 | |
| Total liabilities at fair value | 0 | 0 | 0 | 0 | 0 | 0 | 284 | 284 | |
| Liabilities for which fair value is disclosed |
|||||||||
| Current borrowings | 0 | 0 | 1 | 1 | 0 | 0 | 0 | 0 | |
| Trade payables and other liabilities excluding amounts owed to the state, to employees and advances |
0 | 0 | 218,647 | 218,647 | 0 | 0 | 241,876 | 241,876 | |
| Total liabilities for which fair value is disclosed |
0 | 0 | 218,648 | 218,648 | 0 | 0 | 241,876 | 241,876 | |
| Total | 0 | 0 | 218,648 | 218,648 | 0 | 0 | 242,160 | 242,160 |
| In € thousand | 30 June 2018 | 31 Dec 2017 | Index |
|---|---|---|---|
| Assets | |||
| Property, plant and equipment | 604,904 | 611,341 | 99 |
| Intangible assets | 27,157 | 28,299 | 96 |
| Investments in subsidiaries | 325,413 | 321,898 | 101 |
| Trade receivables from subsidiaries | 26,812 | 38,644 | 69 |
| Loans | 14,382 | 11,187 | 129 |
| Investments | 9,600 | 8,814 | 109 |
| Deferred tax assets | 12,007 | 12,342 | 97 |
| Other non-current assets | 76 | 70 | 109 |
| Total non-current assets | 1,020,351 | 1,032,595 | 99 |
| Assets held for sale | 41 | 41 | 100 |
| Inventories | 281,598 | 264,174 | 107 |
| Trade receivables | 449,735 | 456,265 | 99 |
| Other receivables | 14,304 | 15,395 | 93 |
| Loans | 73,947 | 34,895 | 212 |
| Investments | 686 | 0 | |
| Cash and cash equivalents | 68,415 | 34,117 | 201 |
| Total current assets | 888,726 | 804,887 | 110 |
| Total assets | 1,909,077 | 1,837,482 | 104 |
| Equity | |||
| Share capital | 54,732 | 54,732 | 100 |
| Treasury shares | -46,536 | -40,588 | 115 |
| Reserves | 187,363 | 180,779 | 104 |
| Retained earnings | 1,384,900 | 1,298,402 | 107 |
| Total equity | 1,580,459 | 1,493,325 | 106 |
| Liabilities | |||
| Provisions | 86,959 | 85,503 | 102 |
| Deferred revenues | 2,217 | 2,408 | 92 |
| Total non-current liabilities | 89,176 | 87,911 | 101 |
| Trade payables | 152,298 | 159,119 | 96 |
| Borrowings | 17,029 | 27,525 | 62 |
| Income tax payable | 5,554 | 15,127 | 37 |
| Other current liabilities | 64,561 | 54,475 | 119 |
| Total current liabilities | 239,442 | 256,246 | 93 |
| Total liabilities | 328,618 | 344,157 | 95 |
| Total equity and liabilities | 1,909,077 | 1,837,482 | 104 |
| In € thousand | 1–6/2018 | 1–6/2017 | Index |
|---|---|---|---|
| Revenues | 631,086 | 615,010 | 103 |
| Costs of goods sold | -264,539 | -260,069 | 102 |
| Gross profit | 366,547 | 354,941 | 103 |
| Other operating income | 1,462 | 2,183 | 67 |
| Selling and distribution expenses | -149,423 | -147,247 | 101 |
| R&D expenses | -66,974 | -64,438 | 104 |
| General and administrative expenses | -33,640 | -32,606 | 103 |
| Operating profit | 117,972 | 112,833 | 105 |
| Financial income | 4,766 | 11,586 | 41 |
| Financial expenses | -16,667 | -24,482 | 68 |
| Net financial result | -11,901 | -12,896 | 92 |
| Profit before tax | 106,071 | 99,937 | 106 |
| Income tax | -13,625 | -16,364 | 83 |
| Net profit | 92,446 | 83,573 | 111 |
| Basic earnings per share (in €) | 2.89 | 2.59 | 111 |
| Diluted earnings per share ** (in €) | 2.89 | 2.59 | 111 |
* Net profit for the period/Average number of shares issued in the period exclusive of treasury shares.
** All shares issued by the company are ordinary shares, hence the diluted earnings per share ratio equalled the basic earnings per share.
| In € thousand | 1–6/2018 | 1–6/2017 | Index |
|---|---|---|---|
| Net profit | 92,446 | 83,573 | 111 |
| Other comprehensive income for the period | |||
| Other comprehensive income for the period reclassified to profit or loss at a future date |
|||
| Change in fair value of available-for-sale financial assets | 785 | -2,462 | |
| Deferred tax effect | -149 | 468 | |
| Net other comprehensive income for the period reclassified to profit or loss at a future date |
636 | -1,994 | |
| Total other comprehensive income for the period (net of tax) | 636 | -1,994 | |
| Total comprehensive income for the period (net of tax) | 93,082 | 81,579 | 114 |
| Reserves | Retained earnings | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Reserves for |
Other | ||||||||||
| In € thousand | Share capital |
Treasury shares |
treasury shares |
Share premium |
Legal reserves |
Statutory reserves |
Fair value reserve |
profit reserves |
Retained earnings |
Profit for the period |
Total equity |
| Balance at 1 Jan 2018 | 54,732 | -40,588 | 40,588 | 105,897 | 14,990 | 30,000 | -10,696 | 1,129,172 | 26,398 | 142,832 | 1,493,325 |
| Net profit | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 92,446 | 92,446 |
| Total other comprehensive income for the period (net of tax) |
0 | 0 | 0 | 0 | 0 | 0 | 636 | 0 | 0 | 0 | 636 |
| Total comprehensive income for the period (net of tax) |
0 | 0 | 0 | 0 | 0 | 0 | 636 | 0 | 0 | 92,446 | 93,082 |
| Transactions with owners recognised in equity |
|||||||||||
| Transfer of previous period's profit to retained earnings |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 142,832 | -142,832 | 0 |
| Purchase of treasury shares | 0 | -5,948 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | -5,948 |
| Formation of reserves for treasury shares | 0 | 0 | 5,948 | 0 | 0 | 0 | 0 | 0 | 0 | -5,948 | 0 |
| Total transactions with owners recognised in equity |
0 | -5,948 | 5,948 | 0 | 0 | 0 | 0 | 0 | 142,832 | -148,780 | -5,948 |
| Balance at 30 June 2018 | 54,732 | -46,536 | 46,536 | 105,897 | 14,990 | 30,000 | -10,060 | 1,129,172 | 169,230 | 86,498 | 1,580,459 |
| Reserves | Retained earnings | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Reserves | |||||||||||
| for | Other | ||||||||||
| Share | Treasury | treasury | Share | Legal | Statutory | Fair value | profit | Retained | Profit for | Total | |
| In € thousand | capital | shares | shares | premium | reserves | reserves | reserve | reserves | earnings | the period | equity |
| Balance at 1 Jan 2017 | 54,732 | -29,690 | 29,690 | 105,897 | 14,990 | 30,000 | -9,994 | 1,102,165 | 49,405 | 93,253 | 1,440,448 |
| Net profit | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 83,573 | 83,573 |
| Total other comprehensive income for the period (net of tax) |
0 | 0 | 0 | 0 | 0 | 0 | -1,994 | 0 | 0 | 0 | -1,994 |
| Total comprehensive income for the period (net of tax) |
0 | 0 | 0 | 0 | 0 | 0 | -1,994 | 0 | 0 | 83,573 | 81,579 |
| Transactions with owners recognised in equity |
|||||||||||
| Transfer of previous period's profit to retained earnings |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 93,253 | -93,253 | 0 |
| Purchase of treasury shares | 0 | -3,503 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | -3,503 |
| Formation of reserves for treasury shares | 0 | 0 | 3,503 | 0 | 0 | 0 | 0 | 0 | 0 | -3,503 | 0 |
| Total transactions with owners recognised in equity |
0 | -3,503 | 3,503 | 0 | 0 | 0 | 0 | 0 | 93,253 | -96,756 | -3,503 |
| Balance at 30 June 2017 | 54,732 | -33,193 | 33,193 | 105,897 | 14,990 | 30,000 | -11,988 | 1,102,165 | 142,658 | 80,070 | 1,518,524 |
| Statement of cash flows of Krka, d. d., Novo mesto | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| ---------------------------------------------------- | -- | -- | -- | -- | -- | -- | -- | -- | -- |
| In € thousand | 1–6/2018 | 1–6/2017 |
|---|---|---|
| CASH FLOWS FROM OPERATING ACTIVITIES | ||
| Net profit | 92,446 | 83,573 |
| Adjustments for: | 54,624 | 59,128 |
| – amortisation/depreciation | 41,537 | 40,166 |
| – foreign exchange differences | 764 | -171 |
| – investment income | -4,790 | -11,728 |
| – investment expenses | 2,525 | 13,267 |
| – interest expenses and other financial expenses | 963 | 1,230 |
| – income tax | 13,625 | 16,364 |
| Operating profit before changes in net operating current assets | 147,070 | 142,701 |
| Change in trade receivables | 18,460 | -8,595 |
| Change in inventories | -17,423 | -18,161 |
| Change in trade payables | -8,761 | 7,074 |
| Change in provisions | 685 | 40 |
| Change in deferred revenues | -191 | -195 |
| Change in other current liabilities | 10,370 | 1,599 |
| Income tax paid | -23,011 | 2,278 |
| Net cash from operating activities | 127,199 | 126,741 |
| CASH FLOWS FROM INVESTING ACTIVITIES | ||
| Interest received | 269 | 566 |
| Proceeds from sale of current investments | 0 | 2 |
| Dividends received | 959 | 1 |
| Proportionate profit of subsidiaries | 2,210 | 1,028 |
| Proceeds from sale of property, plant and equipment | 181 | 170 |
| Purchase of intangible assets | -1,592 | -2,182 |
| Purchase of property, plant and equipment | -30,795 | -38,134 |
| Acquisition of subsidiaries and a share of minority interest without obtained | ||
| assets | -3,515 | -951 |
| Refund of subsequent payments in subsidiaries | 0 | 237 |
| Non-current loans | -3,013 | -1,212 |
| Proceeds from repayment of non-current loans | 601 | 10,358 |
| Payments to acquire non-current investments | -9 | -20 |
| Proceeds from sale of non-current investments | 2 | 8 |
| Payments in connection with current investments and loans | -39,804 | -23,780 |
| Payments in connection with derivative financial instruments | -2,278 | -25,820 |
| Proceeds in connection with derivative financial instruments | 1,294 | 0 |
| Net cash from investing activities | -75,490 | -79,729 |
| CASH FLOWS FROM FINANCING ACTIVITIES | ||
| Interest paid | -220 | -587 |
| Payments in connection with current borrowings | -10,468 | -35,615 |
| Dividends and other profit shares paid | 0 | -91 |
| Purchase of treasury shares | -5,948 | -3,503 |
| Net cash used in financing activities | -16,636 | -39,796 |
| Net increase in cash and cash equivalents | 35,073 | 7,216 |
| Cash and cash equivalents at beginning of the year | 34,117 | 24,049 |
| Effect of exchange rate fluctuations on cash held | -775 | 95 |
| Net cash and cash equivalents at the end of the period | 68,415 | 31,360 |
| European Union | South-East Europe | East Europe | Other | Total | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| In € thousand | 1–6/2018 | 1–6/2017 | 1–6/2018 | 1–6/2017 | 1–6/2018 | 1–6/2017 | 1–6/2018 | 1–6/2017 | 1–6/2018 | 1–6/2017 |
| Revenues | 378,810 | 359,329 | 35,530 | 27,065 | 193,765 | 205,862 | 22,981 | 22,754 | 631,086 | 615,010 |
| Other operating income | 1,009 | 1,932 | 24 | 21 | 429 | 230 | 0 | 0 | 1,462 | 2,183 |
| Operating expenses | -313,835 | -305,508 | -24,351 | -20,756 | -161,582 | -163,975 | -14,808 | -14,121 | -514,576 | -504,360 |
| Operating profit | 65,984 | 55,753 | 11,203 | 6,330 | 32,612 | 42,117 | 8,173 | 8,633 | 117,972 | 112,833 |
| Interest income | 250 | 214 | 0 | 0 | 22 | 213 | 0 | 0 | 272 | 427 |
| Interest expenses | -146 | -560 | 0 | 0 | 0 | 0 | 0 | 0 | -146 | -560 |
| Net financial result | -1,210 | 2,127 | 712 | -37 | -11,643 | -14,932 | 240 | -54 | -11,901 | -12,896 |
| Income tax | -7,620 | -8,086 | -1,294 | -918 | -3,767 | -6,108 | -944 | -1,252 | -13,625 | -16,364 |
| Net profit | 57,154 | 49,794 | 10,621 | 5,375 | 17,202 | 21,077 | 7,469 | 7,327 | 92,446 | 83,573 |
| Investments | 34,337 | 44,289 | 0 | 0 | 0 | 0 | 0 | 0 | 34,337 | 44,289 |
| Depreciation | 28,024 | 26,511 | 906 | 796 | 9,502 | 9,842 | 371 | 175 | 38,803 | 37,324 |
| Amortisation | 1,641 | 1,661 | 154 | 125 | 839 | 951 | 100 | 105 | 2,734 | 2,842 |
| 30 June | 31 Dec | 30 June | 31 Dec | 30 June | 31 Dec | 30 June | 31 Dec | 30 June | 31 Dec | |
| 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | |
| Total assets | 1,375,423 | 1,299,639 | 45,483 | 41,563 | 469,206 | 485,553 | 18,965 | 10,727 | 1,909,077 | 1,837,482 |
| Total liabilities | 213,748 | 227,306 | 10,279 | 9,530 | 86,076 | 89,939 | 18,515 | 17,382 | 328,618 | 344,157 |
| In € thousand | 1–6/2018 | 1–6/2017 | Index |
|---|---|---|---|
| Cost of goods and material | 183,603 | 196,897 | 93 |
| Cost of services | 171,797 | 172,272 | 100 |
| Employee benefit cost | 114,970 | 103,337 | 111 |
| Amortisation and depreciation | 41,537 | 40,166 | 103 |
| Inventory write-off and allowances | 4,310 | 3,596 | 120 |
| Receivables impairment and write-off | 498 | -44 | |
| Other operating expenses | 12,339 | 11,375 | 108 |
| Total costs | 529,054 | 527,599 | 100 |
| Change in the value of inventories of products and work in | -14,478 | -23,239 | 62 |
| progress | |||
| Total | 514,576 | 504,360 | 102 |
| In € thousand | 1–6/2018 | 1–6/2017 | Index |
|---|---|---|---|
| Gross wages and salaries and continued pay | 89,474 | 81,202 | 110 |
| Social security contributions | 7,424 | 5,195 | 143 |
| Pension insurance contributions | 10,893 | 10,314 | 106 |
| Post-employment benefits and other non-current employee benefits |
2,179 | 2,129 | 102 |
| Other employee benefits cost | 5,000 | 4,497 | 111 |
| Total employee benefit costs | 114,970 | 103,337 | 111 |
| In € thousand | 1–6/2018 | 1–6/2017 | Index |
|---|---|---|---|
| Grants and assistance for humanitarian and other purposes | 677 | 575 | 118 |
| Environmental protection expenses | 1.388 | 1.284 | 108 |
| Other taxes and levies | 8.769 | 7.871 | 111 |
| Loss on sale of property, plant and equipment and intangible assets |
248 | 116 | 214 |
| Other expenses | 1.257 | 1.529 | 82 |
| Total other operating expenses | 12.339 | 11.375 | 108 |
Other taxes and levies include taxes (claw-back and similar) that have recently been imposed in several markets of Krka's operations.
| In € thousand | 1–6/2018 | 1–6/2017 | Index |
|---|---|---|---|
| Interest income | 272 | 427 | 64 |
| Gains on disposal of available-for-sale financial assets | 0 | 2 | 0 |
| Financial instruments income | 2,265 | 10,144 | 22 |
| – realised income | 1,294 | 0 | |
| – change in fair value | 971 | 10,144 | 10 |
| Income from dividends and other shares of the profit | 2,229 | 1,013 | 220 |
| – dividends | 1 | 1 | 100 |
| – profits of subsidiaries | 2,228 | 1,012 | 220 |
| Total financial income | 4,766 | 11,586 | 41 |
| Net foreign exchange differences | -13,426 | -10,004 | 134 |
| Interest expenses | -146 | -560 | 26 |
| Financial instruments expenses | -2,278 | -13,150 | 17 |
| – incurred expenses | -2,278 | -25,820 | 9 |
| – change in fair value | 0 | 12,670 | 0 |
| Other financial expenses | -817 | -768 | 106 |
| Total financial expenses | -16,667 | -24,482 | 68 |
| Net financial result | -11,901 | -12,896 | 92 |
Income tax amounted to €13,439 thousand, or 12.7% of profit before tax. Together with deferred tax of €186 thousand, total income tax expenses in
Income tax €13,625 thousand
the income statement equalled €13,625 thousand. The effective tax rate was 12.8%.
The value of property, plant and equipment represents just over 32% of the Company's total assets. Please see the chapter 'Investments' in the Business Report for details on Krka's major investments.
Intangible assets €27,157 thousand
| In € thousand | 30 June 2018 | 31 Dec 2017 | Index |
|---|---|---|---|
| Concessions, patents, licences and similar rights | 23,491 | 24,811 | 95 |
| Intangible assets being acquired | 3,666 | 3,488 | 105 |
| Total intangible assets | 27,157 | 28,299 | 96 |
Intangible assets comprise registration documentation for new pharmaceuticals and software.
| In € thousand | 30 June 2018 | 31 Dec 2017 | Index |
|---|---|---|---|
| Non-current loans | 14,382 | 11,187 | 129 |
| – loans to subsidiaries | 3,683 | 1,950 | 189 |
| – loans to others | 10,699 | 9,237 | 116 |
| Current loans | 73,947 | 34,895 | 212 |
| – portion of non-current loan maturing next year | 3,014 | 3,765 | 80 |
| – loans to subsidiaries | 30,865 | 30,981 | 100 |
| – loans to others | 40,012 | 96 | 41,679 |
| – current interest receivable | 56 | 53 | 106 |
| Total loans | 88,329 | 46,082 | 192 |
Non-current loans constitute 16% of total loans.
Non-current loans to others include loans that the Company extends in accordance with its internal acts to its employees for the purchase or renovation of housing facilities.
Non-current loans to other entities comprise bank deposits with a maturity exceeding 90 days in total of €40,000 thousand.
| In € thousand | 30 June 2018 | 31 Dec 2017 | Index |
|---|---|---|---|
| Non-current investments | 9,600 | 8,814 | 109 |
| – available-for-sale financial assets | 9,600 | 8,814 | 109 |
| Current investments including derivative financial instruments |
686 | 0 | |
| – derivative financial instruments | 686 | 0 | |
| Total investments | 10,286 | 8,814 | 117 |
Available-for-sale financial assets comprise shares and interests in companies in Slovenia in total of €810 thousand, and €8,790 thousand of investments in shares and interests in companies abroad.
| In € thousand | 30 June 2018 | 31 Dec 2017 | Index |
|---|---|---|---|
| Material | 114,821 | 111,925 | 103 |
| Work in progress | 84,263 | 76,063 | 111 |
| Products | 66,410 | 63,533 | 105 |
| Merchandise | 10,596 | 9,811 | 108 |
| Advances for inventories | 5,508 | 2,842 | 194 |
| Total inventories | 281,598 | 264,174 | 107 |
| In € thousand | 30 June 2018 | 31 Dec 2017 | Index |
|---|---|---|---|
| Current trade receivables | 449,735 | 456,265 | 99 |
| – current trade receivables from subsidiaries | 248,289 | 265,168 | 94 |
| – current trade receivables from customers other than subsidiaries |
201,446 | 191,097 | 105 |
| Other current receivables | 14,304 | 15,395 | 93 |
| Total receivables | 464,039 | 471,660 | 98 |
Bank balances comprise also bank deposits with a maturity to 90 days in total of €13,470 thousand.
| In € thousand | 30 June 2018 | 31 Dec 2017 | Index |
|---|---|---|---|
| Share capital | 54,732 | 54,732 | 100 |
| Treasury shares | -46,536 | -40,588 | 115 |
| Reserves: | 187,363 | 180,779 | 104 |
| – reserves for treasury shares | 46,536 | 40,588 | 115 |
| – share premium | 105,897 | 105,897 | 100 |
| – legal reserves | 14,990 | 14,990 | 100 |
| – statutory reserves | 30,000 | 30,000 | 100 |
| – fair value reserves | -10,060 | -10,696 | 94 |
| Retained earnings | 1,384,900 | 1,298,402 | 107 |
| Total equity | 1,580,459 | 1,493,325 | 106 |
| In € thousand | 30 June 2018 | 31 Dec 2017 | Index |
|---|---|---|---|
| Current borrowings | 17,029 | 27,525 | 62 |
| – borrowings from subsidiaries | 16,986 | 27,455 | 62 |
| – current interest payable | 43 | 70 | 61 |
| Total borrowings | 17,029 | 27,525 | 62 |
| In € thousand | 30 June 2018 | 31 Dec 2017 | Index |
|---|---|---|---|
| Provisions for lawsuits | 4,000 | 4,000 | 100 |
| Provisions for post-employment benefits and other non-current employee benefits |
82,959 | 81,503 | 102 |
| Total provisions | 86,959 | 85,503 | 102 |
| In € thousand | 30 June 2018 | 31 Dec 2017 | Index |
|---|---|---|---|
| The project Production of pharmaceuticals in the new Notol 2 | |||
| plant is partly funded by the European Regional Development | 1,984 | 2,117 | 94 |
| Fund and budget of the Republic of Slovenia. | |||
| Grants from the European Regional Development Fund for | |||
| developing new technologies (a FBD project) | 197 | 242 | 81 |
| Grants from the European Regional Development Fund for | |||
| setting up information and technology solutions system GEN-I | 8 | 10 | 80 |
| Subsidy for acquisition of electric vehicles | 6 | 7 | 86 |
| Property, plant and equipment received for free | 21 | 23 | 91 |
| Emission coupons | 1 | 9 | 11 |
| Total deferred revenues | 2,217 | 2,408 | 92 |
The FBD project is partly funded by the European Union from the European Regional Development Fund. It 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.
Trade payables €152,298 thousand
| In € thousand | 30 June 2018 | 31 Dec 2017 | Index |
|---|---|---|---|
| Payables to subsidiaries | 76,409 | 80,358 | 95 |
| Payables to domestic suppliers | 37,462 | 37,900 | 99 |
| Payables to foreign suppliers | 37,841 | 37,967 | 100 |
| Payables from advances | 586 | 2,894 | 20 |
| Total trade payables | 152,298 | 159,119 | 96 |
| In € thousand | 30 June 2018 | 31 Dec 2017 | Index |
|---|---|---|---|
| Accrued contractual discounts on products sold | 16,845 | 17,967 | 94 |
| Payables to employees – gross salaries, other receipts and charges |
35,948 | 29,605 | 121 |
| Derivative financial instruments | 0 | 284 | 0 |
| Other | 11,768 | 6,619 | 178 |
| Total other current liabilities | 64,561 | 54,475 | 119 |
| In € thousand | 30 June 2018 | 31 Dec 2017 | Index |
|---|---|---|---|
| Guarantees issued | 14,769 | 15,722 | 94 |
| Other | 620 | 620 | 100 |
| Total contingent liabilities | 15,389 | 16,342 | 94 |
| 30 June 2018 | 31 Dec 2017 | ||||
|---|---|---|---|---|---|
| Carrying | Carrying | ||||
| In € thousand | amount | Fair value | amount | Fair value | |
| Trade receivables from subsidiaries | 26,812 | 26,812 | 38,644 | 38,644 | |
| Non-current loans | 14,382 | 14,382 | 11,187 | 11,187 | |
| Available-for-sale financial assets | 9,600 | 9,600 | 8,814 | 8,814 | |
| Current loans | 73,947 | 73,947 | 34,895 | 34,895 | |
| Current investments | 686 | 686 | 0 | 0 | |
| – derivative financial instruments | 686 | 686 | 0 | 0 | |
| Trade receivables | 449,735 | 449,735 | 456,265 | 456,265 | |
| Cash and cash equivalents | 68,415 | 68,415 | 34,117 | 34,117 | |
| Current borrowings | -17,029 | -17,029 | -27,525 | -27,525 | |
| Trade payables and other liabilities excluding amounts owed to the state, to employees and advances |
-175,383 | -175,383 | -175,620 | -175,620 | |
| Other current liabilities | 0 | 0 | -284 | -284 | |
| – derivative financial instruments | 0 | 0 | -284 | -284 | |
| Total | 451,165 | 451,165 | 380,493 | 380,493 |
In terms of fair value, investments are classified into three levels:
The fair value of securities held for trading is computed on the basis of the stock exchange quotation of the respective securities as at reporting date, and it is not decreased by any costs that may arise upon the sale or purchase of securities.
| 30 June 2018 | 31 Dec 2017 | |||||||
|---|---|---|---|---|---|---|---|---|
| In € thousand | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total |
| Assets at fair value | ||||||||
| Available-for-sale financial assets | 8,220 | 0 | 1,380 | 9,600 | 7,434 | 0 | 1,380 | 8,814 |
| Derivative financial instruments | 686 | 0 | 686 | 0 | 0 | 0 | 0 | |
| Total assets at fair value | 8,906 | 0 | 1,380 | 10,286 | 7,434 | 0 | 1,380 | 8,814 |
| Assets for which fair value is disclosed |
||||||||
| Trade receivables from subsidiaries | 0 | 0 | 26,812 | 26,812 | 0 | 0 | 38,644 | 38,644 |
| Non-current loans | 0 | 0 | 14,382 | 14,382 | 0 | 0 | 11,187 | 11,187 |
| Current loans | 0 | 0 | 73,947 | 73,947 | 0 | 0 | 34,895 | 34,895 |
| Trade receivables | 0 | 0 | 449,735 | 449,735 | 0 | 0 | 456,265 | 456,265 |
| Cash and cash equivalents | 0 | 0 | 68,415 | 68,415 | 0 | 0 | 34,117 | 34,117 |
| Total assets for which fair value is disclosed |
0 | 0 | 633,291 | 633,291 | 0 | 0 | 575,108 | 575,108 |
| Total | 8,906 | 0 | 634,671 | 643,577 | 7,434 | 0 | 576,488 | 583,922 |
| 30 June 2018 | 31 Dec 2017 | |||||||
|---|---|---|---|---|---|---|---|---|
| In € thousand | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total |
| Liabilities at fair value | ||||||||
| Derivative financial instruments | 0 | 0 | 0 | 0 | 0 | 0 | 284 | 284 |
| Total liabilities at fair value | 0 | 0 | 0 | 0 | 0 | 0 | 284 | 284 |
| Liabilities for which fair value is disclosed |
||||||||
| Current borrowings | 0 | 0 | 17,029 | 17,029 | 0 | 0 | 27,525 | 27,525 |
| Trade payables and other liabilities excluding amounts owed to the state, to employees and advances |
0 | 0 | 175,383 | 175,383 | 0 | 0 | 175,620 | 175,620 |
| Total liabilities for which fair value is disclosed |
0 | 0 | 192,412 | 192,412 | 0 | 0 | 203,145 | 203,145 |
| Total | 0 | 0 | 192,412 | 192,412 | 0 | 0 | 203,429 | 203,429 |
The Management Board of Krka, d. d., Novo mesto hereby states that the condensed financial statements of Krka and the condensed consolidated financial statements of the Krka Group for the six months ended 30 June 2018 were drawn up so as to provide a true and fair view of the financial standing and operating results of Krka and the Krka Group. The condensed statements for the first two quarters of 2018 were drawn up using the same accounting principles as for the annual financial statements of Krka and the Krka Group for 2017.
The condensed interim financial statements for the period that ended on 30 June 2018 were drawn up pursuant to IAS 34 – Interim Financial Reporting,
Novo mesto, 13 July 2018
and must be read in conjunction with the annual financial statements drawn up for the business year that ended on 31 December 2017.
The Management Board is responsible for implementing measures to maintain the value of Krka and the Krka Group assets, and to prevent and detect frauds or other forms of misconduct.
The Management Board states that all transactions between in the Krka Group subsidiaries were executed according to the concluded purchase contracts, using market prices for products and services. No significant business transactions were concluded with any other related parties.
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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