Consolidated Statements of Financial Position

As at December 31, 2024 and 2023

(Amounts in EUR)

	As at December 31, 2024	As at December 31, 2023
ASSETS
Non-current assets
Property, plant and equipment	107,886,420	93,996,914
Right-of-use assets	5,861,080	6,968,226
Intangible assets	8,148,624	6,132,799
Investments in associates	11,437,680	8,619,917
Financial assets at fair value through profit or loss	5,633,778	3,891,069
Financial assets at fair value through other comprehensive income	4,750,000	3,500,000
Other non-current financial assets	7,464,489	5,781,505
Deferred tax assets	4,892,296	5,037,766
Total non-current assets	146,074,367	133,928,196
Current assets
Inventories	47,575,987	40,949,780
Trade and other receivables	57,575,083	50,711,961
Financial assets at fair value through profit or loss	76,588	3,330,005
Cash and cash equivalents	17,277,021	36,328,282
Total current assets	122,504,679	131,319,028
Total assets	268,579,046	265,247,224
EQUITY AND LIABILITIES
Equity
Issued capital	10,171,721	10,171,721
Treasury shares	(3,518,369)	(3,518,369)
Capital redemption reserve	1,767,700	1,767,700
Other reserves	6,549,596	5,045,273
Retained earnings	117,561,411	116,073,499
Total equity	132,531,059	130,049,824
Non-current liabilities
Lease liabilities	2,310,564	2,593,058
Provisions	1,167,299	986,817
Deferred tax liabilities	225,883	349,453
Borrowings	47,653,013	49,308,576
Total non-current liabilities	51,356,759	53,237,904
Current liabilities
Trade and other payables	47,968,488	43,296,169
Provisions	1,804,976	1,634,114
Current tax liabilities	11,957,629	10,227,056
Borrowings	23,100,125	26,802,157
Lease liabilities	1,939,009	1,809,000
Total current liabilities	86,770,227	83,768,496
Total liabilities	138,126,986	137,006,400
Total equity and liabilities	270,658,045	267,056,224

IGH GFI 2024 - Nekons. Nefinan. izvješće ENG .pdf ENG-Nekonsolidirani financijski izvještaji_IGH_2024_FINAL.pdf# FORM 10-K

ITEM 1. BUSINESS

General

Overview

Pactiv Evergreen Inc. (the "Company," "we," "us" or "our") is a leading manufacturer and distributor of fresh food and beverage packaging solutions in North America. The Company operates through three reportable segments: Foodservice, Fresh Produce Packaging, and Food Merchandising. The Company's products are essential for protecting and preserving food and beverages, extending shelf life, enhancing visual appeal, and providing convenience for consumers and food service providers. The Company's strategy is to leverage its scale, operational excellence, innovation and sustainability initiatives to be the partner of choice for its customers.

The Company's net sales in fiscal year 2023 were $5.4 billion. The Company has a broad customer base, including national and regional food retailers, food service distributors, food processors and growers. The Company's primary raw materials include polyethylene terephthalate ("PET"), high-density polyethylene ("HDPE"), polyvinylidene chloride ("PVDC"), ethylene vinyl acetate ("EVA"), and paperboard.

Strategy

The Company's strategy focuses on:

Leveraging Scale and Operational Excellence: The Company is a leading player in its key markets, benefiting from a broad manufacturing footprint and efficient distribution network. The Company continuously seeks to optimize its operations to improve efficiency, reduce costs, and enhance customer service.
Driving Innovation: The Company invests in product development to meet evolving customer needs and market trends, including demand for sustainable packaging solutions.
Focusing on Sustainability: The Company is committed to sustainability, investing in circular economy solutions, reducing its environmental footprint, and offering products made from recycled content and recyclable materials.
Customer Partnership: The Company aims to be the preferred packaging partner for its customers by offering high-quality products, reliable supply, and responsive service.

Products and Services

The Company designs, manufactures, and distributes a wide range of packaging products. The Company's products are used across the food and beverage industry, including for fresh produce, meats, poultry, seafood, baked goods, dairy products, ready-to-eat meals, and beverages. The Company's product portfolio includes:

Foodservice Packaging: This includes foam and plastic containers, clamshells, bowls, trays, and cups used by restaurants, catering companies, and institutions.
Fresh Produce Packaging: This includes clamshells, containers, bags, and trays designed to protect and preserve fresh fruits and vegetables.
Food Merchandising Packaging: This includes rigid and flexible plastic packaging, film, and trays used for packaging meat, poultry, seafood, and dairy products in grocery stores.

Markets and Customers

The Company's primary markets are North America, with a significant presence in the United States and Canada. The Company serves a diverse customer base across various channels, including:

Retail: Major grocery chains and independent food retailers.
Food Service: Restaurants, fast-food chains, caterers, and institutional food providers.
Food Processors: Companies that process and package food for sale to retailers and food service providers.
Growers: Agricultural producers who package their produce for sale.

Competition

The packaging industry is highly competitive. The Company competes with a number of other packaging manufacturers, both large and small, as well as some customers who may have in-house packaging capabilities. Competition is based on factors such as product quality, price, innovation, service, and sustainability.

Intellectual Property

The Company owns a portfolio of patents, trademarks, and trade secrets that protect its proprietary technologies and brand identity.

Seasonality

The Company's business experiences some seasonal variations, with higher demand in certain product categories during particular periods of the year. For example, demand for fresh produce packaging may increase during harvesting seasons.

Employees

As of December 31, 2023, the Company employed approximately 14,000 people.

Reportable Segments

The Company's business is organized into three reportable segments:

Foodservice

The Foodservice segment manufactures and distributes a wide array of food and beverage packaging products to the foodservice industry, including restaurants, catering companies, and institutions. Key products include foam and plastic containers, clamshells, bowls, trays, and cups.

Fresh Produce Packaging

The Fresh Produce Packaging segment manufactures and distributes a comprehensive range of packaging solutions for fresh fruits and vegetables. Products include clamshells, containers, bags, and trays designed to protect, preserve, and merchandise produce.

Food Merchandising

The Food Merchandising segment manufactures and distributes rigid and flexible plastic packaging, films, and trays for the packaging of meat, poultry, seafood, and dairy products.

Properties

The Company operates a network of manufacturing facilities and distribution centers across North America. These facilities are strategically located to serve the Company's customer base efficiently.

Legal Proceedings

Information regarding legal proceedings can be found in Note 15, "Commitments and Contingencies," to the Consolidated Financial Statements, which is incorporated herein by reference.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Critical Accounting Policies and Estimates

Management's Discussion and Analysis of Financial Condition and Results of Operations is discussed in Item 7 of this Annual Report on Form 10-K. The following discussion of critical accounting policies and estimates is incorporated herein by reference.

Business Overview

The Company is a leading manufacturer and distributor of fresh food and beverage packaging solutions in North America. The Company operates through three reportable segments: Foodservice, Fresh Produce Packaging, and Food Merchandising. The Company's products are essential for protecting and preserving food and beverages, extending shelf life, enhancing visual appeal, and providing convenience for consumers and food service providers. The Company's strategy is to leverage its scale, operational excellence, innovation and sustainability initiatives to be the partner of choice for its customers. The Company's net sales in fiscal year 2023 were $5.4 billion. The Company has a broad customer base, including national and regional food retailers, food service distributors, food processors and growers. The Company's primary raw materials include polyethylene terephthalate ("PET"), high-density polyethylene ("HDPE"), polyvinylidene chloride ("PVDC"), ethylene vinyl acetate ("EVA"), and paperboard.

Results of Operations

Fiscal Year Ended December 31, 2023 Compared to Fiscal Year Ended December 31, 2022

Net Sales

Net sales decreased by $184 million, or 3.3%, to $5.4 billion for the fiscal year ended December 31, 2023, from $5.6 billion for the fiscal year ended December 31, 2022. The decrease was primarily due to lower volumes across all segments, partially offset by favorable pricing and product mix.

Cost of Goods Sold

Cost of goods sold decreased by $125 million, or 2.3%, to $5.3 billion for the fiscal year ended December 31, 2023, from $5.4 billion for the fiscal year ended December 31, 2022. The decrease was primarily driven by lower raw material costs and reduced production volumes, partially offset by higher labor and manufacturing overhead costs.

Gross Profit

Gross profit decreased by $59 million, or 10.7%, to $490 million for the fiscal year ended December 31, 2023, from $549 million for the fiscal year ended December 31, 2022. The decrease in gross profit was primarily attributable to lower sales volumes, which resulted in less favorable absorption of fixed manufacturing overhead costs, partially offset by lower raw material costs and favorable pricing.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased by $39 million, or 12.0%, to $364 million for the fiscal year ended December 31, 2023, from $325 million for the fiscal year ended December 31, 2022. The increase was primarily due to higher personnel-related expenses, including increased investments in sales and marketing, and increased costs associated with operating as a standalone public company.

Interest Expense, Net

Interest expense, net increased by $167 million, or 150.5%, to $278 million for the fiscal year ended December 31, 2023, from $111 million for the fiscal year ended December 31, 2022. The increase was primarily due to higher interest rates on the Company's variable-rate debt and increased borrowings.

Other Income (Expense), Net

Other income (expense), net was an expense of $4 million for the fiscal year ended December 31, 2023, compared to income of $2 million for the fiscal year ended December 31, 2022. The change was primarily due to foreign currency translation adjustments.

Income Tax Expense

Income tax expense was $35 million for the fiscal year ended December 31, 2023, compared to $53 million for the fiscal year ended December 31, 2022. The decrease in income tax expense was primarily due to lower pre-tax income.

Net Income (Loss)

Net loss was $195 million for the fiscal year ended December 31, 2023, compared to net income of $42 million for the fiscal year ended December 31, 2022. The net loss for fiscal year 2023 was primarily attributable to the factors described above, including increased interest expense and the impact of lower sales volumes.

Segment Information

(In millions)	Fiscal Year Ended December 31, 2023	Fiscal Year Ended December 31, 2022
Net Sales:
Foodservice	$2,205	$2,300
Fresh Produce Packaging	$1,950	$2,025
Food Merchandising	$1,245	$1,275
Total Net Sales	$5,400	$5,600
Operating Income:
Foodservice	$85	$110
Fresh Produce Packaging	$105	$135
Food Merchandising	$50	$60
Corporate and Other	($184)	($156)
Total Operating Income	$56	$154

Fiscal Year Ended December 31, 2022 Compared to Fiscal Year Ended December 31, 2021

Net Sales

Net sales increased by $433 million, or 8.3%, to $5.6 billion for the fiscal year ended December 31, 2022, from $5.1 billion for the fiscal year ended December 31, 2021. The increase was primarily driven by favorable pricing and product mix, partially offset by slightly lower volumes.

Cost of Goods Sold

Cost of goods sold increased by $428 million, or 8.6%, to $5.4 billion for the fiscal year ended December 31, 2022, from $5.0 billion for the fiscal year ended December 31, 2021. The increase was primarily due to higher raw material costs and increased production volumes, partially offset by manufacturing efficiencies.

Gross Profit

Gross profit increased by $5 million, or 0.9%, to $549 million for the fiscal year ended December 31, 2022, from $544 million for the fiscal year ended December 31, 2021. The increase in gross profit was primarily attributable to favorable pricing and product mix, which more than offset the impact of higher raw material costs and slightly lower volumes.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased by $55 million, or 20.3%, to $325 million for the fiscal year ended December 31, 2022, from $270 million for the fiscal year ended December 31, 2021. The increase was primarily due to increased personnel-related expenses, increased investments in sales and marketing, and higher professional fees.

Interest Expense, Net

Interest expense, net increased by $31 million, or 38.8%, to $111 million for the fiscal year ended December 31, 2022, from $80 million for the fiscal year ended December 31, 2021. The increase was primarily due to higher interest rates on the Company's variable-rate debt and increased borrowings.

Other Income (Expense), Net

Other income (expense), net was income of $2 million for the fiscal year ended December 31, 2022, compared to an expense of $1 million for the fiscal year ended December 31, 2021. The change was primarily due to favorable foreign currency translation adjustments.

Income Tax Expense

Income tax expense was $53 million for the fiscal year ended December 31, 2022, compared to $47 million for the fiscal year ended December 31, 2021. The increase in income tax expense was primarily due to higher pre-tax income.

Net Income

Net income was $42 million for the fiscal year ended December 31, 2022, compared to $44 million for the fiscal year ended December 31, 2021. The slight decrease in net income was primarily attributable to the factors described above, including higher selling, general and administrative expenses and interest expense, which were partially offset by higher net sales and gross profit.

Segment Information

(In millions)	Fiscal Year Ended December 31, 2022	Fiscal Year Ended December 31, 2021
Net Sales:
Foodservice	$2,300	$2,100
Fresh Produce Packaging	$2,025	$1,800
Food Merchandising	$1,275	$1,200
Total Net Sales	$5,600	$5,100
Operating Income:
Foodservice	$110	$95
Fresh Produce Packaging	$135	$115
Food Merchandising	$60	$55
Corporate and Other	($156)	($111)
Total Operating Income	$154	$154

Liquidity and Capital Resources

Overview

The Company's primary sources of liquidity are cash generated from operations, existing credit facilities and, from time to time, borrowings under its revolving credit facility. The Company's primary uses of cash include working capital, capital expenditures, debt service, and other general corporate purposes.

Cash Flows

(In millions)	Fiscal Year Ended December 31, 2023	Fiscal Year Ended December 31, 2022	Fiscal Year Ended December 31, 2021
Net cash provided by (used in) operating activities	$(143)$	$291$	$385$
Net cash provided by (used in) investing activities	$(254)$	$(173)$	$(170)$
Net cash provided by (used in) financing activities	$353$	$(63)$	$(178)$
Net increase (decrease) in cash and cash equivalents	$56	$55	$37
Cash and cash equivalents at beginning of period	$108$	$53$	$16$
Cash and cash equivalents at end of period	$164	$108	$53

Operating Activities

Net cash used in operating activities was $143 million for the fiscal year ended December 31, 2023, compared to net cash provided by operating activities of $291 million for the fiscal year ended December 31, 2022. The decrease was primarily driven by lower net income and unfavorable changes in working capital, including an increase in accounts receivable and inventory.

Net cash provided by operating activities was $291 million for the fiscal year ended December 31, 2022, compared to $385 million for the fiscal year ended December 31, 2021. The decrease was primarily driven by unfavorable changes in working capital, particularly an increase in inventory and accounts receivable, partially offset by higher net income.

Investing Activities

Net cash used in investing activities was $254 million for the fiscal year ended December 31, 2023, primarily related to capital expenditures for property, plant, and equipment.

Net cash used in investing activities was $173 million for the fiscal year ended December 31, 2022, primarily related to capital expenditures for property, plant, and equipment.

Net cash used in investing activities was $170 million for the fiscal year ended December 31, 2021, primarily related to capital expenditures for property, plant, and equipment.

Financing Activities

Net cash provided by financing activities was $353 million for the fiscal year ended December 31, 2023. This was primarily due to net borrowings under the Company's revolving credit facility.

Net cash used in financing activities was $63 million for the fiscal year ended December 31, 2022. This was primarily due to repayments of debt, partially offset by net borrowings under the Company's revolving credit facility.

Net cash used in financing activities was $178 million for the fiscal year ended December 31, 2021. This was primarily due to repayments of debt.

Debt

As of December 31, 2023, the Company had total debt of $2.8 billion, consisting of $1.0 billion of senior secured term loans, $0.8 billion of senior unsecured notes, and $1.0 billion drawn under its revolving credit facility.

Capital Expenditures

The Company's capital expenditures are primarily for maintaining and upgrading its manufacturing facilities, expanding capacity, and investing in new technologies. For the fiscal years ended December 31, 2023, 2022, and 2021, capital expenditures were $254 million, $173 million, and $170 million, respectively.

Contractual Obligations and Commitments

As of December 31, 2023, the Company had significant contractual obligations and commitments, including:

Debt Obligations: Scheduled principal and interest payments on outstanding debt.
Lease Obligations: Payments under operating and finance leases for facilities and equipment.
Purchase Commitments: Commitments to purchase raw materials and other goods and services.

The following table summarizes the Company's significant contractual obligations as of December 31, 2023:

(In millions)	Less than 1 year	1-3 years	4-5 years	More than 5 years	Total
Long-term debt	$30$	$1,650$	$1,120$	$- $	$2,800$
Interest on long-term debt	$100$	$210$	$150$	$100$	$560$
Finance lease obligations	$20$	$40$	$30$	$10$	$100$
Operating lease obligations	$50$	$100$	$80$	$70$	$300$
Purchase obligations	$200$	$150$	$100$	$50$	$500$
Total	$400$	$2,150$	$1,480$	$230$	$4,260$

Note: Purchase obligations represent commitments for inventory and other goods and services that are non-cancelable.

Off-Balance Sheet Arrangements

The Company does not have any significant off-balance sheet arrangements that are reasonably likely to have a material current or future effect on its financial condition, results of operations, or cash flows.

Quantitative and Qualitative Disclosures About Market Risk

The Company is exposed to market risks, including interest rate risk and foreign currency exchange rate risk. The Company manages these risks through various hedging strategies and by maintaining appropriate levels of financial exposure.

Interest Rate Risk

The Company is exposed to interest rate risk primarily through its variable-rate debt obligations. Fluctuations in interest rates can impact the Company's interest expense and, consequently, its net income. As of December 31, 2023, the Company had $1.0 billion of variable-rate debt outstanding. A hypothetical 1% increase or decrease in interest rates would result in an approximate $10 million increase or decrease in annual interest expense.

Foreign Currency Exchange Rate Risk

The Company operates in various international markets and, therefore, is exposed to foreign currency exchange rate fluctuations. The Company's reporting currency is the U.S. dollar. Fluctuations in exchange rates between the U.S. dollar and other currencies in which the Company conducts business can impact the reported value of the Company's net assets, liabilities, revenues, and expenses. The Company does not engage in extensive hedging activities related to foreign currency risk.

Risk Factors

Investing in our securities involves a high degree of risk. You should carefully consider the following risk factors, in addition to the other information set forth in this Annual Report on Form 10-K, before deciding to invest in our securities. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties that we are not currently aware of or that we currently deem immaterial may also impair our business, financial condition, results of operations and prospects.

Risks Related to Our Business and Industry

We operate in a highly competitive industry and face intense competition.
Our industry is characterized by a large number of participants, including global, regional and local competitors, as well as some customers who may have in-house packaging capabilities. Competition is based on a variety of factors, including product quality, price, innovation, customer service and sustainability. We may not be able to compete effectively with our competitors, which could adversely affect our business, financial condition and results of operations.
Our business depends on the availability and cost of raw materials.
We rely on various raw materials, including polyethylene terephthalate ("PET"), high-density polyethylene ("HDPE"), polyvinylidene chloride ("PVDC"), ethylene vinyl acetate ("EVA"), and paperboard. The prices of these raw materials can be volatile and are subject to market fluctuations, geopolitical events, supply and demand dynamics and other factors. Increases in the cost of these raw materials could significantly impact our profitability and financial results.
We are subject to fluctuations in energy costs.
Our manufacturing operations are energy-intensive, and we are exposed to fluctuations in the price of natural gas, electricity and other energy sources. Increases in energy costs could significantly impact our operating expenses and profitability.
Changes in consumer preferences and demand for our products could adversely affect our business.
Consumer preferences regarding food packaging, including preferences for materials, sustainability and convenience, are constantly evolving. If we are unable to adapt to these changing preferences, demand for our products may decline, which could adversely affect our business, financial condition and results of operations.
Our business is subject to environmental regulations, which could increase our costs or restrict our operations.
We are subject to a variety of environmental laws and regulations in the jurisdictions in which we operate. These regulations govern emissions, waste disposal, use of chemicals and other environmental matters. Changes in these regulations, or the imposition of new regulations, could increase our compliance costs, restrict our operations or require us to invest in new pollution control equipment or processes, all of which could adversely affect our business, financial condition and results of operations.
We may be unable to innovate or keep pace with technological advancements in the packaging industry.
The packaging industry is characterized by ongoing innovation and technological advancements. If we are unable to develop and introduce new products or improve our existing products, we may lose market share to competitors who are more innovative.
Disruptions in our supply chain could adversely affect our ability to meet customer demand.
Our operations depend on a reliable supply chain for raw materials and components. Disruptions in the supply chain due to natural disasters, geopolitical events, labor disputes, transportation issues or other factors could impact our ability to procure necessary materials, which could adversely affect our production and our ability to meet customer demand.
Our customers' financial health and purchasing decisions could impact our sales.
Our customers include retailers, food service providers and food processors. The financial health of these customers, their purchasing decisions, and their ability to pay for our products could impact our sales and cash flow. Economic downturns or industry-specific challenges affecting our customers could lead to reduced demand for our products.
The COVID-19 pandemic or other public health crises could have a material adverse effect on our business.
The COVID-19 pandemic demonstrated the potential for public health crises to disrupt global supply chains, impact workforce availability, and alter consumer behavior. Future pandemics or other widespread public health emergencies could have similar or more severe impacts on our business, including our operations, supply chain, workforce, and demand for our products.
Sustainability initiatives and changing consumer and regulatory demands related to sustainability could negatively impact our business.
There is increasing pressure from consumers, regulators, and investors for companies to adopt more sustainable business practices and offer more environmentally friendly products. While we are committed to sustainability, the increasing focus on this area, including potential bans or restrictions on certain types of packaging, could create challenges for our business, require significant investments in new technologies or materials, and may impact the demand for our existing products. Failure to meet evolving sustainability expectations could also harm our reputation.

Risks Related to Our Financial Condition

We have significant levels of indebtedness, which could adversely affect our financial condition and our ability to meet our obligations.
We have a substantial amount of debt. Our substantial indebtedness could:
- make us more vulnerable to a downturn in our business or the economy;
require us to dedicate a significant portion of our cash flow from operations to payments on our indebtedness, reducing the availability of cash for other corporate purposes, including capital expenditures, acquisitions and research and development;
- limit our ability to obtain additional financing for working capital, capital expenditures, acquisitions or other purposes;
- limit our ability to adjust to changes in our business or industry; and
- place us at a disadvantage relative to competitors with less debt.
The terms of our debt agreements contain restrictive covenants that may limit our ability to pursue certain business strategies.
The agreements governing our indebtedness contain various covenants that restrict our ability to, among other things, incur additional indebtedness, make certain investments, sell assets, pay dividends and engage in certain other aspects of our business. These covenants could limit our ability to respond to market opportunities or pursue strategic initiatives.
We may be unable to generate sufficient cash flow from operations to service our debt obligations and fund our other commitments.
Our ability to make payments on our debt and to fund our other commitments depends on our future operating performance, which is subject to business and economic conditions and financial, business and other factors, many of which are beyond our control. If we are unable to generate sufficient cash flow, we may default on our debt obligations.

Risks Related to Our Corporate Structure and Ownership

We are a new public company, and our historical financial and operational information may not be representative of our future results.
We recently completed our initial public offering. Our historical financial and operational information may not be indicative of our future results of operations, financial condition, liquidity, capital resources and prospects, and it may be difficult for investors to assess our future prospects.
Our controlling stockholders may have conflicts of interest with us or our minority stockholders.
Following our initial public offering, our Sponsor will continue to beneficially own a significant portion of our outstanding capital stock. So long as our Sponsor maintains a significant ownership interest, it will have the ability to influence our business and affairs, including the composition of our board of directors and our strategic direction. The interests of our Sponsor may differ from the interests of our other stockholders.
The market price and trading volume of our common stock may be volatile.
The market price and trading volume of our common stock may be highly volatile and subject to wide fluctuations in response to, among other things, our operating results, future prospects, the performance of our competitors and other companies in our industry, macroeconomic and industry trends, analyst recommendations and trading activity by large investors.

Other Risks

We may be subject to litigation risks.
We may be subject to various legal proceedings and claims arising in the ordinary course of our business, including product liability claims, intellectual property disputes, employment-related claims and environmental litigation. The outcome of these matters can be uncertain and could result in significant liabilities, which could adversely affect our financial condition and results of operations.
The loss of key personnel could disrupt our operations.
Our success depends to a significant extent on the continued services of our key management and technical personnel. The unexpected loss of services of any of these individuals could have a material adverse effect on our business.

Properties

The Company operates a network of manufacturing facilities and distribution centers across North America. These facilities are strategically located to serve the Company's customer base efficiently. The Company continuously evaluates its facility footprint to optimize its operations and meet evolving market demands.

Legal Proceedings

Information regarding legal proceedings can be found in Note 15, "Commitments and Contingencies," to the Consolidated Financial Statements, which is incorporated herein by reference.

Market Information

Information regarding the market for our common stock, related stockholder matters and dividend policy can be found in Item 5, "Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities," which is incorporated herein by reference.

Recent Sales of Unregistered Securities and Use of Proceeds

This information is not applicable to our Company.

Exhibits and Financial Statement Schedules

See "Exhibits" and "Financial Statement Schedules" in Item 15 of this Annual Report on Form 10-K.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") should be read in conjunction with the Consolidated Financial Statements and the Notes thereto included in Item 8 of this Annual Report on Form 10-K.

Business Overview

Pactiv Evergreen Inc. (the "Company," "we," "us," or "our") is a leading manufacturer and distributor of fresh food and beverage packaging solutions in North America. The Company operates through three reportable segments: Foodservice, Fresh Produce Packaging, and Food Merchandising. The Company's products are essential for protecting and preserving food and beverages, extending shelf life, enhancing visual appeal, and providing convenience for consumers and food service providers. The Company's strategy is to leverage its scale, operational excellence, innovation and sustainability initiatives to be the partner of choice for its customers. The Company's net sales in fiscal year 2023 were $5.4 billion. The Company has a broad customer base, including national and regional food retailers, food service distributors, food processors and growers. The Company's primary raw materials include polyethylene terephthalate ("PET"), high-density polyethylene ("HDPE"), polyvinylidene chloride ("PVDC"), ethylene vinyl acetate ("EVA"), and paperboard.

Strategic Priorities

Our strategic priorities remain focused on driving profitable growth through operational excellence, innovation, and sustainability. We aim to:

Enhance Operational Efficiency: Continuously optimize our manufacturing and distribution processes to improve cost efficiency, reduce waste, and enhance product quality.
Drive Product Innovation: Invest in research and development to create new and improved packaging solutions that meet evolving customer needs and market trends, particularly in areas of sustainability and convenience.
Strengthen Sustainability Leadership: Accelerate our commitment to circular economy principles by increasing the use of recycled content, developing more recyclable products, and reducing our environmental footprint across our operations.
Deepen Customer Relationships: Expand our role as a strategic partner to our customers by providing superior service, reliable supply, and tailored solutions that contribute to their success.

Critical Accounting Policies and Estimates

The preparation of our Consolidated Financial Statements in accordance with U.S. generally accepted accounting principles ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. Critical accounting policies and estimates are those that are most important to the portrayal of our financial condition and results of operations and involve the most significant estimates and judgments. We believe that the following accounting policies are critical:

Revenue Recognition
We recognize revenue when control of the promised goods is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods. Revenue is typically recognized at a point in time when products are shipped to customers or delivered to their specified locations, as this is generally when control transfers. We assess the terms of our sales contracts to determine the point at which control transfers. Provisions for estimated returns, discounts, and allowances are recorded at the time of sale.

Inventory Valuation
Our inventories are stated at the lower of cost or net realizable value. Cost is determined using the weighted-average cost method. We regularly review our inventory for obsolescence or net realizable value declines. Adjustments are made to reduce the carrying value of inventory to its net realizable value when it is determined that the cost is not recoverable. Factors such as market demand, product obsolescence and changes in production costs are considered in assessing net realizable value.

Property, Plant, and Equipment and Depreciation
Property, plant, and equipment are recorded at cost less accumulated depreciation and amortization. Depreciation is recognized using the straight-line method over the estimated useful lives of the assets. Maintenance and repairs that do not extend the useful life of an asset are expensed as incurred. The estimated useful lives of our assets are based on historical experience, industry standards, and appraisals. Significant judgments are involved in determining useful lives and salvage values, which can impact depreciation expense and the carrying value of our assets.

Goodwill and Other Intangible Assets
Goodwill represents the excess of the purchase price over the fair value of net assets acquired in business combinations. Goodwill and other indefinite-lived intangible assets are not amortized but are tested for impairment at least annually, or more frequently if events or changes in circumstances indicate that the carrying value may not be recoverable. Impairment testing involves comparing the fair value of the reporting unit or intangible asset to its carrying amount. If the carrying amount exceeds fair value, an impairment loss is recognized. These valuations require significant judgment and involve assumptions about future cash flows, discount rates, and market multiples.

Accrued Liabilities and Contingent Obligations
We accrue liabilities for estimated future costs associated with product warranties, self-insured risks, environmental remediation, and litigation. Estimating these liabilities involves significant judgment and requires consideration of historical experience, available information, and management's best estimates of future outcomes. Contingent liabilities are recognized when it is probable that a liability has been incurred and the amount can be reasonably estimated.

Income Taxes
We recognize deferred tax assets and liabilities based on the differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases. We also assess the need for a valuation allowance for deferred tax assets if it is more likely than not that some portion or all of the deferred tax asset will not be realized. We record income tax expense based on the statutory tax rates, adjusted for any permanent differences and changes in deferred tax assets and liabilities. Changes in tax laws, tax rates, or our business operations could affect our income tax expense and the value of our deferred tax assets.

Results of Operations

Fiscal Year Ended December 31, 2023 Compared to Fiscal Year Ended December 31, 2022

Net Sales
Net sales decreased by $184 million, or 3.3%, to $5.4 billion for the fiscal year ended December 31, 2023, from $5.6 billion for the fiscal year ended December 31, 2022. The decrease was primarily due to lower volumes across all segments, partially offset by favorable pricing and product mix. The decline in volume was influenced by softer demand in certain end markets and ongoing efforts to optimize our product portfolio. Favorable pricing and product mix reflected our ability to pass through some input cost increases and a shift towards higher-value products in certain categories.

Cost of Goods Sold
Cost of goods sold decreased by $125 million, or 2.3%, to $5.3 billion for the fiscal year ended December 31, 2023, from $5.4 billion for the fiscal year ended December 31, 2022. The decrease was primarily driven by lower raw material costs and reduced production volumes, which directly correlated with the decrease in net sales. We experienced some relief in key raw material costs, particularly PET and paperboard, compared to the elevated levels in the prior year. However, these benefits were partially offset by higher labor and manufacturing overhead costs associated with inflation and investments in our facilities.

Gross Profit
Gross profit decreased by $59 million, or 10.7%, to $490 million for the fiscal year ended December 31, 2023, from $549 million for the fiscal year ended December 31, 2022. The decrease in gross profit was primarily attributable to lower sales volumes, which resulted in less favorable absorption of fixed manufacturing overhead costs. This impact was partially offset by lower raw material costs and favorable pricing initiatives. The deleveraging effect of lower volumes on our fixed cost base was a significant factor in the gross profit decline.

Selling, General and Administrative Expenses
Selling, general and administrative expenses increased by $39 million, or 12.0%, to $364 million for the fiscal year ended December 31, 2023, from $325 million for the fiscal year ended December 31, 2022. The increase was primarily due to higher personnel-related expenses, including increased investments in our sales and marketing teams to support growth initiatives and enhanced customer engagement. Additionally, we incurred increased costs associated with operating as a standalone public company, including higher compliance, reporting, and professional services expenses.

Interest Expense, Net
Interest expense, net increased significantly by $167 million, or 150.5%, to $278 million for the fiscal year ended December 31, 2023, from $111 million for the fiscal year ended December 31, 2022. The increase was primarily due to higher interest rates on our variable-rate debt obligations, reflecting the broader macroeconomic environment of rising interest rates. Furthermore, increased borrowings, particularly related to our working capital needs and capital expenditures, contributed to the rise in interest expense.

Other Income (Expense), Net
Other income (expense), net was an expense of $4 million for the fiscal year ended December 31, 2023, compared to income of $2 million for the fiscal year ended December 31, 2022. The change was primarily due to unfavorable foreign currency translation adjustments related to our international operations.

Income Tax Expense
Income tax expense was $35 million for the fiscal year ended December 31, 2023, compared to $53 million for the fiscal year ended December 31, 2022. The decrease in income tax expense was primarily due to lower pre-tax income. The effective tax rate for 2023 was impacted by various discrete items, including changes in state tax assessments and adjustments related to uncertain tax positions.

Net Income (Loss)
As a result of the factors discussed above, we reported a net loss of $195 million for the fiscal year ended December 31, 2023, compared to net income of $42 million for the fiscal year ended December 31, 2022. The net loss for fiscal year 2023 was primarily attributable to the combined impact of lower sales volumes leading to reduced gross profit, significantly higher interest expense due to increased debt and rising interest rates, and increased operating expenses associated with our public company status.

Segment Information

(In millions)	Fiscal Year Ended December 31, 2023	Fiscal Year Ended December 31, 2022
Net Sales:
Foodservice	$2,205	$2,300
Fresh Produce Packaging	$1,950	$2,025
Food Merchandising	$1,245	$1,275
Total Net Sales	$5,400	$5,600
Operating Income:
Foodservice	$85	$110
Fresh Produce Packaging	$105	$135
Food Merchandising	$50	$60
Corporate and Other	($184)	($156)
Total Operating Income	$56	$154

Segment Analysis

Foodservice: Net sales decreased due to lower volumes, reflecting softer demand in certain restaurant and institutional segments. Operating income decreased due to lower sales volume and the impact of higher overhead costs.
Fresh Produce Packaging: Net sales decreased, primarily driven by lower volumes. Operating income declined due to the impact of lower sales volumes and increased manufacturing costs.
Food Merchandising: Net sales decreased slightly, primarily due to lower volumes, offset by favorable pricing. Operating income decreased as a result of lower sales volumes and increased operating costs.
Corporate and Other: The increase in loss for Corporate and Other reflects higher general and administrative expenses, including those related to our transition to a public company, and increased interest expense.

Fiscal Year Ended December 31, 2022 Compared to Fiscal Year Ended December 31, 2021

Net Sales
Net sales increased by $433 million, or 8.3%, to $5.6 billion for the fiscal year ended December 31, 2022, from $5.1 billion for the fiscal year ended December 31, 2021. The increase was primarily driven by favorable pricing and product mix, which more than offset a slight decrease in volumes. The favorable pricing reflected our ability to pass on increased input costs, particularly for raw materials and transportation, to our customers. Lower volumes were generally attributed to a normalization of demand following the surge experienced in some categories during the prior year.

Cost of Goods Sold
Cost of goods sold increased by $428 million, or 8.6%, to $5.4 billion for the fiscal year ended December 31, 2022, from $5.0 billion for the fiscal year ended December 31, 2021. The increase was primarily due to higher raw material costs, particularly for PET, HDPE, and paperboard, as well as increased production volumes. We also experienced higher energy and transportation costs. These cost increases were partially mitigated by manufacturing efficiencies and cost-saving initiatives.

Gross Profit
Gross profit increased by $5 million, or 0.9%, to $549 million for the fiscal year ended December 31, 2022, from $544 million for the fiscal year ended December 31, 2021. The increase in gross profit was primarily attributable to favorable pricing and product mix, which more than offset the impact of higher raw material costs and slightly lower volumes. The ability to implement price increases effectively was crucial in maintaining gross profit margins in the face of rising input costs.

Selling, General and Administrative Expenses
Selling, general and administrative expenses increased by $55 million, or 20.3%, to $325 million for the fiscal year ended December 31, 2022, from $270 million for the fiscal year ended December 31, 2021. The increase was primarily due to increased personnel-related expenses, including higher salaries, benefits, and incentive compensation, as we invested in our workforce and management team. We also increased investments in sales and marketing to support our growth strategies and enhanced our customer relationships. Higher professional fees, including those related to our ongoing transformation and preparation for our initial public offering, also contributed to the increase.

Interest Expense, Net
Interest expense, net increased by $31 million, or 38.8%, to $111 million for the fiscal year ended December 31, 2022, from $80 million for the fiscal year ended December 31, 2021. The increase was primarily due to higher interest rates on our variable-rate debt obligations and increased borrowings under our credit facilities to support working capital needs and strategic initiatives.

Other Income (Expense), Net
Other income (expense), net was income of $2 million for the fiscal year ended December 31, 2022, compared to an expense of $1 million for the fiscal year ended December 31, 2021. The change was primarily due to favorable foreign currency translation adjustments related to our international operations.

Income Tax Expense
Income tax expense was $53 million for the fiscal year ended December 31, 2022, compared to $47 million for the fiscal year ended December 31, 2021. The increase in income tax expense was primarily due to higher pre-tax income. The effective tax rate for 2022 was influenced by changes in state tax assessments and other discrete items.

Net Income
Net income was $42 million for the fiscal year ended December 31, 2022, compared to $44 million for the fiscal year ended December 31, 2021. The slight decrease in net income was primarily attributable to the combined impact of higher selling, general and administrative expenses and higher interest expense, which were partially offset by higher net sales and gross profit.

Segment Information

(In millions)	Fiscal Year Ended December 31, 2022	Fiscal Year Ended December 31, 2021
Net Sales:
Foodservice	$2,300	$2,100
Fresh Produce Packaging	$2,025	$1,800
Food Merchandising	$1,275	$1,200
Total Net Sales	$5,600	$5,100
Operating Income:
Foodservice	$110	$95
Fresh Produce Packaging	$135	$115
Food Merchandising	$60	$55
Corporate and Other	($156)	($111)
Total Operating Income	$154	$154

Segment Analysis

Foodservice: Net sales increased due to favorable pricing and product mix, partially offset by slightly lower volumes. Operating income increased, reflecting the positive impact of pricing and volume, partially offset by increased operating costs.
Fresh Produce Packaging: Net sales increased, driven by favorable pricing and product mix, as well as higher volumes. Operating income increased, reflecting the benefits of higher sales and pricing, partially offset by increased costs.
Food Merchandising: Net sales increased due to favorable pricing and product mix, as well as higher volumes. Operating income increased, reflecting the positive impact of higher sales and pricing, partially offset by increased operating costs.
Corporate and Other: The increase in loss for Corporate and Other primarily reflects higher general and administrative expenses related to investments in our team and the ongoing transformation of our business, as well as higher interest expense.

Liquidity and Capital Resources

Overview
Our primary sources of liquidity are cash generated from operations, our existing revolving credit facility, and access to capital markets. Our primary uses of cash include working capital, capital expenditures, debt service, acquisitions, and other general corporate purposes. We regularly review our liquidity position and capital structure to ensure we have sufficient financial resources to meet our obligations and fund our strategic initiatives.

Cash Flows

(In millions)	Fiscal Year Ended December 31, 2023	Fiscal Year Ended December 31, 2022	Fiscal Year Ended December 31, 2021
Net cash provided by (used in) operating activities	$(143)$	$291$	$385$
Net cash provided by (used in) investing activities	$(254)$	$(173)$	$(170)$
Net cash provided by (used in) financing activities	$353$	$(63)$	$(178)$
Net increase (decrease) in cash and cash equivalents	$56	$55	$37
Cash and cash equivalents at beginning of period	$108$	$53$	$16$
Cash and cash equivalents at end of period	$164	$108	$53

Operating Activities
Net cash used in operating activities was $143 million for the fiscal year ended December 31, 2023, compared to net cash provided by operating activities of $291 million for the fiscal year ended December 31, 2022. The significant decrease in operating cash flow was primarily driven by lower net income and unfavorable changes in working capital. Specifically, we experienced an increase in accounts receivable due to higher sales in the latter part of the year and an increase in inventory levels as we adjusted to demand fluctuations and managed raw material availability.

Investing Activities
Net cash used in investing activities was $254 million for the fiscal year ended December 31, 2023, an increase from $173 million in the prior year. The increase was primarily related to higher capital expenditures, including investments in plant and equipment to enhance efficiency, expand capacity for certain product lines, and upgrade our technology infrastructure.

Net cash used in investing activities was $173 million for the fiscal year ended December 31, 2022, an increase from $170 million in the prior year. The primary use of cash was for capital expenditures related to maintaining and upgrading our manufacturing facilities and investing in new equipment to support production needs.

Financing Activities
Net cash provided by financing activities was $353 million for the fiscal year ended December 31, 2023. This was primarily due to net borrowings under our revolving credit facility, which we utilized to manage our working capital needs and fund our operations.

Net cash used in financing activities was $178 million for the fiscal year ended December 31, 2021. This was primarily due to repayments of debt.

Debt
As of December 31, 2023, our total debt was $2.8 billion. This consisted of $1.0 billion of senior secured term loans, $0.8 billion of senior unsecured notes, and $1.0 billion drawn under our revolving credit facility. Our ability to service our debt obligations is dependent on our future operating performance and cash flow generation.

Capital Expenditures
Our capital expenditures are primarily focused on maintaining and upgrading our manufacturing facilities, expanding capacity to meet growing customer demand, and investing in new technologies to improve efficiency and sustainability.

For the fiscal year ended December 31, 2023, capital expenditures were $254 million.
For the fiscal year ended December 31, 2022, capital expenditures were $173 million.
For the fiscal year ended December 31, 2021, capital expenditures were $170 million.

We expect to continue to invest in capital expenditures to support our long-term growth objectives and maintain our competitive position.

Contractual Obligations and Commitments
We have significant contractual obligations and commitments that extend into the future. These include debt service obligations, lease payments for our facilities and equipment, and commitments for raw material purchases and other services. The following table summarizes our significant contractual obligations as of December 31, 2023:

(In millions)	Less than 1 year	1-3 years	4-5 years	More than 5 years	Total
Long-term debt	$30$	$1,650$	$1,120$	$- $	$2,800$
Interest on long-term debt	$100$	$210$	$150$	$100$	$560$
Finance lease obligations	$20$	$40$	$30$	$10$	$100$
Operating lease obligations	$50$	$100$	$80$	$70$	$300$
Purchase obligations	$200$	$150$	$100$	$50$	$500$
Total	$400$	$2,150$	$1,480$	$230$	$4,260$

Note: Purchase obligations represent commitments for inventory and other goods and services that are non-cancelable.

Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that are reasonably likely to have a current or future material effect on our financial condition, results of operations, or cash flows.

Quantitative and Qualitative Disclosures About Market Risk
We are exposed to certain market risks, including interest rate risk and foreign currency exchange rate risk. We manage these risks through various strategies, including the use of financial instruments where appropriate.

Interest Rate Risk
Our primary exposure to interest rate risk relates to our variable-rate debt obligations. Fluctuations in interest rates can affect our interest expense and, consequently, our net income. As of December 31, 2023, we had approximately $1.0 billion of variable-rate debt outstanding under our revolving credit facility. A hypothetical 1% increase or decrease in interest rates would result in an approximate $10 million increase or decrease in annual interest expense, assuming the outstanding balances remain constant. We actively monitor our exposure to interest rate fluctuations and evaluate hedging strategies as market conditions warrant.

Foreign Currency Exchange Rate Risk
We conduct business in various countries, and our financial results can be affected by fluctuations in foreign currency exchange rates. Our reporting currency is the U.S. dollar. The value of our net assets, liabilities, revenues, and expenses can be impacted by changes in exchange rates between the U.S. dollar and other currencies in which we operate. We do not engage in extensive hedging activities related to foreign currency risk, as our exposure is generally managed through the natural matching of revenues and expenses in the same currencies.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The following information is presented in accordance with Item 7A of Form 10-K.

Market Risk Sensitivity Analysis

We are exposed to market risks, primarily related to fluctuations in interest rates and foreign currency exchange rates. We use a sensitivity analysis to assess the potential impact of these market risks on our financial condition.

Interest Rate Risk

Our primary exposure to interest rate risk relates to our variable-rate debt obligations. We have a revolving credit facility that bears interest at variable rates based on market benchmarks. As of December 31, 2023, we had $1.0 billion outstanding under this facility.

The following table presents the sensitivity of our interest expense to a hypothetical 100 basis point (1%) change in interest rates, assuming the outstanding debt balances and other variables remain constant:

(In millions)	Change in Interest Rate	Potential Change in Annual Interest Expense
Variable-rate debt as of Dec 31, 2023	+1.00%	+$10$
	-1.00%	-$10$

This analysis assumes that the outstanding debt balance remains constant. In reality, debt balances fluctuate based on our operating and financing activities.

Foreign Currency Exchange Rate Risk

We operate internationally and generate revenues and incur expenses in various foreign currencies. Our reporting currency is the U.S. dollar. Fluctuations in foreign currency exchange rates can affect the translated value of our foreign-denominated assets, liabilities, revenues, and expenses.

Our primary foreign currency exposure relates to our Canadian operations. The following table summarizes the potential impact on our net income of a hypothetical 10% appreciation or depreciation of the U.S. dollar against the Canadian dollar, assuming other factors remain constant. This analysis is based on our foreign currency transactions and balances outstanding as of December 31, 2023.

(In millions)	Currency Pair	Change in Exchange Rate	Potential Change in Net Income
Net effect of foreign currency fluctuations on net income	USD/CAD	+10% USD appreciation	$(1)$
		-10% USD depreciation	$+1$

This sensitivity analysis is hypothetical and assumes that exchange rates would change in a parallel manner and that such changes would only affect our reported earnings. It does not consider any adjustments we might make to our business activities in response to adverse currency movements. Our actual foreign currency gains or losses could differ from these hypothetical amounts.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Consolidated Financial Statements

Pactiv Evergreen Inc. and Subsidiaries

Consolidated Balance Sheets
(In millions, except for share data)

	December 31, 2023	December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$164$	$108$
Accounts receivable, net	$750$	$720$
Inventories	$480$	$460$
Prepaid expenses and other current assets	$80$	$70$
Total current assets	$1,474$	$1,358$
Property, plant, and equipment, net	$1,600$	$1,550$
Goodwill	$900$	$900$
Other intangible assets, net	$150$	$170$
Other assets	$100$	$90$
Total assets	$4,224$	$4,068$

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$450$	$430$
Accrued expenses	$300$	$280$
Current portion of long-term debt	$30$	$25$
Total current liabilities	$780$	$735$
Long-term debt, net of current portion	$2,770$	$2,750$
Other long-term liabilities	$150$	$140$
Deferred tax liabilities	$100$	$95$
Total liabilities	$3,800$	$3,720$

Commitments and contingencies (Note 15)

Stockholders' equity:
Preferred stock, $0.01 par value; authorized...	$- $	$- $
Common stock, $0.01 par value; authorized...	$1$	$1$
Additional paid-in capital	$500$	$490$
Retained earnings (deficit)	$(177)$	$23$
Accumulated other comprehensive income	$0$	$0$
Total stockholders' equity	$324$	$514$
Total liabilities and stockholders' equity	$4,224$	$4,068$

See Notes to Consolidated Financial Statements.

Pactiv Evergreen Inc. and Subsidiaries

Consolidated Statements of Operations
(In millions)

	Fiscal Year Ended December 31, 2023	Fiscal Year Ended December 31, 2022	Fiscal Year Ended December 31, 2021
Net sales	$5,400$	$5,600$	$5,100$
Cost of goods sold	$5,300$	$5,400$	$5,000$
Gross profit	$100$	$200$	$100$

Operating expenses:
Selling, general and administrative	$364$	$325$	$270$
Depreciation and amortization	$150$	$140$	$130$
Total operating expenses	$514$	$465$	$400$

Operating income (loss)	$(414)$	$(265)$	$(300)$

Other income (expense):
Interest expense, net	$278$	$111$	$80$
Other income (expense), net	$(4)$	$2$	$(1)$
Total other income (expense)	$274$	$113$	$79$

Income (loss) before income taxes	$(688)$	$(378)$	$(379)$
Income tax expense	$35$	$53$	$47$
Net income (loss)	$(723)$	$(431)$	$(426)$

Net income (loss) per share:
Basic	$(2.37)$	$(1.41)$	$(1.39)$
Diluted	$(2.37)$	$(1.41)$	$(1.39)$

See Notes to Consolidated Financial Statements.

Pactiv Evergreen Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss)
(In millions)

	Fiscal Year Ended December 31, 2023	Fiscal Year Ended December 31, 2022	Fiscal Year Ended December 31, 2021
Net income (loss)	$(723)$	$(431)$	$(426)$
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	$0$	$0$	$0$
Total other comprehensive income (loss)	$0$	$0$	$0$
Comprehensive income (loss)	$(723)$	$(431)$	$(426)$

See Notes to Consolidated Financial Statements.

Pactiv Evergreen Inc. and Subsidiaries

Consolidated Statements of Cash Flows
(In millions)

	Fiscal Year Ended December 31, 2023	Fiscal Year Ended December 31, 2022	Fiscal Year Ended December 31, 2021
Cash flows from operating activities:
Net income (loss)	$(723)$	$(431)$	$(426)$
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	$150$	$140$	$130$
Amortization of intangible assets	$20$	$20$	$20$
Stock-based compensation	$15$	$12$	$10$
Changes in operating assets and liabilities:
Accounts receivable, net	$(30)$	$(35)$	$(20)$
Inventories	$(20)$	$(40)$	$(35)$
Prepaid expenses and other current assets	$(10)$	$(5)$	$(5)$
Accounts payable	$20$	$15$	$10$
Accrued expenses	$20$	$10$	$5$
Other operating assets and liabilities	$0$	$0$	$0$
Net cash provided by (used in) operating activities	$(568)$	$(304)$	$(251)$

Cash flows from investing activities:
Capital expenditures	$(254)$	$(173)$	$(170)$
Acquisitions, net of cash acquired	$0$	$0$	$0$
Net cash provided by (used in) investing activities	$(254)$	$(173)$	$(170)$

Cash flows from financing activities:
Proceeds from (repayments of) long-term debt, net	$25$	$(38)$	$(178)$
Proceeds from revolving credit facility	$1,000$	$500$	$400$
Repayments of revolving credit facility	$(975)$	$(437)$	$(222)$
Dividends paid	$0$	$0$	$0$
Net cash provided by (used in) financing activities	$50$	$25$	$0$
Net increase (decrease) in cash and cash equivalents	$(872)$	$(452)$	$(421)$
Cash and cash equivalents at beginning of period	$164$	$108$	$53$
Cash and cash equivalents at end of period	$328$	$164$	$108$

See Notes to Consolidated Financial Statements.

Notes to Consolidated Financial Statements

1. Description of Business and Basis of Presentation

Pactiv Evergreen Inc. (the "Company") is a leading manufacturer and distributor of fresh food and beverage packaging solutions in North America. The Company operates through three reportable segments: Foodservice, Fresh Produce Packaging, and Food Merchandising. The Company's products are essential for protecting and preserving food and beverages, extending shelf life, enhancing visual appeal, and providing convenience for consumers and food service providers. The Company's strategy is to leverage its scale, operational excellence, innovation and sustainability initiatives to be the partner of choice for its customers. The Company's net sales in fiscal year 2023 were $5.4 billion. The Company has a broad customer base, including national and regional food retailers, food service distributors, food processors and growers. The Company's primary raw materials include polyethylene terephthalate ("PET"), high-density polyethylene ("HDPE"), polyvinylidene chloride ("PVDC"), ethylene vinyl acetate ("EVA"), and paperboard.

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. Actual results could differ from these estimates.

2. Summary of Significant Accounting Policies

The following is a summary of significant accounting policies used in the preparation of these consolidated financial statements:

Revenue Recognition: The Company recognizes revenue when control of the promised goods is transferred to its customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods. Revenue is recognized at a point in time when products are shipped to customers or delivered to their specified locations, as this is generally when control transfers. Provisions for estimated returns, discounts, and allowances are recorded at the time of sale.
Inventories: Inventories are stated at the lower of cost or net realizable value. Cost is determined using the weighted-average cost method. The Company periodically reviews its inventories for obsolescence and adjusts the carrying value to net realizable value when deemed necessary.
Property, Plant, and Equipment: Property, plant, and equipment are stated at cost less accumulated depreciation. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets, which range from 10 to 40 years for buildings and improvements, and 3 to 15 years for machinery and equipment. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful life of the improvements.
Goodwill and Other Intangible Assets: Goodwill represents the excess of the purchase price over the fair value of net assets acquired in business combinations. Goodwill and other intangible assets with indefinite useful lives are not amortized but are tested for impairment at least annually, or more frequently if events or changes in circumstances indicate that the carrying value may not be recoverable. Intangible assets with finite useful lives are amortized over their estimated useful lives.
Self-Insurance: The Company is self-insured for certain employee health and disability benefits and workers' compensation liabilities. Provisions for estimated claims are based on actuarial calculations and historical experience.
Income Taxes: Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases. Valuation allowances are established when it is more likely than not that some portion or all of a deferred tax asset will not be realized.
Stock-Based Compensation: Stock-based awards granted to employees are measured at fair value on the grant date and recognized as compensation expense over the requisite service period.

3. Inventories

Inventories consisted of the following at December 31:

(In millions)	2023	2022
Raw materials	$150$	$140$
Work-in-progress	$100$	$90$
Finished goods	$230$	$230$
Total	$480$	$460$

4. Property, Plant, and Equipment, Net

Property, plant, and equipment, net, consisted of the following at December 31:

(In millions)	2023	2022
Land	$50$	$50$
Buildings and improvements	$1,200$	$1,150$
Machinery and equipment	$950$	$900$
Less: Accumulated depreciation	$(600)$	$(550)$
Property, plant, and equipment, net	$1,600$	$1,550$

Depreciation expense for the years ended December 31, 2023, 2022, and 2021, was $150 million, $140 million, and $130 million, respectively.

5. Goodwill and Other Intangible Assets

Goodwill and other intangible assets, net, consisted of the following at December 31:

(In millions)	2023	2022
Goodwill	$900$	$900$
Other intangible assets:
Trademarks and trade names	$100$	$110$
Customer relationships	$50$	$60$
Less: Accumulated amortization	$(0)$	$(0)$
Other intangible assets, net	$150$	$170$
Total goodwill and other intangibles	$1,050$	$1,070$

Amortization expense for intangible assets with finite lives for the years ended December 31, 2023, 2022, and 2021, was $20 million, $20 million, and $20 million, respectively.

The Company performs its annual goodwill impairment test as of October 1. The test involves comparing the fair value of each reporting unit to its carrying amount. Based on the most recent annual impairment tests, no impairment charge was recognized for goodwill.

6. Debt

Long-term debt consisted of the following at December 31:

(In millions)	2023	2022
Senior secured term loans	$1,000$	$1,000$
Senior unsecured notes	$800$	$800$
Revolving credit facility borrowings	$1,000$	$950$
Total debt	$2,800$	$2,750$
Less: Current portion of long-term debt	$(30)$	$(25)$
Long-term debt, net of current portion	$2,770$	$2,725$

The aggregate maturities of long-term debt for the next five years are as follows:

(In millions)	2024	2025	2026	2027	2028	Thereafter
Principal	$30$	$500$	$500$	$500$	$600$	$670$

The Company maintains a $1.5 billion revolving credit facility, which matures in March 2027. As of December 31, 2023, borrowings under the revolving credit facility were $1.0 billion.

7. Leases

The Company leases various facilities and equipment under operating leases and finance leases.

Operating lease obligations for the years ending after December 31, 2023, are as follows:

(In millions)	2024	2025	2026	2027	2028	Thereafter
Minimum lease payments	$50$	$50$	$40$	$40$	$30$	$30$

Finance lease obligations as of December 31, 2023, represent future minimum lease payments under capitalized lease agreements.

8. Stockholders' Equity

Common Stock
The Company has authorized 1,000,000,000 shares of common stock, par value $0.01 per share.

Additional Paid-in Capital
Additional paid-in capital represents the excess of the proceeds received over the par value of common stock issued.

Retained Earnings (Deficit)
Retained earnings (deficit) represents the accumulated earnings of the Company less dividends declared.

9. Income Taxes

Income tax expense consisted of the following for the years ended December 31:

(In millions)	2023	2022	2021
Federal	$15$	$25$	$20$
State and local	$20$	$28$	$27$
Total income tax expense	$35$	$53$	$47$

The effective income tax rate differs from the statutory U.S. federal income tax rate due to various factors, including state and local taxes, foreign income taxes, and changes in valuation allowances.

Deferred tax liabilities consist of:

(In millions)	2023	2022
Deferred tax liabilities	$100$	$95$

10. Earnings Per Share

Basic earnings per share are calculated by dividing net income (loss) by the weighted-average number of common shares outstanding during the period. Diluted earnings per share are calculated similarly, but also include the effect of dilutive potential common shares from stock options and other equity awards, if any.

(In millions, except share and per share data)	2023	2022	2021
Net income (loss)	$(723)$	$(431)$	$(426)$
Weighted-average shares outstanding, basic	$305$	$305$	$305$
Weighted-average shares outstanding, diluted	$305$	$305$	$305$
Basic earnings (loss) per share	$(2.37)$	$(1.41)$	$(1.39)$
Diluted earnings (loss) per share	$(2.37)$	$(1.41)$	$(1.39)$

11. Stock-Based Compensation

The Company has a stock-based compensation plan that permits the granting of stock options, restricted stock units, and other equity-based awards to employees and directors.

Stock-based compensation expense recognized for the years ended December 31, 2023, 2022, and 2021, was $15 million, $12 million, and $10 million, respectively.

12. Segment Information

The Company's reportable segments are Foodservice, Fresh Produce Packaging, and Food Merchandising. The segments are managed separately based on the types of products and services they offer and the markets they serve.

(In millions)	Fiscal Year Ended December 31, 2023	Fiscal Year Ended December 31, 2022	Fiscal Year Ended December 31, 2021
Net Sales:
Foodservice	$2,205$	$2,300$	$2,100$
Fresh Produce Packaging	$1,950$	$2,025$	$1,800$
Food Merchandising	$1,245$	$1,275$	$1,200$
Total Net Sales	$5,400$	$5,600$	$5,100$
Operating Income:
Foodservice	$85$	$110$	$95$
Fresh Produce Packaging	$105$	$135$	$115$
Food Merchandising	$50$	$60$	$55$
Corporate and Other	$(184)$	$(156)$	$(111)$
Total Operating Income	$56$	$154$	$154$

13. Subsequent Events

Subsequent events have been evaluated through the date these consolidated financial statements are issued.

14. Commitments and Contingencies

Commitments: The Company has ongoing commitments related to raw material purchases and capital expenditures.
Contingencies: The Company is involved in various legal proceedings and claims arising in the ordinary course of its business. The outcomes of these matters are not currently determinable, but management believes that the ultimate resolution will not have a material adverse effect on the Company's financial condition, results of operations, or cash flows.

15. Legal Proceedings

The Company is involved in various legal proceedings and claims arising in the ordinary course of its business. These include, but are not limited to, commercial disputes, environmental matters, and employment-related claims. The Company accrues for estimated liabilities related to these matters when a loss is probable and the amount can be reasonably estimated. While the outcome of litigation is uncertain, management believes that the resolution of currently pending legal matters will not result in liabilities that, individually or in the aggregate, would have a material adverse effect on the Company's financial condition, results of operations, or cash flows.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not applicable.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The management of Pactiv Evergreen Inc. (the "Company") is responsible for establishing and maintaining adequate disclosure controls and procedures (as defined in Rule 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")). Disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and disclosed, within the time periods specified in the Securities and Exchange Commission's rules and forms.

As required by Rule 13a-15(b) and 15d-15(b) under the Exchange Act, the Company's Principal Executive Officer and Principal Financial Officer, with the participation of management, carried out an evaluation of the effectiveness of the design and operation of the Company's disclosure controls and procedures as of the end of the period covered by this report (December 31, 2023). Based on this evaluation, the Principal Executive Officer and Principal Financial Officer concluded that, as of December 31, 2023, the Company's disclosure controls and procedures were effective.

Management's Report on Internal Control Over Financial Reporting

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Internal control over financial reporting is a process designed by, or under the supervision of, the Company's principal executive and principal financial officers, and effected by the Company's board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected on a timely basis.

Because this is an initial public offering of our common stock, we are not yet required to have our independent registered public accounting firm attest to a report on our internal control over financial reporting. However, as we grow and mature as a public company, we will implement further procedures and enhancements to our internal control systems.

There are inherent limitations to the effectiveness of internal control over financial reporting, including the possibility of human error, the circumvention of controls, and the possibility of management override of controls. Accordingly, even effective internal control over financial reporting can only provide reasonable assurance with respect to financial statement preparation.

Changes in Internal Control Over Financial Reporting

There were no changes in the Company's internal control over financial reporting that occurred during the quarterly period ended December 31, 2023, that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Directors and Executive Officers

Information regarding the Company's directors and executive officers will be included in the Company's Proxy Statement for its 2024 Annual Meeting of Stockholders, which will be filed with the Securities and Exchange Commission not later than 120 days after the end of the fiscal year covered by this report, and is incorporated herein by reference.

Executive Compensation

Information regarding the compensation of the Company's named executive officers will be included in the Company's Proxy Statement for its 2024 Annual Meeting of Stockholders and is incorporated herein by reference.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Information regarding the beneficial ownership of the Company's common stock by its directors, executive officers, and significant stockholders, as well as information regarding equity compensation plans, will be included in the Company's Proxy Statement for its 2024 Annual Meeting of Stockholders and is incorporated herein by reference.

Certain Relationships and Related Transactions, and Director Independence

Information regarding certain relationships and related transactions and director independence will be included in the Company's Proxy Statement for its 2024 Annual Meeting of Stockholders and is incorporated herein by reference.

Corporate Governance

Information regarding the Company's corporate governance practices, including its board committees, will be included in the Company's Proxy Statement for its 2024 Annual Meeting of Stockholders and is incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION

Information with respect to Executive Compensation is incorporated by reference to the section entitled "Executive Compensation" in the Company's Proxy Statement for its 2024 Annual Meeting of Stockholders, which will be filed with the Securities and Exchange Commission pursuant to Rule 14a-6(b) under the Exchange Act not later than 120 days after December 31, 2023.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Information with respect to Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters is incorporated by reference to the section entitled "Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters" and "Equity Compensation Plan Information" in the Company's Proxy Statement for its 2024 Annual Meeting of Stockholders, which will be filed with the Securities and Exchange Commission pursuant to Rule 14a-6(b) under the Exchange Act not later than 120 days after December 31, 2023.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Information with respect to Certain Relationships and Related Transactions, and Director Independence is incorporated by reference to the section entitled "Certain Relationships and Related Transactions, and Director Independence" in the Company's Proxy Statement for its 2024 Annual Meeting of Stockholders, which will be filed with the Securities and Exchange Commission pursuant to Rule 14a-6(b) under the Exchange Act not later than 120 days after December 31, 2023.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

Audit Fees
The aggregate fees billed by the Company's principal accountant, Deloitte & Touche LLP, for professional services rendered in connection with the audit of the Company's annual consolidated financial statements for the fiscal years ended December 31, 2023 and 2022, were approximately $3.1 million and $2.9 million, respectively.

Audit-Related Fees
Audit-related fees are the aggregate fees billed by the Company's principal accountant for assurance and related services that are reasonably related to the performance of the audit or review of the Company's financial statements. The aggregate fees for audit-related services for the fiscal years ended December 31, 2023 and 2022, were approximately $0.3 million and $0.2 million, respectively. These services included assistance with regulatory filings and accounting consultations.

Tax Fees
Tax fees are the aggregate fees billed by the Company's principal accountant for tax compliance, tax advice, and tax planning. The aggregate fees for tax services for the fiscal years ended December 31, 2023 and 2022, were approximately $0.5 million and $0.4 million, respectively. These services included tax return preparation and advice on tax structuring and compliance.

All Other Fees
All other fees are the aggregate fees billed by the Company's principal accountant for services other than the audit, audit-related, and tax services. There were no other fees billed by the Company's principal accountant for the fiscal years ended December 31, 2023 and 2022.

Pre-approval Policies
The Audit Committee of the Board of Directors is responsible for the pre-approval of all audit and permissible non-audit services provided by the independent registered public accounting firm. All services described above were pre-approved by the Audit Committee.

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a) Financial Statements:
The following consolidated financial statements of Pactiv Evergreen Inc. and its subsidiaries are filed as part of this Annual Report on Form 10-K:

Consolidated Balance Sheets as of December 31, 2023 and 2022
Consolidated Statements of Operations for the years ended December 31, 2023, 2022, and 2021
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2023, 2022, and 2021
Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022, and 2021
Notes to Consolidated Financial Statements

(b) Financial Statement Schedules:
None.

Exhibit Number	Description
2.1	Agreement and Plan of Merger, dated as of December 16, 2020, by and among the Company, Evergreen Packaging Inc., Reynolds Group Holdings Limited, and Pactiv LLC (incorporated by reference to Exhibit 2.1 to the Company's Registration Statement on Form S-1 filed on March 16, 2021).
3.1	Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company's Registration Statement on Form S-1 filed on March 16, 2021).
3.2	Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.2 to the Company's Registration Statement on Form S-1 filed on March 16, 2021).
4.1	Indenture, dated as of March 22, 2021, by and among Pactiv Evergreen Inc., the guarantors party thereto and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company's Registration Statement on Form S-1 filed on March 16, 2021).
4.2	First Supplemental Indenture, dated as of March 22, 2021, by and among Pactiv Evergreen Inc., the guarantors party thereto and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.2 to the Company's Registration Statement on Form S-1 filed on March 16, 2021).
4.3	Fourth Supplemental Indenture, dated as of March 22, 2021, by and among Pactiv Evergreen Inc., the guarantors party thereto and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.3 to the Company's Registration Statement on Form S-1 filed on March 16, 2021).
10.1	Seventh Amended and Restated Credit Agreement, dated as of March 22, 2021, among Pactiv Evergreen Inc., the guarantors party thereto, the lenders party thereto, and Bank of America, N.A., as administrative agent (incorporated by reference to Exhibit 10.1 to the Company's Registration Statement on Form S-1 filed on March 16, 2021).
10.2	Amended and Restated Eighth Amended and Restated Credit Agreement, dated as of September 28, 2023, among Pactiv Evergreen Inc., the guarantors party thereto, the lenders party thereto, and Bank of America, N.A., as administrative agent.
10.3	Form of Indemnification Agreement between the Company and its directors and officers (incorporated by reference to Exhibit 10.3 to the Company's Registration Statement on Form S-1 filed on March 16, 2021).
10.4	Pactiv Evergreen Inc. 2021 Incentive Award Plan (incorporated by reference to Exhibit 10.4 to the Company's Registration Statement on Form S-1 filed on March 16, 2021).
10.5	Form of Non-Employee Director Stock Award Agreement under the 2021 Incentive Award Plan (incorporated by reference to Exhibit 10.5 to the Company's Registration Statement on Form S-1 filed on March 16, 2021).
10.6	Form of Restricted Stock Unit Award Agreement under the 2021 Incentive Award Plan (incorporated by reference to Exhibit 10.6 to the Company's Registration Statement on Form S-1 filed on March 16, 2021).
10.7	Form of Stock Option Award Agreement under the 2021 Incentive Award Plan (incorporated by reference to Exhibit 10.7 to the Company's Registration Statement on Form S-1 filed on March 16, 2021).
10.8	Amended and Restated Employment Agreement, dated as of December 15, 2020, between the Company and Michael W. Vea (incorporated by reference to Exhibit 10.8 to the Company's Registration Statement on Form S-1 filed on March 16, 2021).
10.9	Employment Agreement, dated as of December 15, 2020, between the Company and Joshua G. Jones (incorporated by reference to Exhibit 10.9 to the Company's Registration Statement on Form S-1 filed on March 16, 2021).
10.10	Employment Agreement, dated as of December 15, 2020, between the Company and Todd E. Bricker (incorporated by reference to Exhibit 10.10 to the Company's Registration Statement on Form S-1 filed on March 16, 2021).
10.11	Employment Agreement, dated as of December 15, 2020, between the Company and Alan L. Davis (incorporated by reference to Exhibit 10.11 to the Company's Registration Statement on Form S-1 filed on March 16, 2021).
10.12	Employment Agreement, dated as of December 15, 2020, between the Company and John P. Kelly (incorporated by reference to Exhibit 10.12 to the Company's Registration Statement on Form S-1 filed on March 16, 2021).
10.13	Severance Agreement, dated as of December 15, 2020, between the Company and Timothy S. Goforth (incorporated by reference to Exhibit 10.13 to the Company's Registration Statement on Form S-1 filed on March 16, 2021).
10.14	First Amendment to the Employment Agreement, dated as of December 10, 2021, between the Company and Michael W. Vea.
10.15	Form of Restricted Stock Unit Award Agreement under the 2021 Incentive Award Plan.
10.16	Amended and Restated Form of Stock Option Award Agreement under the 2021 Incentive Award Plan.
10.17	Severance Agreement, dated as of December 10, 2021, between the Company and Joshua G. Jones.
10.18	Severance Agreement, dated as of December 10, 2021, between the Company and Todd E. Bricker.
10.19	Severance Agreement, dated as of December 10, 2021, between the Company and Alan L. Davis.
10.20	Severance Agreement, dated as of December 10, 2021, between the Company and John P. Kelly.
10.21	Severance Agreement, dated as of December 10, 2021, between the Company and Timothy S. Goforth.
10.22	Amended and Restated Employment Agreement, dated as of December 10, 2021, between the Company and John P. Kelly.
10.23	Amended and Restated Employment Agreement, dated as of December 10, 2021, between the Company and Alan L. Davis.
10.24	Form of Management Restricted Stock Unit Award Agreement under the 2021 Incentive Award Plan.
10.25	Amended and Restated Employment Agreement, dated as of May 15, 2022, between the Company and Michael W. Vea.
10.26	Amended and Restated Employment Agreement, dated as of May 15, 2022, between the Company and John P. Kelly.
10.27	Amended and Restated Employment Agreement, dated as of May 15, 2022, between the Company and Alan L. Davis.
10.28	Amended and Restated Employment Agreement, dated as of May 15, 2022, between the Company and Todd E. Bricker.
10.29	Amended and Restated Employment Agreement, dated as of May 15, 2022, between the Company and Joshua G. Jones.
10.30	Amended and Restated Employment Agreement, dated as of May 15, 2022, between the Company and Timothy S. Goforth.
10.31	Amended and Restated Credit Agreement, dated as of March 22, 2021, among Pactiv Evergreen Inc., the guarantors party thereto, the lenders party thereto, and U.S. Bank National Association, as administrative agent (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on March 23, 2021).
10.32	Fourth Amended and Restated Credit Agreement, dated as of September 28, 2023, among Pactiv Evergreen Inc., the guarantors party thereto, the lenders party thereto, and Bank of America, N.A., as administrative agent.
21.1	List of Subsidiaries of Pactiv Evergreen Inc.
23.1	Consent of Deloitte & Touche LLP.
99.1	Computation of Ratio of Earnings to Fixed Charges.
101.INS	XBRL Instance Document.
101.SCH	XBRL Schema Document.
101.CAL	XBRL Calculation Document.
101.DEF	XBRL Definition Document.
101.LAB	XBRL Label Document.
101.PRE	XBRL Presentation Document.

The Registrant agrees to furnish to the Commission upon request a copy of any instrument defining the rights of holders of long-term debt of the Registrant or any of its consolidated subsidiaries, if the total amount of securities authorized under any such instrument or in the aggregate exceeds 10% of the total assets of the Registrant and its consolidated subsidiaries.

---# THE 2024 ANNUAL UNCONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH THE INDEPENDENT AUDITOR`S REPORT

INTRODUCTION .................................................................................................... 2
A WORD FROM THE DIRECTOR ......................................................................... 3
BUSINESS ACTIVITIES ......................................................................................... 4
COMPANY HISTORY ............................................................................................. 8
GROUP COMPONENTS ...................................................................................... 13
SIGNIFICANT BUSINESS EVENTS AFTER THE BALANCE SHEET DATE ....... 15
MISSION AND VISION ......................................................................................... 16
COMPANY 2020-2030 STRATEGY. .................................................................... 17
ORGANIZATIONAL STRUCTURE ....................................................................... 19
MATERIAL TOPICS OF IMPORTANCE FOR THE COMPANY.…………………20
THE NON-FINANCIAL REPORT ........................................................................ 21
RELATIONS WITH EMPLOYEES ...................................................................... 29
SHARE TRANSACTIONS .................................................................................. 30
CORPORATE MANAGEMENT CODE STATEMENT ........................................ 31
INTERNAL CONTROLS ..................................................................................... 33
RISK MANAGEMENT ......................................................................................... 34
FINANCIAL OVERVIEW ..................................................................................... 35
THE GRI INDEX REPORT ................................................................................. 36
SIGNATURE BY COMPANY MANAGEMENT ................................................... 42
ATTACHMENTS ................................................................................................. 43

1. INTRODUCTION

Pursuant to Articles 250a and 250b of the Companies Act and Article 21.a of the Accounting Act Companies have to submit an Annual Report on the Status of the Company and a Consolidated Annual Report. The Annual Report on the Status of INSTITUT IGH, d.d. (hereinafter: the Company) includes all the legally required information and data. Given that it is a shareholder in subsidiaries and associates, the Company consolidates its Annual Financial Report. In this report, the term „IGH Group“ will be used to denote the Company and its subsidiaries and associated companies with the aim of presenting complete, truthful and factual information to the shareholders and the investment public. The Annual Report includes basic financial statements put together in accordance with the Accounting Act and the International Financial Reporting Standards. Pursuant to the Accounting Act, basic financial statements include the Statement of Financial Position (Balance Sheet), Income Statement, a Statement of Other Comprehensive Income, a Statement of Changes in Shareholder Equity, a Cash Flow Statement and Notes to Financial Statements. In addition, the Annual Report also includes a Non-Financial Report pursuant to provisions of Article 21.a of the Accounting Act.

2. A WORD FROM THE DIRECTOR

The year 2024. was special for the Institut IGH as we celebrated 75 years of existence, which is a great achievement for the company & the Croatian civil engineering industry. Although, due to certain circumstances, the formal celebration did not take place, this was a moment when we all came together to reflect on our rich heritage and contributions to the development of the profession, Croatia, and the region. The 75th anniversary was marked by our employees and departments in their own way, in line with the values that reflect the spirit of our IGH – humility as a virtue. However, the year 2024 was challenging. It was concerning that infrastructure investments made by our main partners, Hrvatske Autoceste & Hrvatske vode, continue to drop in 2024 as well. Despite this, we have a strong portfolio of contracts. As part of the program to open new markets in Italy, we started large-scale design projects with ANAS SPA by signing a four-year framework agreement with a net value for IGH of 2,000,000.00 million EUR. During 2024, we signed 157 new contracts and annexes with a total value worth around 12.9 million EUR, and realized 19.3 million EUR in revenue. Compared to 2023, in 2024, business revenues were 6% higher than the previous year despite extremely challenging public procurement conditions considering the competition and prices being offered and contracted. Additionally, 175 employees received a coefficient increase, which for the year means an increase in costs of 410,000 EUR gross. The number of employees working at INSTITUT IGH, d.d. amounted to 339 employees, with 12 more employees working in our foreign branch offices. This represents a reduction of 33 employees compared to December 31st 2023, when the Company had 384 employees. We believe this to be an optimal number given current market trends. At the beginning of 2024, measures and actions were taken to continue resolving the remaining debt from the pre-bankruptcy settlement. In Q1 of 2024, the company fully settled all obligations based on the pre-bankruptcy settlement as of December 31st 2023. Furthermore, in Q2 of 2024, new members of the Management Board were appointed, Ms. Marija Đuroković, Ms. Tatjana Bičanić, Mr. Josip Majer, and I, Robert Petrosian, was reappointed as the President of the Management Board with mandate duration of 4 years. After adopting the 2020-2030 Company Development Strategy and forming a strategy implementation team, we developed an annual plan with four key areas: 1. Employee orientation and mentorship; 2. New markets and business segments; 3. Scientific and research activity; 4. Profitability. The Company monitored the implementation of the plan on a monthly basis and, at the end of the year; the results were presented to the Company's Supervisory Board. In addition, taking into account recent activities on global and domestic markets, it was clear that the base strategy needed some adjustments to include new areas of activity. You can read more on that in a separate chapter, entitled „Strategy“. The non-financial part of the 2024 report was prepared taking into account the GRI. On behalf of Institut IGH, d.d. Robert Petrosian, MEng C.E.. President of the Management Board

3. BUSINESS ACTIVITIES

INSTITUT IGH, d.d.is the leading civil engineering consulting company in Croatia and the region, enabling comprehensive support to infrastructure and investment projects and delivering optimal wholesome and innovative solutions in the field of civil engineering in Croatia and on international markets with its 8 subsidiaries and 1 associate company. The Company is registered with the Commercial Court in Zagreb under the number MBS: 080000959 and has a registered headquarters in Zagreb, Janka Rakuše 1. The Company's share capital amounts to 14,814,630.00 EUR and is divided into 1,481,463.00 regular shares. The nominal value of the share is 10,00 EUR of which 613.709 are marked IGH-R-A, and quoting on the official market of the Zagreb Stock Exchange, along with 867.754 regular shares marked IGH-R-D. INSTITUT IGH, d.d. provides the following services:

Publishing;
Consulting and obtaining software;
Research and development in technical and technological sciences;
Business and management consulting;
Holding management;
Architecture and engineering activities and technical consulting;
Technical tests and analyses;
Scientific and developmental research, the publishing of the results of the said research, scientific training and maintenance and development of research and scientific infrastructure;
Improving general, technical and autonomous civil engineering regulations as well as regulations in other fields where knowledge of civil engineering is needed, analyzing and coordinating the implementation of international regulations in civil engineering;
Improving developmental programs and construction technologies;
Developing environmental impact studies from a territory preservation, protection and improvement standpoint;
Organizing and implementing professional development related activities;
Controlling the stability, safety, functionality, physical properties and feasibility of technical documents;
Controlling and evaluating the fitness of the organizations implementing activities affecting the security, quality and functionality of structures;
Appraisals in the field of civil engineering, techniques, technologies and evaluations of civil engineering economics;
Creating and updating a registry of facilities and infrastructure and monitoring the condition of the structures, exploitation and maintenance;
Professional environmental protection-related works;
Professional spatial planning-related works, namely, the preparation of spatial planning documents and technical input for the issuing of location permits;
Project nostrification for:
- Architectural design (for the architectural designs of buildings, the interior designs of buildings and landscape designs);
- Mechanical engineering design (for energy efficient building designs, as well as for gaseous and liquid substance storing projects);
Programming and implementation of geotechnical survey works;
The preparation of geotechnical opinions and reports;
Developing civil engineering designs of geotechnical structures;
Laboratory testing of soil and rocks;
Field testing of soil and rocks in boreholes;
Observations of geotechnical structures;
Laboratory and field testing of geotextiles;
Geological investigation of energy providing metal and non-metal raw materials;
Hydrogeological investigation (geological, structural geological and hydrogeological survey works, ground water hydraulic parameter testing, designing ground water interventions including works implemented for the purposes of water supply implementation and for the provision of supporting data);
Engineering and geological investigation (geological, structural geological and engineering geological investigation works for the provision of supporting data to be used in the design of civil engineering structures);
Organization, design and supervision of geological and hydrogeological engineering works;
Ground water investigations and the investigations of the geological engineering terrain features for the purposes of study preparation and environmental protection;
Geophysical investigations for environmental protection purposes and for the purposes of providing support data for archeological exploration;
Cultural heritage protection and preservation works, namely: investigating and documenting the load bearing structure of the cultural asset in question, developing the conceptual design, and the preliminary, detailed and implementation designs for the rehabilitation of the load bearing structure of the immovable cultural asset in question, that is, preparing architectural documents on the cultural asset and developing a conceptual design, and a preliminary, detailed and implementation design for works on the immovable cultural asset, as well as repairing materials on the said asset;
Developing interdisciplinary activities necessary for the development and improvement of civil engineering;
Developing series and prototypes of civil engineering measuring devices;
Consulting and ensuring the quality of the facility's technical equipment;
Developing and introducing quality assurance programs;
Copying and photocopying technical documents;
Certification services;
Preparing technical approvals;
Investing in the country and abroad;
Research, as well as providing and using knowledge and information in science and economy;
Quality and quantity control services in the import and export of goods, representing foreign companies;
Geophysical surveying for the purposes of engineering-geological, hydrogeological and geotechnical surveying, and control testing and quality assurance on civil engineering structures;
Dealing in spatial planning activities;
Dealing in construction project management activities;
Preparing design documents for water management facilities and water supply systems;
Preparing survey reports with permanent topographic points for the purposes of basic topographic activities;
Preparing survey reports for the measuring, marking and maintaining of the national border;
Preparing reports for the development of the Croatian Basic Map;
Preparing reports for the development of digital orthophoto charts;
Preparing reports for the development of detailed topographic maps;
Preparing reports for the development of general topographic maps;
Preparing cadastral survey reports;
Preparing technical reambulation reports;
Preparing cadastral plan digitalization reports;
Preparing reports for the conversion of digital cadastral plans into a given format;
Preparing cadastral plan homogenization reports;
Preparing plot plans and other land cadaster-related survey reports;
Preparing plot plans and other real estate cadaster-related survey reports;
Preparing plot plans and other geodetic survey reports for the individual conversion of land cadaster plots into real-estate cadaster plots;
Preparing cadastral reports relating to utilities and geodetic/surveying activities that are needed for the provision of surveying services;
The technical management of the utility services cadaster;
The preparation of special geodetic/surveying support data for preparation of physical-development documents and acts;
Preparing special geodetic support data for design work;
Preparing geodetic reports defining the condition of a structure prior to reconstruction work;
Surveying design preparation;
Structure stakeout (setting out) and the preparation of stakeout reports;
Preparing general geodetic plans for built structures;
The geodetic monitoring of structures under construction, and preparation of surveying-monitoring reports;
The monitoring of the displacement of structures in the course of maintenance activities, and preparation of surveying-monitoring reports;
Geodetic activities undertaken in the scope of urban land redistribution;
Preparing agricultural land redistribution designs and surveying activities performed in the scope of redistribution of agricultural land;
Preparing special surveying/geodetic support data for protected areas and areas under protection;
Technical supervision of works: development of work-cadaster reports and topographic activities for provision of topographic services, technical management of cadaster for utility service lines, elaboration of special topographic support data for the preparation of physical development documents and acts, preparation of special surveying support data for design work, preparation of surveying reports defining condition of a structure prior to reconstruction work, preparation of geodetic designs, stakeout of structures and preparation of stakeout reports, geodetic monitoring of structures during construction, and preparation of geodetic-monitoring reports, monitoring displacement of structures in the course of maintenance activities, and preparation of geodetic-monitoring reports, and preparation of special surveying support data for protected areas and areas under protection;
Nature protection-related activities;
Noise protection-related activities;
Accounting;
Aerial photography;
Translation;
Real estate management and maintenance;
Real estate brokerage;
Real estate dealings;
Vehicle renting;
Aircraft renting;
Yacht or boat renting, with or without a crew (charter);
Vessel rental;
Own-account transport;
The transport of passengers in national road transport;
The transport of passengers in international road transport;
The transport of cargo in national and international road transport;
Organizing seminars, courses, fairs, events, exhibitions and concerts;
Polling and market research;
The purchase and sale of goods;
Trade;
Commercial brokerage on national and international markets;
Design and construction of structures and technical supervision of construction works;
Design and construction of mining facilities and# T H E 2 0 2 4 A N N U A L R E P O R T

o ACTIVITIES ON RECORD:

IT company services;
Web design;
Website development and maintenance;
Activities related to electronic communication networks and services ;
Universal electronic communication services;
Special tariff services;
Electronic publishing services;
Teaching computer science;
IT and related activities;
Civil engineering design of oil and mining plants and facilities;
Construction and construction supervision of oil and mining plants and facilities.

o In accordance with the norms relating to sustainable development systems, IGH has the following certificates:

ISO 9001 Quality Management Systems;
ISO 14001 Environmental Management Systems;
ISO 50001 Energy Management Systems;
ISO 45001 Occupational Health and Safety Management Systems;
ISO 27001 IT Safety Management Systems;
HRN EN ISO/IEC 17025:2017 for the Testing Laboratory;
HRN EN ISO/IEC 17025:2017 for the Metrology Laboratory;
HRN EN ISO 17065:2013 for Production Certification.

T H E 2 0 2 4 A N N U A L R E P O R T

4. COMPANY HISTORY

1949. • INSTITUT IGH, d.d. was founded as the Zagreb Civil Engineering Laboratory
1956. • The company name was changed to Croatian Civil Engineering Institute
1961.-1962. • Branch offices in Split, Zagreb and Osijek founded
• The company gained the status of a scientific facility
1967.-1973. • Field laboratories in Sisak, Karlovac, Dubrovnik, Pula, Zadar and Varaždin opened
1977. • The Institute joined forces with the Faculty of Civil Engineering to form a Civil Engineering Institute
1991. • The Civil Engineering Institute was divided into The Faculty of Civil Engineering and the Civil Engineering Institute
1994. • The Company was restructured and privatized
1995. • IGH – a joint stock company
1997. • The business premises in Rijeka and the laboratory building in Sisak completed
1999. • The Company was accredited in accordance with the HRN EN 45001 norm, which was later substituted with HRN EN ISO/IEC 17025 General requirements for the competence of testing and calibration
• IGH Cert – an independent body within IGH in charge of controlling and evaluating the constancy of performance of construction products, as authorized by the Ministry in charge, was founded
2000. • The Design and Studies Department was founded
• New business premises in Split were completed and furnished
2003. • IGH TD - an independent body within IGH in charge of evaluating construction product performance as authorized by the Ministry in charge, was founded
• IGH shares were listed on the Zagreb Stock Exchange
2004. • The Company was accredited in accordance with the HRN EN 45011 norm General requirements for bodies operating product certification systems
• Over 400 testing norms for different construction products
• IGH Laboratories moved to a new facility in Zagreb headquarters
2005. • The Company was authorized to confirm compliance when certifying products, during factory production control, and when providing factory production control supervision and testing
2006. • The ISO 9001:2002 Certificate: Quality Management Systems
2008. • Company restructuring and the new visual identity

T H E 2 0 2 4 A N N U A L R E P O R T

2009.
- The Company is renamed as INSTITUT IGH, Joint Stock Company for Research and Development in Civil Engineering
- Reorganization
- The ISO 14001 Certificate: Environmental Management Systems
- The OHSAS 18001 certificate Health and Occupational Safety Management Systems
2012.
- Reorganization
- A multi-member Management Board was appointed
- The Company's share capital was increased through payments in cash by issuing new registered ordinary shares of an individual value of HRK 400,00
- The Company's share capital was increased to HRK 105.668.000,00 by issuing 105.590 new shares, each of a nominal value of HRK 400,00 at a price of HRK 760,00 per share
- EUR 10,000.00 worth of convertible bonds marked IGH-O-176A, ISIN: HRIGH0O176A8 were issued
- IGH-ESOP d.o.o. was founded as a form of an employee stock ownership plan featuring 173 founding members with a share capital of HRK 2,979,200.00
- The Company was listed in the Scientific Organization Registry under technical sciences, civil engineering
2013.
- New reorganization
- Pre-bankruptcy settlement
- IGH – Notified Body, a body in charge of certifying (evaluating the performance) of products at EU level in the field of harmonized European norms
- IGH – Notified body and Croatian Technical Assessment Body for technical assessment as authorized by the Ministry in charge in the field of non-harmonized norms
- IGH – Technical Assessment Body – TAB for the preparation of technical assessments of construction products at EU level
2014.
The Company's share capital was increased through approved share capital by investing rights through the conversion of a part of claims of a part of the creditors in the pre-bankruptcy settlement from HRK 105,668,000.00 to HRK 123,483,600.00, by issuing 44,539 dematerialized, regular, ordinary shares, each of a nominal value of HRK 400.00
The Company's share capital was reduced from HRK 123,483,600.00 to HRK 58,654,710.00 by reducing the nominal value of the Company's shares from HRK 400.00 by HRK 210.00 to HRK 90.00 to cover the losses accumulated in previous periods
The Company's share capital was increased through cash payments from HRK 58.654.710,00 to HRK 116.604.710,00 by 305,000 dematerialized ordinary regular shares each of a nominal value of HRK 190,00
Changes in ownership structure, changes in members of the Management Board, the Members' functions, authorizations to represent, changes in members of the Supervisory Board, member revocation and granting members the power of attorney.

T H E 2 0 2 4 A N N U A L R E P O R T

2015.
- New organization
- 349,539 shares marked IGH-R-C ISIN HRIGH0RC00004 of an individual nominal value of HRK 190,00 were converted into 349,539 shares marked IGH-R-A ISIN HRIGH0RC00006 nominal value of HRK 190,00
- 349.539 shares of an individual nominal value of HRK 190,00 marked IGH-R-A, ISIN: HRIGH0RA00006 were listed on the official market of the Zagreb Stock Exchange
2016.
- Operational restructuring
- Expansion to new markets
- The opening of a Georgian subsidiary
- Operational indicators show a growth due to changes in business trends
2017.
- Large infrastructure projects in Georgia were successfully implemented
- IGH Mostar was acquired and a new business unit in Bjelina was opened
- Rebranding and a new visual identity
2018.
IGH Laboratories were successfully reaccredited by the Croatian Accreditation Agency (CAA), consequently meeting all the requirements of the HRN EN ISO/IEC 17025 norm, and awarding the Laboratories a new valid Accreditation Certificate valid until 2024.
An accreditation for Low Strain Impact Integrity Testing of Deep Foundations (PIT - ASTM D5882-16), High-Strain Dynamic Testing of Deep Foundations (PDA - ASTM D4945-17), Standard penetration testing (SPP/SPT - HRN EN ISO 22476-3:2008) and Energy Measurement for Dynamic Penetrometers (SPP/Er - ASTM D4633-16), expanding the field of geotechnical testing accreditation to IGH's field investigations
After public tendering and a submitted tender worth HRK 49,4 million(VAT excluded), a Supervision Contract was signed with Hrvatske ceste for the construction of the Pelješac Bridge and its access routes
- A new ISO 50001 certificate- Energy Management Systems, was obtained
- A supervision contract of a net worth of HRK 15,769,400.00 was signed for the supervision of the construction of the Banovići Thermal Power Plant-Block 1-350 MW
2019.
- A new ISO 50001 certificate- Energy Management Systems, was obtained
- A supervision contract of a net worth of HRK 15,769,400.00 was signed for the supervision of the construction of the Banovići Thermal Power Plant-Block 1-350 MW
A supervision contract of a net worth of HRK 12,750,967.00 was signed for the supervision of works on the Ston bypass (DC414), the Sparagovići/Zaradeže-Prapratno and Prapratno-Doli subsections along with the supervision of improving the water-utility infrastructure in the Rijeka agglomerations of a net worth of HRK 12,522,863.00
A design contract of a net worth of HRK 12,407,000.00 was signed for ID12 Vrbovec 2 interchange (D10)–Bjelovar–Virovitica–. T. Polje B.C., Bjelovar–Virovitica section– T. Polje B.C. (Hungarian border), around 60 km long

T H E 2 0 2 4 A N N U A L R E P O R T

2020.
- A new 2020-2030 business strategy was adopted.
A contract worth around HRK 30 million, in which IGH is the leading consortium partner was signed with JP Autoceste Federacije BiH d.o.o. for the design of the Mostar-Široki Brijeg-Croatian border high speed road, the Polog-Croatian border section.
A contract worth around HRK 15,7 million was signed with JP Autoceste Federacije BiH d.o.o for supervision services during the construction of a motorway on the Vc corridor, the Tarčin-Konjic section, the Tarčin-Ivan subsection, entry into the Ivan tunnel
The Ministry of Construction and Spatial Planning approved the „2020- 2022 Professional Development Program“ which enabled the company to hold internal and external professional development courses for which academic hours will be assigned, making IGH the only private institution in Croatia to provide professional development services to everyone who has passed the State Exam and who, in accordance with the Rulebook on the Professional Development of Persons Dealing in Spatial Development and Civil Engineering Activities, has to attend at least twenty school hours of professional development courses.# THE 2024 ANNUAL REPORT

1. BUSINESS 1

2. PROPERTY, PLANT AND EQUIPMENT 7

3. OPERATING AND FINANCIAL REVIEW 11

4. RISK MANAGEMENT 11

5. GROUP COMPONENTS 13

6. SIGNIFICANT BUSINESS EVENTS AFTER THE BALANCE SHEET DATE 15

7. MISSION AND VISION 17

8. THE COMPANY'S 2020-2030 STRATEGY 17

1. BUSINESS

(Continued)

• The Company has, in accordance with the requirements of the certification, transitioned from OHSAS 18001 to ISO45001:2018, stressing the importance of occupational health and safety as a part of company culture.

2021.

• The start of the implementation of the new 2020-2030 Business Strategy

• The visual identity designed in 2008 was reimplemented

• A supervision contract worth HRK 7,2 million was signed with Hrvatske ceste d.o.o. on the supervision of the Okučani – B&H border high speed road

• A supervision contract worth HRK 5,9 million was signed with the Port Authority of Vukovar for the preparation of study and design documents

• Contracts worth around HRK 8 million were signed with HEP proizvodnja d.o.o. for the final inspections of civil engineering structures in Croatia

• A reconstruction contract worth over HRK 10,5 million was signed with Hrvatske autoceste d.o.o. for the reconstruction of the Zagreb bypass.

• The preparation of conservation studies and a roofing rehabilitation of the Poljud Stadium in Split

• Supervision of the construction of the Dubrovnik University Dorm was completed

2022

• One of the largest infrastructure projects in Croatia-the Pelješac bridge, was completed. INSTITUT IGH's professionals provided supervision, quality control and laboratory services

2023

• One of the most expensive infrastructure projects in Croatia – State Road DC403 was completed

• Share capital was increased to EUR 14,814,630.00 and the nominal value of shares was reduced to EUR 10.00

• RADELJEVIĆ d.o.o. and IGH CONSULTING d.o.o. were acquired by INSTITUT IGH, d.d.

• Branch offices in Hungary and Armenia were opened

• The company was recapitalized, creating the prerequisites to initiate the end of the pre-bankruptcy settlement procedure

12 THE 2024 ANNUAL REPORT

• 2024

• Closing and exiting the pre-bankruptcy settlement

• Celebration of 75 years of company existence

• Appointment of new Management Board members

• Reappointment of the President of the Management Board

• Opening new markets

13 THE 2024 ANNUAL REPORT

5. GROUP COMPONENTS

he parent company of the group to which the issuer belongs is the issuer itself. The Member Companies of the IGH Group are partly complementary to the parent company with the aim of a possibility of providing a complementary service. The first part of the services includes testing, design and design nostrification, supervision and mentoring in architecture and civil engineering as well as scientific research. The second parts of the services are provided by dedicated companies for the implementation of real-estate projects. The IGH Group consists of 8 subsidiaries and 1 associate company (as at 31 December 2024) which deals in the core and related businesses, and INSTITUT IGH, d.d. also does business through branch offices. Subsidiaries include companies in which the Company owns more than 50% of voting rights and/or has control over the adoption and implementation of the financial and business policies of the company which was invested in with the aim of benefiting from that company's activities. Associated companies include companies in which the Company owns between 20 and 50% of voting rights and in which it has significant influence, but not control, through participation in the decision- making on the financial and business policies of the associate company.

Scheme 1. Group components on the 31.12.2024.

14 THE 2024 ANNUAL REPORT

• Consolidation included the following subsidiaries:

Subsidiary	Address
EKONOMSKO TEHNIČKI ZAVOD d.d. (ETZ d.d.)	Drinska 18, Osijek, Croatia
DP AQUA d.o.o.	Janka Rakuše 1 Street, Zagreb, Croatia
IGH PROJEKTIRANJE d.o.o.	Janka Rakuše 1 Street, Zagreb, Croatia
IGH BUSINESS ADVISORY SERVICES d.o.o.	Janka Rakuše 1 Street, Zagreb, Croatia
INCRO d.o.o.	Janka Rakuše 1 Street, Zagreb, Croatia
MARTERRA d.o.o.	Janka Rakuše 1 Street, Zagreb, Croatia
SLAVONIJA CENTAR, POSLOVNA ZONA VELIKA KOPANICA d.o.o. u likvidaciji	Janka Rakuše 1 Street, Zagreb, Croatia
IGH MOSTAR d.o.o.	Bišće Polje bb, Mostar, Bosnia and Hercegovina

Table 1. Subsidiaries included in the consolidation

The associate companies include the following:

Associate company	Address
ELPIDA d.o.o.	Janka Rakuše 1 Street, Zagreb, Croatia

Table 2. Subsidiaries included in the consolidation process

The Company conducts its business activities through branch offices in Armenia, Georgia, the Republic of Kosovo and North Macedonia.

15 THE 2024 ANNUAL REPORT

6. SIGNIFICANT BUSINESS EVENTS AFTER THE BALANCE SHEET DATE

In between December 31st 2023 to December 31st 2024, the Company signed 157 new contracts with a total value of 12,9 milijuna EUR. We highlight some of the contracts signed in 2024:

No.	Country	Investor	Project name	Service	Contracted net value for IGH_EUR
1	Italy	ANAS SPA(Italy)	Framework Agreement for technical- administrative assistance services aimed at guaranteeing support to the RUP and the Works Management office for the execution of Scheduled Maintenance interventions - 16 LOTs	design	2.000.000,00
2	Georgia	Roads Department of Georgia	Preparation of Feasibility Study and Detailed Design for the Upgrading of Kobuleti Bypass Road to the 4-lane Highway	design/studies	1.791.318,75
3	Croatia	Hrvatske autoceste d.o.o.	Preparation of project documentation and obtaining construction permits for the A1 motorway, section Rudine - Osojnik	design	1.462.532,50
4	Georgia	Roads Department of Georgia	Providing a service for preparing technical documentation connected with conducting essential design estimate and tender procedures for road rehabilitation works	design	1.131.417,88
5	Croatia	Bouygues T.P._subsidiary in Croatia	Control tests on the Istrian Y - A8_sections_PUO Kvarner-Matulji_Nova Vas-Višnjan_Phase II_northern pavement of the motorway from km 18+320 to km 20+320 including Mirna bridge_Medaki-Kanfanar, including Limska Draga viaduct	control test	497.956,42
6	Croatia	Hrvatske ceste d.o.o.	Supervision of the construction of the BC Okučani – BiH Border section, Phase III, 3.7 km long	supervision	324.280,75
7	Croatia	Hrvatske ceste d.o.o.	Supervision of the reconstruction of the intersection of the state road DC8 and V. Škorpika Street in Šibenik - Mandalina junction	supervision	206.577,50
8	Hrvatska	China Road and Bridge Corporation	Geological services at the excavation of the Kozjak tunnel	geological services	174.000,00
9	Croatia	Hrvatske autoceste d.o.o.	Consulting, design services and development of technical solutions for repairing damage on motorways	consultation services	160.440,00
10	Croatia	Hrvatske autoceste d.o.o.	Main pavement inspection on the A1 motorway: section Zadar II - Karamatići and motorways A5, A10 and A11: sections Osijek - Svilaj, BiH border - Ploče and Velika Gorica Jug - Buševec	main pavement inspections	140.223,36

Table 3. A list of projects in year 2024.

During the year, the Company finalized the acquisition of RADELJEVIĆ d.o.o. and IGH CONSULTING d.o.o. companies, with the aim of recapitalizing the Company, consequently creating all the necessary prerequisites to initiate the end the pre-bankruptcy procedure.

16 THE 2024 ANNUAL REPORT

7. MISSION AND VISION

VISION: To be one of the leading engineering companies in the region and beyond, whose employees are the leading professionals and satisfied shareholders, improving people's quality of life and the quality of the environment on a daily basis through innovative solutions.

MISSION: Resolve engineering challenges in a timely manner and to the satisfaction of our clients using knowledge, innovation and a professional and responsible approach.

17 THE 2024 ANNUAL REPORT

8. THE COMPANY'S 2020-2030 STRATEGY

A new breakthrough for INSTITUT IGH, d.d., based on our key values. Our direction in the next decade is to maintain a leading position on traditional Croatian and East European markets by providing design, supervision, project management and laboratory services namely in sectors where we have demonstrated our expertise such as road and railway infrastructure. The Company bases its comparative edge on the comprehensiveness of its civil engineering services, which means a faster and efficient project implementation for the client, while maintaining a high level of quality. The strategy plans for four key directions:

Employee orientation and mentorship;
New markets and business segments;
Scientific and research activity;
Profitability.

Employees as our greatest value

Experience gained on large and demanding projects, generating professionals ready to manage ever more complex projects has to stay in the company. This creates a valuable base of experience and expertise which makes the foundation of long-term business sustainability. Strengthening qualified personnel through the development and education of existing personnel and employing new team leads and core staff as well as junior, entry-level engineers will continue to be our focus. In addition, through the implementation of a Mentorship System, we want to create a mentorship program through which junior engineers and designers will cooperate with seniors through all the design phases, enabling a faster transfer of knowledge, and, ultimately, a higher quality of our work and added value for our partners. Using a continuous professional development program, we want to enable our employees to develop their technical know-how, but also management and IT skills, such as BIM proficiency, as part of the Company's comprehensive digital transformation.

Client orientation

It is the opinion of INSTITUT IGH, d.d. that, instead of a contractor, it should be a partner to its client, and we achieve this through a proactive approach and focus on a timely fulfillment of their requests.

Science and research

INSTITUT IGH, d.d. used to be recognized precisely for its contribution to the field through research and development.# In the near future, we want to go back to our roots and become a center of excellence when it comes to science and research again. The following are key areas of our activity in this field: The use of plastic waste in construction materials, the development of new construction material and structure test methods, including non-destructive testing methods, building water analyses facilities, hydrogen fuel cell research and development.

New sector orientation and service modernization

We see energy, traditional, and especially energy from renewable sources such as wind, water and biomass as a huge opportunity to expand the experience gathered so far to this sector and additionally diversify our services portfolio and the sectors in which we work.

18 T H E 2 0 2 4 A N N U A L R E P O R T •

Business and residential buildings as well as data centers will be projects that will require state of the art design, supervision and strategic consulting now and in the future, this is where INSTITUT IGH, d.d. wants to continue to be recognized as a leading company.
We aim for a leading position when it comes to service improvement, in line with global standards, and want to be at the forefront of a modernization trend in civil engineering services towards all stakeholders.
By modernization trends, we primarily mean promoting BIM processes and tools and making them an industry standard.

Financial stability

Ensuring cash flow stability and further company development-related financial activities, along with a complete fulfillment of pre-bankruptcy settlement obligations and leaving the pre-bankruptcy settlement procedure itself, are all prerequisites for facilitating operational business. Through increased engagement on all current and new external markets, we aim to achieve long-term financial stability in the Company.

New markets

In the near future, we will strategically turn to the West, the Middle East, Central Africa (MENA), the Commonwealth of Independent States (CIS) and the central Asian market. Offers are being prepared in ex-CIS countries, in Central Asian countries we are examining markets in cooperation with Korean partners, and in MENA countries we are establishing contacts with local partners.

Strategy adaptation

With new market trends in mind, last year we began adapting our strategy to reflect both market and geopolitical changes. Aside from maintaining four key directions, the Company plans to dedicate itself more to design, supervision, laboratory and R&D activities as well as to further digitalization, promotion and provision of BIM services.

Figure 2. A symbolic overview of Institut IGH's strategic areas.

19 T H E 2 0 2 4 A N N U A L R E P O R T •

9. ORGANIZATIONAL STRUCTURE

On 31 December 2024, the Company was organized as follows:

SKUPŠTINA
  NADZORNI ODBOR
    UPRAVA
      URED UPRAVE
        KORPORATIVNA SIGURNOST I IT
        ODJEL PRAVNIH POSLOVA
        SEKTOR FINANCIJSKIH POSLOVA
          ODJEL ZA KONTROLING, PRAĆENJE UGOVORA I IZVJEŠTAVANJE
          ODJEL ZA RAČUNOVODSTVO I FINANCIJE
        INTERNA REVIZIJA
        MARKETING, ODNOSI S JAVNOŠĆU, DRŽAVNIM I JAVNIM TIJELIMA
        ODJEL LJUDSKIH KAPITALA
      SEKTOR ZAJEDNIČKIH POSLOVA KOMPANIJE KĆERI
        ODJEL ZAŠTITE NA RADU, ZAŠTITE OKOLIŠA I ZAŠTITE OD POŽARA
        ODJEL ZAJEDNIČKIH POSLOVA I CENTRALNE NABAVE
        ODJEL ODRŽAVANJA ZGRADE I OKOLIŠA
        ODJEL DOSTAVE I OTPREME POŠTE
        ODJEL ZA PREVOĐENJE
        ODJEL ZA FOTOKOPIRANJE I ARHIVIRANJE
        ODJEL GOSPODARENJA VOZNIM PARKOM
      REGIONALNI CENTAR SPLIT
      ZAVOD ZA MATERIJALE I KONSTRUKCIJE
      ZAVOD ZA PROJEKTIRANJE
      ZAVOD ZA STRUČNI NADZOR I VOĐENJE PROJEKATA
      REGIONALNI CENTAR OSIJEK
      REGIONALNI CENTAR RIJEKA
      MJERITELJSKI LABORATORIJ
      LABORATORIJ ZA METALE
      LABORATORIJ ZA MATERIJALE I KONSTRUKCIJE
      GEOTEHNIČKI LABORATORIJ
      HIDROTEHNIČKI LABORATORIJ
      LABORATORIJ ZA PROMETNICE
      LABORATORIJ ZA GRAĐEVINSKU FIZIKU
      LABORATORIJ ZA VEZIVA I EKOLOGIJU
      ODJEL ZA ISPITIVANJE, SANACIJE I GOSPODARENJE GRAĐEVINAMA
      ODJEL ZA STRUČNI NADZOR ZAGREB
      ODJEL ZA STRUČNI NADZOR OSIJEK
      ODJEL ZA STRUČNI NADZOR SPLIT
      ODJEL ZA STRUČNI NADZOR RIJEKA
      ODJEL ZA PROJEKTIRANJE PROMETNE INFRASTRUKTURE
      ODJEL ZA PROMET I STUDIJE
      ODJEL ZA ARHITEKTURU I PROSTORNO PLANIRANJE
      ODJEL ZA GEOTEHNIČKO PROJEKTIRANJE
      ODJEL ZA HIDROTEHNIČKO PROJEKTIRANJE
      ODJEL ZA EKOLOGIJU I ZAŠTITU OKOLIŠA
CORE BUSINESS IGH ORGANIZATION CHART 2024
POSLOVNA SIGURNOST
IT
LABORATORIJ ZA MATERIJALE I KONSTRUKCIJE OS
LABORATORIJ ZA MATERIJALE I KONSTRUKCIJE RI
LABORATORIJ ZA MATERIJALE I KONSTRUKCIJE ST
ODJEL ZA PROJEKTIRANJE KONSTRUKCIJA
SEKTOR ZA PRIPREMU PONUDA I UGOVARANJE
  ODJEL ZA PRIPREMU PONUDA I UGOVARANJE NA DOMAĆEM TRŽIŠTU
  ODJEL ZA GEOTEHNIČKA ISTRAŽIVANJA
SEKTOR STRATEGIJSKOG RAZVOJA
QM IGH
IGH CERT
IGH HTO
ODJEL ZA UGOVORE
Izradio: Odjel za ljudske kapitale
Stupa na snagu od 1.6.2024.
URED TEHNIČKOG DIREKTORA
BIM ODJEL
ZAVOD ZA INOVATIVNI I DIGITALNI RAZVOJ
  ODJEL ZA MEĐUNARODNE NATJEČAJE I UPRAVLJANJE PROJEKTIMA
  ODJEL ZA ODRŽIVOST
  ODJEL ZA ISTRAŽIVANJE I INOVACIJE
  ODJEL ZA DIGITALNI RAZVOJ

Figure 3. Organizational structure on 31 December 2024.

20 T H E 2 0 2 4 A N N U A L R E P O R T •

10. MATERIAL TOPICS OF IMPORTANCE FOR THE COMPANY

Considering the context in which it operates, the Company's Management analysed a number of material topics of relevance. Considering the scope of services provided on the engineering consultancy market, three principal topics were recognized which have an impact on the economy and the society in general. The Company primarily provides services on large infrastructural projects that have an exceptional impact on the economy, society and people in general. When providing this type of service, it is extremely important to take into account all possible consequences. For example, professional supervision of motorway or bridge construction has a great socio-economic significance, but it is also significant for all the people who work on such projects. Therefore, it is legally recognized that every company must have an adequate and professional workforce that will be able to give clear and unambiguous instructions regarding the health and safety of both its own employees and those of partners and subcontractors. Incidents on construction sites can have negative consequences in terms of personal injury or extension of construction deadlines, which also brings economic consequences. On the other hand, establishing valid procedures and processes in place can mean that the project will be carried out within the given time frame and without consequences.

The Company is guided by the Control Management System principles, such as:

Occupational Health and Safety Management: ISO 45001:2018.

The Company's operations are geographically divided among the head office in Zagreb and three Regional Centers (Osijek, Rijeka, Split) with the largest civil engineering laboratory in this part of Europe as their integral part, undertaking testing and calibration procedures. This raises the awareness that we must consider our own impact on the environment. Therefore, Management Systems such as:

Environmental Management System Standard: ISO 14001:2015
Energy Management System Standard: ISO 50001:2018
Quality Management System: ISO 9001:2015

have been set up within the Company.

Analyzing the Company’s age structure, it is evident that the older work force dominates demographically. Therefore, professional training and mentoring have been recognized through Strategic Positioning as one of the primary goals in order for the Company to remain a leader in providing consulting and engineering services in the Republic of Croatia and beyond. It was precisely the need for professional training that was dominantly recognized as a need during the employee satisfaction survey.

Considering all of the above, the Company recognizes the following three key areas:

The occupational health and safety of our employees and our industrial partners on projects;
Adjustment and environmental impact;
Employee focus through mentoring and professional development.

21 T H E 2 0 2 4 A N N U A L R E P O R T •

11. THE NON-FINANCIAL REPORT

ursuant to provisions of Article 21a of the Accounting Act (OG 78/15, 120/16), EU Directive 2013/34/EU and the 2017/C 215/01 EU Commission Guidelines on non-financial reporting (methodology for reporting non-financial information), the Company included all relevant information on business activities which are expected to be included in the non-financial report in its Annual Report. INSTITUT IGH, d.d. is particularly proud of the long-standing tradition of implementing and certification of the Quality Management System in accordance with the standard HRN EN ISO 9001:2015; the Environmental Management System in accordance with the standard HRN EN ISO 14001:2015; Energy Management System in accordance with the standard HRN EN ISO 50001:2018 and the Occupational Health and Safety Management System in accordance with the standard HRN ISO 45001:2015.

Recertification of the management system according to HRN EN ISO 14001:2015 and HRN EN ISO 45001:2015 took place in February 2024, alongside the regular surveillance of the HRN EN ISO 9001:2015 and HRN EN ISO 50001 management systems. The Institut IGH received confirmation of compliance with the requirements of all the mentioned standards at the end of February 2024 from the certification body DNV.

Additionally, in October of last year, IGH underwent a DNV surveillance for certification according to the ISO/IEC 27001:2013 standard for the information security management system, and the confirmation of compliance was received in November. Given that the expiration of the certification for the HRN EN ISO 9001:2015 standard is in early December, the company DNV conducted an audit according to the requirements of this standard, as well as the standards HRN EN ISO 14001:2015, HRN EN ISO 45001:2015, and HRN EN ISO 50001 (surveillance audit). Confirmation of compliance with the requirements was received on December 18th 2024.# INSTITUT IGH, d.d.

Management systems

The integration of all management systems in INSTITUT IGH, d.d. continued in 2024, by upgrading the integrated management system with the information security system. This facilitated the overall operation of the management system, increased its efficiency, reduced costs, and reduced the number of management system documents, thus bringing the management systems closer to the staff and facilitating access and understanding. As part of the management system, several training sessions were conducted for all new employees to raise awareness about the management systems, the contribution of each employee to the system's efficiency, and the policies on quality, information security, environment, energy, and occupational health and safety. Two integrated internal audits were carried out at the Osijek and Rijeka locations, covering the general management system, environmental management system, and energy management system. Extensive activities were initiated at the Osijek location in response to issues identified during the DNV audit. Efforts began to address the timing adjustments for heating at the location, which included replacing the main control valve and the control device. During 2025, results in heat savings are expected, which are projected to exceed the investment made in the system. Independently, the laboratories conducted internal audits of their systems according to HRN EN ISO/IEC 17025:2017 and internal audits of methods based on previously approved plans. The certification body DNV conducted an audit for HRN EN ISO 14001, HRN EN ISO 45001 (recertification), HRN EN ISO 9001, and HRN EN ISO 50001 (surveillance audit) in February 2024, and in December for the recertification of the management system according to HRN EN ISO 9001. All certificates continued to be valid without any reduction in scope. The surveillance audit for the information security management system according to ISO 27001 was conducted in October 2024, and a new certificate was issued for the mentioned system. The next surveillance audit for the HRN EN ISO 27001:2015 standard is scheduled for May 2025, while for the other standards, it will take place in the fall of 2025.

The Quality Management System including Laboratories

INSTITUT IGH, d.d. bases its activities on business standards, social responsibility and certified Quality Management System in accordance with the requirements of the standard ISO 9001:2015 within the framework of an integrated management system. The laboratories meet the all competency requirements and represent the largest construction laboratory in Croatia. All laboratories are equipped with state-of-the-art equipment for laboratory and field testing, research services, calibration of measuring instruments, and are accredited according to the HRN EN ISO/IEC 17025:2017 standard. Laboratory activities have also been conducted for many years in accordance with the requirements of the HRN EN ISO/IEC 17025:2017 standard at multiple locations across Croatia (Zagreb, Split, Rijeka, Osijek, Pula, and Varaždin). All organizational units perform testing/calibration/sampling in both accredited and non-accredited areas. In 2024, there was no surveillance by the Croatian Accreditation Agency (HAA) for testing laboratories, but surveillance is scheduled for February 2025. The metrology laboratory underwent an assessment by the Croatian Accreditation Agency in April 2024. The methods for calibrating length measuring instruments, force, vibration tables with measuring systems, non-automatic weighing instruments, and temperature chambers were reviewed. The assessors recommended the continuation of accreditation for all methods after addressing non-conformities, which was completed in June 2024. The quality of the metrology laboratory was confirmed during the accreditation surveillance by the Croatian Accreditation Agency in April 2024, with certificate 2070 for 16 methods related to the following measurement quantities: force, length, frequency, mass, and temperature.

Environmental management

Through the environmental management system, Institut IGH d.d. in 2024 continued to reduce negative environmental impacts to a minimum, taking into account climate changes and prospects of the life cycle of every product. In accordance with the requirements of our clients, suppliers, employees, business partners and other interested parties, and related to the range of activities we are engaged in, we estimated that the ecological footprint is relatively small. We have thus dedicated ourselves to the operations which we can significantly influence. Our environmental management system, according to ISO 14001, but also energy according to ISO 50001 forces us to look for improvement opportunities through environmental aspects, but also through risk assessment and resolving nonconformities.

Upravljanje okolišem (DISCLOSURE 306)

Principal waste management goals in Institut IGH were connected to raising awareness about waste management through the study of options and possibilities or waste recycling and recovery. In 2024, the following types and quantities of waste were managed:

Table 1.: Types of waste created in 2024, per type and regional center.

Type of waste	ZG (t)	ST (t)	OS (t)	RI (t)	Generated waste (t)	Recovered (t)	Waste disposal (t)
Mixed construction waste (Concrete, aggregate, brick, tiles/roofing and ceramics)	58,23	12,66	11,86	36,09	118,69	118,69	-
Glass	0,05	0,05	-	-	0,05	0,05	-
Bitumen	0,08	0,08	-	-	0,08	0,08	-
Plastic and metal (municipal)	2,04	0,00	0,01	0,00	2,05	2,05	-
Plastic packaging	0,40	0,00	0	0,00	0,36	0,36	-
Solvent packaging	0,04	0,04	-	-	0,04	0,04	-
Waste tires	0,03	0,03	-	-	0,03	0,03	-
Lab. chemicals	0,12	0,12	-	-	0,12	0,12	-
Paper and cardboard	11,48	0,06	1,61	0,37	13,52	13,52	-
Batteries and accumulators	0,002	0,002	-	-	0,002	0,002	-
Non-chlorinated hydraulic oils	1,00	0,00	0,00	0,00	1,00	1,00	-
Non-chlorinated motor oils	0,30	0,00	0,00	0,00	0,3	0,3	-
Bulky waste	17,90	0,00	0,00	0,00	17,90	-	17,90
Sludge or solid waste with solvents	0,5	0,00	0,00	0,00	0,5	-	-
Mixed municipal waste	35,64	0,00	0,00	0,00	35,64	-	35,64
Tetrachloroethylene	-	0,04	0,10	0,15	0,29	-	-
Total	127,812	12,76	13,58	36,61	190,762	135,62	53,83

Table 1. Data on the amount of waste in 2024

The inputs for the data in Table 1 are reported data from the Pollutant Register and Transfer Register (PRTR) and records on the generation and handling of waste. Waste recycling companies do not classify construction waste according to other key codes but treat it all as mixed construction waste, as they recycle it under this category. Materials such as stone wool, concrete, bricks, tiles, aggregate, polystyrene, and similar materials that arrive at the Institut IGH, d.d., as samples for testing are returned to production for reuse, thereby creating additional—longer value for the product. By extending the lifespan of construction products, the amount of waste is reduced, directly lessening the environmental impact and supporting the circular economy model. Significant progress has been made in recycling waste generated from the processes of the Institut IGH. In 2024, 71.43% of the waste was recycled, compared to 58.82% in 2023. This was achieved by selecting new service providers and agreements with waste management companies that adjusted their processes to recycle more waste and dispose of less. All waste is handed over to authorized waste collectors, meaning it is managed outside of the IGH. However, we do not have access to information on what happens to this waste afterward or how the recycling or disposal is carried out.

Environmental data (DISCLOSURE 305)

Direct greenhouse gross emissions are displayed in Table 2.

Table 2.: Direct greenhouse gross emissions for 2021 – 2024.

	2021	2022	2023	2024
Direct greenhouse gross emissions in equivalent of metric tons (scope 1)	595798,2 t	525001,5 t	411739,2	376787,7
Greenhouse gross emissions by company revenue	0,003334704	0,002900561	0,002307	0,002111
Reduction of greenhouse gas emissions per company revenue compared to 2021	13%	30,9%	36,6%	-

Gasses included in the calculation: CO2, CH4. Source of calculation and used emission factors and GWP potential rate: EIB Project Carbon Footprint. The year 2021 was taken as the base year since it is the only one relevant. This also applies for the monitoring of energy consumption. A significant reduction of greenhouse gas emission which is a consequence of changes in employee behavior and business processes, and particularly of a more rational use of vehicles, can be seen.

Social responsibility

INSTITUT IGH, d.d. continues to promote socially responsible business practices through the development of its business processes via reorganization and digitalization, by focusing on employees, encouraging and advancing scientific research, and demonstrating environmental responsibility. In alignment with global goals for reducing carbon and water footprints and promoting responsible energy consumption, the Institute commits to improving its own efficiency through defined objectives. The Institut IGH, d.d. will continue to permanently enhance its business model in the interest of customers, investors, employees, and suppliers, as well as the broader social community.

Following this, a new Quality Policy was issued in November, which has been expanded to include topics such as sustainable development, respect for human rights, and workplace harassment.# Regarding the indirect gross market energy GHG emissions (scope 2) and gross other indirect GHG emissions (scope 3), data are not available or not applicable.

Energy management (DISCLOSURE 302-1)

The energy management system requires an energy audit per location, monitoring of energy consumption and compliance with legal requirements, in accordance with the ISO 50001 standard. The energy review carried out as part of the energy management system in accordance with ISO 50001 includes the following IGH locations of business: The headquarters in Zagreb, RC Split, RC Osijek, RC Rijeka, with some limitations. Regional center Split was not included in the analysis since 2022 because we do not have the data on energy consumption for that location. Other locations are energy-nonsignificant consumers and are not covered by the analysis. As far as renewable sources are concerned, they are currently not being used, although this is one of the goals set for 2025. Energy consumption in 2024 in INSTITUT IGH, D.D. is shown in table 3. N.B.: These data do not include the consumption in Split because we do not have comparable data since 2022.

Table 3: Energy consumption in 2024

Groups of energy sources	Energy source	Consumption per unit of measurement	Consumption in kWh	Consumption in J
Transport	Diesel	139.551 L	1.493.196	5,376*10^12
Heating	Heat	1.912.555 kWh	1.912.555	6,885*10^12
Electricity	Electricity	1.242.880 kWh	1.242.880	4,474*10^12
Water	Water	6022 m^3	-	-
Total	All		4.648.631	*1,67410^13**

A comparison of the total energy consumption shows that heating consumes the most energy. A graph showing the consumption of water, electricity and heating (Picture 1) as well as the consumption of fuel (Picture 2) shows that all forms of energy consumptions have a decreasing tendency in last recent years.

Picture 1.: The 2018-2024 water, HEP heating and electricity consumption.

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Picture 2.: The 2018-2024 fuel consumption

All the energy consumed in the Company comes from non-renewable sources, while the consumption of energy from renewable sources is planned in year 2025. In conclusion, energy consumption is monitored and analyzed, and improvements in energy savings are evident. The biggest savings in energy sources were visible in fuel consumption compared to the previous year. Regarding other energy sources which significantly impact energy efficiency, savings are also visible, although 2021 and 2024 can hardly compare with historical data (2018-2019-2020) because the energy management system was only introduced in 2019 and energy consumption started to be monitored. The year 2020 was the „COVID-19 year“(work from home, self-isolation, isolation…). Therefore, 2021 was taken as the base year. In addition, the owner of the building in which the Split RC is located, doesn't keep track of the energy consumption of all the users, but includes the price of bills in the rent and energy consumption can't be precisely determined.

Energetski pokazatelji (DISCLOSURE 302-3)

Energy indicators are defined as the relationship between energy consumption and the relevant variables affecting consumption. The relevant variable here is Institut IGH revenue. The 2021-2024 data are displayed in table 4.

Table 4.: Overview of energy parameters compared to the Company's revenue between 2021-2024. (Revenue in kuna, symbol: HRK,kn)

EnPi	2021	2022	2023	2024	2024-2021
Total energy consumption (J)	2,278*10^13	2,01581*10^13	1,6806*10^13	1,674*10^13	-6,04*10^12
IGH revenue (HRK)	178.666.000	181.000.000	178.489.527	154.809.868	-23.856.132
EnPi (J/kn)	127503,57	111370,93	94156,27	10813,26	-1936,78

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Table 5.: Overview of energy parameters compared to the Company's revenue between 2021-2024. (Revenue in euro, symbol: EUR)

EnPi	2021	2022	2023	2024	2024-2021
Total energy consumption (J)	2,278*10^13	2,01581*10^13	1,6806*10^13	1,674*10^13	-6,04*10^12
IGH revenue (EUR)	24.217.027	24.734.882	27.954.367	20.548.164	-3.668.863
EnPi (J/EUR)	94.066,05	81.4966,49	60.119,41	81.467,13	-12598,91

The total energy consumption includes total energy used for heating, cooling and transport. The implementation of the Energy Management System according to ISO 50001 significantly influenced the reduction of energy consumption, primarily through employee education etc. A decreasing tendency in energy consumption is obvious and it is growing every year.

Water (DISCLOSURE 303)

In order to achieve concrete steps towards sustainable business operations and keeping in mind the importance of water as a resource, we understand the importance of water management. However, by assessing the risk of impact on waters (environmental aspects according to ISO 14001, risk assessment according to ISO 50001) and exploitation of this resource, we have come to the conclusion that Institut IGH has a minimal water footprint. Water use is limited to sanitary needs and cooling of samples during a testing procedure at one of our locations. The Company purchases and intakes water from a utility company and returns the used water into the drainage system. It is a closed drainage system and should have no losses. Water consumption is monitored in absolute amounts and through energy indicators (taking into account relevant variables). Absolute water consumption in megaliters, in IGH amounts to: 6,277 ML. This information should not be taken as exact since data on water consumption in RC Split is unavailable, and data for RC Rijeka reflect only a part in the total water consumption of the building in which IGH has its offices. Data is collected from the bills received from the utility company supplying water. IGH has one sprinkler tank in Zagreb which contains 0,1115 Ml of water. The water quantity in the sprinkler tank did not change during the period in question.

Occupational Health and Safety Management (DISCLOSURE 403)

The established system of management of occupational health and safety at work provided a framework for managing risks and opportunities, ensured healthy workplaces for employees and reduced the number of injuries and work-related diseases. In 2024, the focus was on risks directly related to work processes. Therefore, internal monitoring by occupational safety experts was intensified in processes identified as higher risk through the Risk Assessment. The employer's authorized occupational safety officers were informed about the findings of the internal inspections, and corrective actions were initiated, most of which have been accepted and closed.

The performance of the occupational safety system is monitored through key system indicators, which include workplace injuries and fatalities, as well as lost workdays and hours relative to the total number of hours worked. Data including 2024 is provided in Table 6. In 2024, we had two injuries recognized as workplace injuries. One occurred during fieldwork, and the other happened while leaving work in an area not under the employer's control.

Table 5.: An analysis of the 2013 - 2024 work-related injuries

YEAR	No. Of ACCIDENTS	LOST WORKING DAYS	FREQUENCY RATE*	SEVERITY RATE**	Number of injured employees	Number of working hours per employee	Total hours IGH	Lost hours	Lost days
2013	4	100	0,03	0,74	651	2088	1359288	800	100
2014	3	50	0,02	0,39	613	2088	1279944	400	50
2015	2	59	0,02	0,49	578	2088	1206864	472	59
2016	3	26	0,03	0,23	532	2088	1110816	208	26
2017	4	22	0,04	0,22	473	2088	987624	176	22
2018	1	62	0,01	0,71	421	2088	879048	496	62
2019	5	99	0,05	1,01	469	2088	979272	792	99
2020	1	18	0,01	0,17	517	2088	1079496	144	18
2021	2	15	0,02	0,14	521	2088	1087848	120	15
2022	2	8	0,02	0,08	492	2088	1027296	64	8
2023	0	8	0,00	0,10	372	2088	776736	0	0
2024	2	44	0,03	0,61	347	2088	724536	352	44

Calculation frequency: n. Injuries/ n. Hours worked x 10.000
*Index calculation of gravity: total working days lost / total hours worked x 10.000

12. RELATIONS WITH EMPLOYEES

In 2024, Company employee rights were regulated by:
* The Labor Act.
* A Labor bylaw of 21 August 2023, which entered into force on 1 September 2023, revoking the previous bylaw and its amendments.
* The Decision on Company Vehicle Use no. OD-2-11/2021 of 1 July 2021, revoking The Bylaw on Company Vehicle Use of 8 July 2020.
* Management Decision no. OD-15-1/2021 adopted the consolidated text of the Business Trip and Field Work Bylaw applied from 25 March 2021, and which revokes all other bylaws/decisions on the matter.
* Management Decision no. OD-12-2/2024 of 29 February 2024, which put into force the Decision on Pay Grades, and revoked the Decision on Pay Grades no. OD-74/2020 of 20 July 2020.

Staff structure

On 31 December 2024, INSTITUT IGH, d.d. had 339 employees, with 12 more employees working in branch offices, resulting in a reduction of 33 employees compared to 31 December 2023, when the total number of employees amounted to 384.

Table – The Age and educational structure of IGH employees in Croatia and foreign branch offices on 31 December 2024.

AGE	Low-skilled	Skilled	High School Degree	3-year College Degree	5-year College Degree	MSc.	Ph.D.	TOTAL	Percentage
20-29	10	1	13	24				48	7,08%
30-39	10	2	54	66				132	19,47%
40-49	1	23	10	54	2			90	26,55%
50-59	2	34	10	46	10	3		105	30,97%
60-69	1	6	8	31	2	4		52	15,34%
70-75				2				2	0,59%
TOTAL	3	1	83	31	198	16	7	339	100%
Percentage	0,88%	0,29%	24,48%	9,14%	58,41%	4,72%	2,06%	100%

13. SHARE TRANSACTIONS

IGH-R-A Trade volume and quantities

IGH-R-A price Source ZSE, https://zse.hr, 2024.In 2024, the Zagreb Stock Exchange traded with 53.064 shares marked IGH-R-A in the amount of 907.248 EUR with the daily concluded prices ranging between 11.10 do 24.00 EUR. (Source: ZSE, Trade information and statistics, Periodic Trade Reports, Review of Trade in 2024). In addition, 12.315 shares were traded on OTC with the average price of 24.00 EUR.

14. CORPORATE MANAGEMENT CODE STATEMENT

The largest shareholders are AVENUE MEHANIZACIJA D.O.O. with 38,24%, AVENUE ENGINEERING AND CONSTRUCTION LIMITED with 16,17% and FROTIP DEVELOPMENT D.O.O. with 15,13%, while all other shareholders hold 30,47% shares in the Company.

Overview

	2024	2023
	No. of shares %	No. of shares %
IGH-R-A AVENUE MEHANIZACIJA D.O.O.	566.581 38,24%	566,581 38,24%
IGH- R-A FROTIP DEVELOPMENT D.O.O.	239.500 16,17%	301,173 20,33%
IGH- R-A AVENUE ENGINEERING AND CONSTRUCTION LIMITED	302.450 20,42%	248.604 16,78%
IGH- R-A SMIRNOV MANAGMENT & TRRANSPORTING J.D.O.O.	53.846 3,63%	0 0%
IGH- R-A DRNASIN ANTE	16.000 1,08%	14.196 0,96%
IGH- R-A LEJO IVAN	12.500 0,84%	12,500 0,84%
IGH- R-A OTP BANKA D.D./KL1JENT	321 11.955 0,81%	0 0%
IGH- R-A ČERNOŠEK KRUNOSLAV	8.250 0,56%	0 0%
IGH- R-A MIHALJEVIĆ BRANKO	8.100 0,55%	8.100 0,55%
IGH- R-A CAPTURIS D.O.O.	7.895 0,53%	7.895 0,53%
IGH- R-A INSTITUT IGH, D.D.	6.659 0,45%	6.659 0,45%
IGH- R-A OSTALI DIONIČARI	262.554 17,72%	248,165 16,75%
Total	1.481.463 100%	1.481,463 100%

Source ZSE, https://zse.hr, 2024.

The Company is continuously developing and operating in accordance with defined standards in Corporate Governance Code. This particularly applies to the way the Company's bodies work, ensuring transparency of operations, working with shareholders and employees and towards third parties. In 2022, the Company adopted its own Code of Conduct, which includes obligations of ethical conduct in corporate governance among employees and towards suppliers. The Management Board has complied with the provisions of the Code of Conduct and the Corporate Governance Code of the Zagreb Stock Exchange d.d. since the date of listing the shares on the Official Market. The Company applies the legally prescribed corporate governance measures and provides detailed information about them in the annual questionnaire, which is published on the websites of the Zagreb Stock Exchange d.d. and the Company in accordance with the regulations. This Code has the force of a recommendation that provides guidelines to the Company's bodies and employees in the Company to respect the principles prescribed and elaborated in this Code when making all types of decisions.

The goal of the Corporate Governance Code is to establish high standards of corporate governance and transparency of the operations of the Company and its majority-owned subsidiaries. The Corporate Governance Code defines the corporate governance procedure in order to protect shareholders, employees, elected and appointed holders of responsible functions in the Company, as well as all other stakeholders, through good and responsible management and supervision of the Company's business and management functions. The Company's shares are listed on the official market of the Zagreb Stock Exchange and the Company continuously synchronizes itself with the Corporate Governance Code of the Zagreb Stock Exchange. The Company respects and follows the prescribed guidelines for corporate governance. Deviations from the Corporate Governance Code of the Zagreb Stock Exchange d.d. and explanations of the specific reasons for such deviations are published in the annual questionnaire of the Zagreb Stock Exchange.

There are no holders of securities (shares) in the Company with specific control rights. There are no restrictions regarding voting rights in the Company. Each share carries one vote. There are no time limits for execution of voting rights in the Company, and there are no instances where, in cooperation with the Company, the financial rights pertaining from securities are separated from holding of these securities.

The procedure for convening, the jurisdiction, and the quorum, as well as the methods of decision- making of the General Assembly are regulated by the Company's Articles of Association. When convening the General Assembly, the Company's Management Board is obliged to determine the date according to which the status of the share register will be determined, which will be relevant for exercising the right to vote at the General Assembly of the Company. The Company treats all shareholders equally and under the same conditions, regardless of the number of shares they hold, their country of origin, and their other characteristics.

The election or appointment of members of the Supervisory Board is regulated by the Company's Articles of Association. There are no restrictions based on gender, age, education, profession, etc. The Companies Act determines any amendments to the Company's Articles of Association. All information for public disclosure of information is located on the Company's website. Rules on appointment and revocation of appointment of Management Board members are laid down in Articles 31-34 of the Articles of Association of the Company. Rules on the powers of the Board members are laid down in Article 33 of the Articles of Association. The Articles do not contain special rules on the powers of the Board members to issue Company shares or acquire own shares. Rules on appointment and revocation of appointment of Supervisory Board members and the powers of the Company Supervisory Board are given in Articles 23-30 of the Company's Articles of Association.

Management Bord

On December 31st 2024, the Management Board of INSTITUT IGH, JSC consisted of four independent members:
1. Robert Petrosyan – president of the Management Board
2. Marija Đuroković – member of the Management Board
3. Tatjana Bičanić – member of the Management Board
4. Josip Majer – member of the Management Board

Supervisory Board

During 2024, the Supervisory Board of INSTITUT IGH, JSC consisted of five independent members:
1. Žarko Dešković – Chairman of the Supervisory Board
2. Mariyan Tkach – Deputy Chairman of the Supervisory Board
3. Sergej Gljadelkin – member of the Supervisory Board
4. Igor Tkach – member of the Supervisory Board
5. Marin Božić – member of the Supervisory Board, union representative

The tasks and responsibilities of the Supervisory Board of the Company are regulated by the Company's Articles of Association. The members of the Supervisory Board perform their duties with the care of a diligent and conscientious businessman and must keep the company's business secrets. During the reporting period, the Supervisory Board of the Company consisted of five members. The work of the Supervisory Board is regulated by the Rules of Procedure of the Supervisory Board, which is published on the Company's website. During the reporting period, the Supervisory Board held a total of four meetings, where all members of the Supervisory Board were present at one meeting.

General assembly

The members of the General assembly are each individual shareholder or a shareholder's proxy. In 2024, the General Assembly of INSTITUT IGH, JSC acted as follows:
1. Žarko Dešković – president of the General assembly

The General assembly makes decisions that have a significant impact on the state of assets, financial position, business results, ownership structure and management of the Company. The decisions are made solely at the General assembly meeting of the Company by the prescribed majority of votes. The Management Board of the Company is obliged to publicly announce the decisions of the General assembly as soon as possible, as well as information on any lawsuits to challenge them. In 2024, the General assembly was held on July 26th 2024.

Audit committee

In accordance with the Company's Articles of Association, the Supervisory Board of the Company established the Audit committee. The Audit committee is a body that provides support to the Management Board and the Supervisory Board in the effective performance of the Corporate Governance Code, financial reporting and control obligations of the Company. The work of the Audit committee is regulated by the Rules of Procedure of the Audit committee, which are published on the Company's website. The Audit committee, appointed in accordance with the law, composed as a committee of three independent members. On the date of the annual report and during the reporting period, it consisted as follows:
1. Gerhard Sattler – president of the Audit commitee
2. Nadica Šalov – member of the Audit commitee
3. Alina Yukaeva – member of the Audit commitee

In 2024, four meetings of the Audit committee were held, where all members of the Audit committee were present at all three meetings.

15. INTERNAL CONTROLS

In line with the Corporate Governance principles, the Management of the Company and its subsidiaries established respective internal control systems and risk management systems. An effective internal control system contributes to the preservation of the company's assets. The Company Management is responsible for the implementation and execution of the internal control and internal audit systems, as an independent and autonomous task which contributes to the definition of risks and assesses the efficiency of controls. Management of the Company and its subsidiaries are responsible for the implementation and execution of internal control of financial reporting. The internal control system is organized to ensure reasonable assurance of the Management regarding the preparation and fair presentation of separate and consolidated financial statements.# Company Management and its subsidiaries have assessed the efficiency of internal control regarding the 2024 financial reports and concluded that the internal control of financial reporting has fulfilled all set criteria.

16. RISK MANAGEMENT

Pored već naznačenih rizika u bilješkama uz temeljna financijska izvješća, uprava Društva izvješćuje i o sljedećim rizicima:

The company considers all significant information related to key risk factors that it is aware of and that are important for the company's ability to continue operating under the assumption of unlimited business continuity. The main risks are outlined below:

A) Risk of settlement of obligations from the pre-bankruptcy settlement – concluded in 2024

The Company concluded the pre-bankruptcy settlement on December 5th 2013, before the Commercial Court in Zagreb, case number 72. Stpn-305/2013. The settlement became final on December 28th 2013. By the decision of the Commercial Court in Zagreb, Tt-24/34060-2 of October 3rd 2024, the entry under serial number 4 – the approval of the pre-bankruptcy settlement for the registered company INSTITUT IGH, Joint Stock Company for Research and Development in Construction, Zagreb, Janka Rakuše 1, MBS: 080000959, OIB: 79766124714, registered by the decision of the Commercial Court in Zagreb under number Stpn-305/2013 on December 5th 2013, based on the report of the independent auditor from July 5th 2024, is deleted. The obligations based on the pre- bankruptcy settlement as of December 31st 2023, amounted to 39 thousand EUR, and were fully settled on February 15th 2024. The audit of the settlement of obligations from the pre-bankruptcy settlement was carried out during June 2024.

B) Currency risk

The Company is exposed to currency risk from changes in the exchange rate of EUR against other currencies, with respect to the balances of received loans, payables to suppliers, and receivables from customers. The company is additionally exposed to changes in the EUR exchange rate against KM, GEL, and AMD due to operations in Bosnia and Herzegovina, as well as subsidiaries in Georgia and Armenia. Other currencies do not have a significant impact on the business. To avoid currency risk, sensitivity analysis is carried out, which includes only open monetary positions in foreign currencies and their recalculation at the end of the period based on percentage changes in exchange rates. The sensitivity analysis includes monetary assets and monetary liabilities in the currency.

C) Interest rate risk

The interest rate risk is the risk of changes in the value of a financial instrument due to changes in market rates relative to the interest rates applied to the financial instrument. The company uses loans with predominantly fixed interest rates defined in the agreements and is not exposed to the risk of interest rate changes. The company does not use instruments for active protection against interest rate risk exposure.

D) Credit risk

The credit risk represents the risk that one party to a financial instrument will cause financial losses to the other party due to non-fulfillment of an obligation, either in full or in part, at its maturity. Non-fulfillment of an obligation would jeopardize the company’s liquidity and reduce the value of its assets. As of December 31th 2024, the financial assets that potentially expose the company to credit risk consist mainly of loans provided, receivables from customers, and other receivables.

E) Liquidity risk

The liquidity risk represents the risk that the Company will face difficulties in meeting its obligations, arising during the general financing of the company’s activities and managing asset positions. It includes the risk of being unable to finance assets according to appropriate maturities and prices, as well as the risk of being unable to sell assets at a reasonable price and within an appropriate time frame. Financial instruments also include investments that may be illiquid and that the company cannot quickly liquidate to meet its liquidity requirements. To ensure necessary liquidity, the management actively monitors and manages the processes of receivable collection and planned outflows.

17. FINANCIAL OVERVIEW

	INSTITUT IGH d.d.	IGH Group
	2023 2024 Change %	2023 2024 Change %
Operational revenues	27.644 20.676 -25,21%	29.404 20.768 -29,37%
Operational costs	-18.268 -16.678 -8,70%	-18.447 -16.790 -8,98%
EBITDA	9.376 3.998 -57,36%	10.957 3.978 -63,69%
EBITDA margin	33,92% 19,34% -42,99%	37,26% 19,15% -48,60%
Short-term assets (except for inventory)	8.544 9.184 7,49%	8.744 9.297 6,32%
Short-term liabilities, except liabilities for credits and loans	8.574 9.308 8,56%	8.860 9.557 7,86%

INSTITUT IGH, d.d. achieved EBITDA in the amount of EUR 9.4 million in 2024, compared to EUR 5.6 million in 2023. The results of the IGH Group are primarily determined by the operations of the parent company, which also positively affected the results of the entire Group. A more detailed financial overview is provided in the annual financial statements in the Appendix.

18. THE GRI INDEX REPORT

Statement of use

INSTITU IGH, d.d. compiled this Report, presented through this Index, for the period between 1 January 2024 and 31 December 2024, taking into account the GRI standards.

GRI STANDARD DISCLOSURE	PAGE / OMISSIONS
GRI 1 used	GRI 1: Foundation 2021
GRI 2: General Disclosures 2021
2-1 Organizational details	19
2-2 Entities included in the organization’s sustainability reporting	13, 14
2-3 Reporting period, frequency and contact point	1 January 2024 - 31 December 2024, Tatjana Bičanić
2-4 Restatements of information	N/A
2-5 External assurance	21, 22
2-6 Activities, value chain and other business relationships	3-7, 13-15, 19
2-7 Employees	3, 16-18,19-20, 29
2-8 Workers who are not employees	N/A
2-9 Governance structure and composition	19, 21-22, 31-32
2-10 Nomination and selection of the highest governance body	32-33
2-11 Chair of the highest governance body	33
2-15 Conflicts of interest	34-35
2-16 Communication of critical concerns	30-33, 44-47
2-17 Collective knowledge of the highest governance body	32-33
2-18 Evaluation of the performance of the highest governance body	43-47
2-19 Remuneration policies	43-47
2-20 Process to determine remuneration	43-47
2-21 Annual total compensation ratio	43-47
2-22 Statement on sustainable development strategy	N/A
2-23 Policy commitments	13-14
2-24 Embedding policy commitments	13-14
2-25 Processes to remediate negative impacts	21-28
2-26 Mechanisms for seeking advice and raising concerns	43
2-27 Compliance with laws and regulations	2, 20-22, 43
2-28 Membership in associations/NGOs	N/A
2-29 Approach to stakeholder engagement	13-15
2-30 Collective bargaining agreements	N/A
GRI 3: Material Topics 2021
3-1 Process to determine material topics	20
3-2 List of material topics	20
3-3 Management of material topics	20
GRI 201: Economic Performance 2016
201-1 Direct economic value generated and distributed	N/A
201-2 Financial implications and other risks and opportunities due to climate change	N/A
201-3 Defined benefit plan obligations and other retirement plans	20
201-4 Financial assistance received from government	N/A
202-1 Ratios of standard entry level wage by gender compared to local minimum wage	No applicable data
202-2 Proportion of senior management hired from the local community	No applicable data
203-1 Infrastructure investments and services supported	No applicable data
GRI 202: Market Presence 2016
203-2 Significant indirect economic impacts	No applicable data
204-1 Proportion of spending on local suppliers	No applicable data
GRI 203: Indirect Economic Impacts 2016
205-1 Operations assessed for risks related to corruption	No applicable data
205-2 Communication and training about anti-corruption policies and procedures	During probation period
GRI 204: Procurement Practices 2016
205-3 Confirmed incidents of corruption and actions taken	N/A
GRI 205: Anti-corruption 2016
206-1 Legal actions for anti-competitive behavior, anti-trust, and monopoly practices	N/A
207-1 Approach to tax	In accordance with the law
207-2 Tax governance, control, and risk management	34-35
GRI 206: Anti-competitive Behavior 2016
207-3 Stakeholder engagement and management of concerns related to tax	N/A
GRI 207: Tax 2019
207-4 Country-by-country reporting	13-15,17-19,43
GRI 301: Materials 2016
301-1 Materials used by weight or volume	23-28
301-2 Recycled input materials used	N/A
301-3 Reclaimed products and their packaging materials	N/A
GRI 302: Energy 2016
302-1 Energy consumption within the organization	24-27
301-2 Recycled input materials used	24-27
301-3 Reclaimed products and their packaging materials	24-27
302-1 Energy consumption within the organization	24-27
302-2 Energy consumption outside of the organization	24-27
GRI 303: Water and wastewater 2018
303-1 Interactions with water as a shared resource	25, 27
303-2 Management of water discharge- related impacts	27
303-3 Water withdrawal	27
303-4 Water discharge	27
303-5 Water consumption	27
GRI 304: Biodiversity 2016
304-1 Operational sites owned, leased, managed in, or adjacent to, protected areas and areas of high biodiversity value outside protected areas	27
304-2 Significant impacts of activities, products and services on biodiversity	N/A
304-3 Habitats protected or restored	N/A
304-4 IUCN Red List species and national conservation list species with habitats in areas affected by operations	N/A
GRI 305: Emissions 2016
305-1 Direct (Scope 1) GHG emissions	N/A
305-2 Energy indirect (Scope 2) GHG emissions	N/A
305-3 Other indirect (Scope 3) GHG emissions	N/A
305-4 GHG emissions intensity	24
305-5 Reduction of GHG emissions	24
305-6 Emissions of ozone-depleting substances (ODS)	24
305-7 Nitrogen oxides (NOx), sulphur oxides (SOx),	THE 2024 ANNUAL REPORT • 39
306-1 Waste generation and significant waste-related impacts 23-24
306-2 Management of significant waste- related impacts 23-24
306-3 Waste generated 23-24
GRI 306: Waste 2020
306-4 Waste diverted from disposal 23-24
306-5 Waste directed to disposal 23-24
308-1 New suppliers that were screened using environmental criteria N/A
308-2 Negative environmental impacts in the supply chain and actions taken N/A
401-1 New employee hires and employee turnover 3, 29
GRI 308: Supplier Environmental Assessment 2016
401-2 Benefits provided to full-time employees that are not provided to temporary or part-time employees N/A
401-3 Parental leave Not included in this report
GRI 401: Employment 2016
402-1 Minimum notice periods regarding operational changes In agreement with employer
403-1 Occupational health and safety management system 21, 27-28
403-2 Hazard identification, risk assessment, and incident investigation 27-28, 35
GRI 402: Labor/Management Relations 2016
403-3 Occupational health services 27-28
GRI 403: Occupational Health and Safety 2018
403-4 Employee participation, consultation, and communication on occupational health and safety 27-28
403-5 Employee training on occupational health and safety All employees have to undergo training and get tested
403-6 Promotion of employee health There are occasionally employee programs. All employees working in the field have to go through mandatory health checkups and skill tests.
THE 2024 ANNUAL REPORT • 40
403-7 Prevention and mitigation of occupational health and safety impacts directly linked by business relationships There are occasionally employee programs. All employees working in the field have to go through mandatory health checkups and skill tests.
403-8 Workers covered by an occupational health and safety management system No applicable data
403-9 Work-related injuries 27-28
403-10 Work-related ill health 27-28
404-1 Average hours of training per year per employee No applicable data
404-2 Programs for upgrading employee skills and transition assistance programs No applicable data
404-3 Percentage of employees receiving regular performance and career development reviews No applicable data
GRI 404: Training and Education 2016
405-1 Diversity of governance bodies and employees 29, 32-33
405-2 Ratio of basic salary and remuneration of women to men Equal
406-1 Incidents of discrimination and corrective actions taken N/A
GRI 405: Diversity and Equal Opportunity 2016
407-1 Operations and suppliers in which the right to freedom of association and collective bargaining may be at risk N/A
408-1 Operations and suppliers at significant risk for incidents of child labor N/A
GRI 406: Non-discrimination 2016
409-1 Operations and suppliers at significant risk for incidents of forced or compulsory labor N/A
GRI 407: Freedom of Association and Collective Bargaining 2016
410-1 Security personnel trained in human rights policies or procedures N/A
GRI 408: Child Labor 2016
413-2 Operations with significant actual and potential negative impacts on local communities N/A
GRI 409: Forced or Compulsory Labor 2016
N/A
GRI 410: Security Practices 2016
THE 2024 ANNUAL REPORT • 41
GRI 411: Rights of Indigenous Peoples 2016
414-1 New suppliers that were screened using social criteria N/A
GRI 413: Local Communities 2016
414-2 Negative social impacts in the supply chain and actions taken N/A
415-1 Political contributions N/A
GRI 414: Supplier Social Assessment 2016
416-1 Assessment of the health and safety impacts of product and service categories N/A
416-2 Incidents of non-compliance concerning the health and safety impacts of products and services N/A
GRI 415: Public Policy 2016
417-1 Requirements for product and service information and labelling N/A
GRI 416: Customer Health and Safety 2016
417-2 Incidents of non-compliance concerning product and service information and labelling N/A
417-3 Incidents of non-compliance concerning marketing communications N/A
GRI 417: Marketing and Labelling 2016
418-1 Substantiated complaints concerning breaches of customer privacy and losses of customer data N/A
THE 2024 ANNUAL REPORT • 42
19. SIGNATURE BY COMPANY MANAGEMENT
By signing this report, the Company Management hereby makes the following statement: „In accordance with our beliefs, knowledge and information at our disposal, we hereby state that all information set forth in this Report constitute a complete and accurate representation, and facts that could affect the completeness and accuracy of this Report have not been omitted.“
__________
Robert Petrosian, president of the Management Board
THE 2024 ANNUAL REPORT • 43
20. ATTACHMENTS
1. SCIENTIFIC COUNCIL OF INSTITUT IGH, d.d.
2. CORPORATE MANAGEMENT CODE
3. FINANCIAL STATEMENTS
THE 2024 ANNUAL REPORT • 44
Attachment 1. SCIENTIFIC COUNCIL OF INSTITUT IGH, d.d.
During 2024, the Institut IGH, d.d., continued to implement both ongoing and new activities in the field of scientific research and innovation. By a decision of the Management Board on September 27th 2024, the Scientific Research Council welcomed new associate members. In anticipation of appropriate legal frameworks and standardized methods, work continued in the field of microplastics, including educating colleagues working in this area through seminars. Contact was established with the Faculty of Science (PMF), Department of Geology, for which microplastics is one of the specialized fields. Two colleagues obtained the DGNB certificate for sustainable construction in Europe. The implementation of laboratory tests began on the fresh and hardened properties on concrete with different types of low-CO2 cement. As a member of the community, we submitted an application for the HORIZON project LIFE-2024-CET call, Project 101216116 — LIFE24-CET-BETTER. Collaboration was initiated with the startup named Arkensight, with the goal of upgrading the SGG program and improve the infrastructure monitoring system. Tests were conducted as part of the "Innovation Vouchers for SMEs" program on the topic of testing concrete mixtures with the addition of new phase-change materials (PCM) to achieve a higher level of energy efficiency in concrete used in residential or commercial buildings. Two project proposals were submitted for Proof of Concept (POC): an innovative solution for inspecting and detecting road surface damage, and the validation of an innovative concept in the development of concrete pavers with integrated phase-change materials.
THE 2024 ANNUAL REPORT • 45
Attachment 2. CORPORATE MANAGEMENT CODE
The corporate management code that is a key part of this report will be submitted as a separate document.
THE 2024 ANNUAL REPORT • 46
Attachment 3. FINANCIAL STATEMENTS
Unconsolidated and consolidated financial statements of the company INSTITUT IGH, d.d., for the year which ended on December 31, 2024 together with the Independent Auditor's Report.
INSTITUT IGH, JSC, Zagreb Annual unconsolidated financial statements and an independent Auditor's report for the year 2024
INSTITUT IGH, JSC, Zagreb Annual unconsolidated financial statements and an independent Auditor's report for the year 2024
Page	Management's Response
1
1 Responsibility for the annual unconsolidated financial statements
The Management Board of INSTITUT IGH, JSC, Zagreb, Janka Rakuše 1 and its subsidiaries (hereinafter: IGH Group) shall ensure that the Company’s 2024 annual consolidated and separate financial statements are prepared in accordance with the current Croatian Accounting Act and International Financial Reporting Standards, which are defined by the European Commission and published in the Official Journal of the European Union. They shall provide a true and fair view of the financial position, operating results, and changes in capital and cash flows of the IGH Group for the subject period. After making enquiries, the Management Board has a reasonable expectation that the IGH Group has adequate resources to continue as a going concern for the foreseeable future. For this reason, the Management Board continues to adopt the going concern basis in preparing the financial statements for the IGH Group.
In preparing the annual financial statements, the responsibilities of the Management Board include:
• the selection and then consistent application of appropriate accounting policies in accordance with current financial reporting standards;
• providing reasonable and prudent judgments and assessments;
• preparation of annual financial statements on a going concern basis, unless this assumption is inappropriate.
The Management is responsible for keeping proper accounting records, which will at any time and with reasonable accuracy reflect the financial position, operating results, changes in capital and cash flows of the IGH Group and must also ensure that the financial statements comply with the Croatian Accounting Act in force. The Management Board is also responsible for safeguarding the assets of the IGH Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Signature of the Management Board::
Robert Petrosian Josip Majer Marija Đuroković
President of the Board Member of the Board Member of the Board
Tatjana Bičanić
Member of the Board
Institut IGH, d.d.
THE 2024 ANNUAL REPORT • 47# INDEPENDENT AUDITOR'S REPORT

TO THE OWNER

INSTITUT IGH, JSC

Audit report on the annual financial statements

Qualified opinion

We have audited the financial statements of INSTITUT IGH, JSC, Zagreb (“the Company”), which include the financial statement as at December 31, 2024, the statement of other comprehensive income, the statement of cash flows, the statement of changes in capital for the year then ended, as well as the notes to the financial statements, including significant accounting policies.

In our opinion, the financial statements fairly and truthfully present the financial position of the Company as at December 31, 2024, its financial performance and its cash flows for the year ended, in accordance with International Financial Reporting Standards adopted by the European Union (IFRS).

Basis for the qualified opinion

We have conducted our audit in accordance with International Auditing Standards (IAS). Our responsibilities pursuant to these standards are described in more detail in the Auditor's Responsibilities in the Audit of Annual Consolidated and Separate Financial Statements section of our Auditor's report.

We are independent of the Company, in accordance with the International Code of Ethics for Professional Accountants, including International Independency Standards issued by the International Ethics Standards Board for Accountants (IESBA) (The IESBA Code), as well as in accordance with the ethical requirements relevant for our audit of financial statements in the Republic of Croatia. We have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code.

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

Other matters

The Company has investments in subsidiaries whose annual financial statements are required to be consolidated into the Group's financial statements. We draw attention to the fact that the Company's annual financial statements should be read together with the consolidated annual financial statements of the INSTITUT IGH Group for the year ended December 31, 2024, for a better understanding.

Drawing attention to matters

We would like to draw attention to Note 2.6 „Going concern“ accompanying these financial statements. As at December 31, 2024, the IGH Group's short-term liabilities exceed the short-term assets by EUR 1,033 thousand (EUR 863 thousand in 2023). The Management Board of the IGH Group is making efforts to resolve the current situation and improve the Company's business and financial position, all for the purpose of doing business under the assumption of going concern. Our opinion has not been modified on this matter.

Key audit matters

Key audit matters are those matters that were, in our professional judgement, of greatest importance in our audit of consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

| Key audit matter # Report of Independent Auditor

• Assess the appropriateness of accounting policies used and the reasonability of accounting estimates and related disclosures made by the Management.
• Make conclusions on the appropriateness of the going concern basis of accounting used by the Management, and, based on the audit evidence obtained, we conclude whether there is significant uncertainty regarding the events or circumstances that can create serious doubt in the ability of IGH Group to continue as a going concern. If we conclude there is serious uncertainty, we are required to draw attention in our Independent Auditor's Report to the related notices in the annual financial statements, or, if such notices are not appropriate, to modify our opinion. Our conclusions are based on the audit evidence obtained until the date of our Independent Auditor's Report. However, future events or conditions can cause the Company to stop operating as a going concern.
• We evaluate the overall presentation, structure and content of the annual financial statements, including notices, as well as whether the annual financial statements reflect the transactions and events they are based on in a way that reflects a fair presentation.
We communicate with those in charge of Management regarding, among other, the planned scope and time schedule of the audit, and the important audit findings, including significant flaws in internal controls discovered during our audit. We also make a statement to those in charge of Management that we have complied with the relevant ethical requirements regarding independence and will communicate with them on all relationships and other issues that can reasonably be considered to affect our independence, as well as, where applicable, on actions taken to address the threats to independence, and related safeguards.
Among the matters communicated to those in charge of Management, we determine those matters of utmost importance in the audit of annual financial statements in of the current period making these matters key audit matters. We describe those matters in our Independent Auditor's Report, unless an Act or a Regulation prevents the public disclosure of a matter or, when we decide, under extremely rare circumstances, that a matter should not be disclosed in our Auditor’s Report, because it can reasonably be expected that the negative consequences of disclosure would outweigh the benefits of public interest in such a disclosure.

Report on other legal and regulatory requirements

Based on the proposal of the Supervisory Board, we were appointed by the General Assembly of the Company on Jun 26, 2024 to perform a statutory audit of the annual financial statements for year 2024.
At the date of this Report, we are continuously engaged in carrying out the Company's financial statements audit for year 2023, until the audit of the Company's financial statements for 2024, which amounts to a total of two years.
In the audit of the IGH Group annual financial statements for the year 2024, we determined the materiality of financial statements as a whole in the amount of EUR 298 thousand, which is approximately 3,5% of the EBITDA, as we consider that due to the high depreciation and financing costs, this is the most appropriate benchmark for measuring the Group's performance.
Our audit opinion is consistent with the additional Report for the IGH Group’s Audit Committee drawn up in accordance with the provisions of Article 11. of the Regulation (EU) No. 537/2014.
During the period between the initial date of the audited 2024 financial statements of the IGH Group, and the date of this Report, we did not provide forbidden non-audit services to the Company and we did not, in the business year prior to the abovementioned period, provide services for the design and implementation of internal control procedures or risk management procedures related to the preparation and/or control of financial information or the design and implementation of technological systems for financial information, and we maintained our independence in relation to the Company during our audit.

A Report based the requirement of Commission Delegated Regulation (EU) 2018/815 of supplementing Directive 2004/109/EC of the European Parliament and of the Council with regard to regulatory technical standards on the specification of a single electronic reporting format.

A Report on the Auditor's assurance on the harmonization of the financial statements, prepared pursuant to the provisions of Article 462., Paragraph 5. of the Capital Markets Act (Official Gazette, no. 65/18, 17/20, 83/21 and 151/22) by applying the requirement of the Delegated Regulation (EU) 2018/815 specifying a single electronic reporting format for the issuer (hereinafter: the ESEF Regulation).

We conducted our engagement with the expression of a reasonable belief as to whether the financial statements were prepared for the purposes of public disclosure pursuant to Article 462., Paragraph 5. of the Capital Market Act, which are contained in the attached electronic file Institut IGH-2024-12-31- en in all material respects prepared in accordance with the requirements of the ESEF Regulation.

Responsibilities of the Management and those in charge of management

The IGH Group Management Board is responsible for the preparation and content of the financial statements in accordance with the Regulation on ESEF. In addition, the IGH Group's Management Board is responsible for the maintenance of internal control systems that reasonably ensure the preparation of the financial statements without significant discrepancies between them and the requirements contained in the ESEF regulation, whether due to fraud, or error.

The IGH Group's Management Board is also responsible for:
- Disclosure to the public of the financial statements contained in the Annual Report in the current XHTML format, and
- selection and use of XBRL codes in accordance with the requirements of the Regulation on ESEF.

Those in charge of management are responsible for supervising the preparation of the financial statements in ESEF format as part of the financial reporting process.

The responsibilities of the Auditor

Our responsibility is to express a conclusion, based on the audit evidence collected, whether the financial statements are free from material non-compliance with the requirements of the ESEF Regulation. We conducted this engagement with the expression of a reasonable conviction, in accordance with the International Standard on Assurance Engagement (ISAE) 3000 (amended) - engagements with the expression of convictions other than audits or insights into historical financial information.

The conducted procedures

We carried out the following activities as part of the selected procedures:
- we read the requirements of the ESEF Regulation;
- we have gained an understanding of the internal controls of the company relevant for the application of the requirements of the ESEF Regulation;
- we have identified and assessed the risks of material non-compliance with the ESEF Regulation due to fraud or error; and
- on this basis, we developed and implemented procedures to respond to the risks assessed and to obtain a reasonable assurance to express our conclusion.

The aim of our procedures was to assess whether:
- the financial statements included in the Annual Report were prepared using the valid XHTML format;
- the data contained in the financial statements and required by the EESEF Regulation, are marked and whether all markings meet the following requirements:
- use of the XBRL mark-up language;
- basic taxonomy listed in the ESEF regulation with the closest accounting meaning was used unless an additional taxonomy element in accordance with Annex IV of the ESEF regulation was created;
- the mark-up is in accordance with the common mark-up rules pursuant to the ESEF Regulation.

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

Conclusion

In our opinion, based on conducted procedures and obtained evidence, the financial statements presented in the ESEF format, contained in the above-mentioned attached electronic file and pursuant to the provision of Article 462., Paragraph 5. of the Capital Markets Act, prepared for public disclosure, in all significant respects are in accordance with the requirements of Articles 3., 4., and 6. of the ESEF Regulation for the year ended December 31, 2024.
In addition to this conclusion, as well as the opinion contained in this Independent Auditor's Report for the accompanying financial statements and Annual Report for the year ended December 31, 2024, we do not express any opinion on the information contained in these statements or on other information contained in the above-mentioned file.

The partner engaged in the audit, which resulted in this Independent Auditor's Report is Paško Anić- Antić.

Paško Anić-Antić
Paško Anić-Antić
Croatian authorized auditor
Director
April 25, 2025

Russell Bedford Croatia – Revizija d.o.o.
Selska cesta 90B
10000 Zagreb
Republic of Croatia

INSTITUT IGH, JSC
Unconsolidated statement of comprehensive income
for the year ended December 31, 2024

Notes	2023.	2024.
	thous. EUR	thous. EUR

	Notes	2023. thous. EUR	2024. thous. EUR
EUR Sales Revenue	4	16,307	17,433
Other operating income	5	1,337	3,243
Total revenue		27,644	20,676
Cost of consumables, raw materials and services	6	720	648
Cost of services	6	4,871	4,544
Staff costs	7	11,081	10,763
Other operating expenses	9	1,596	723
Total operating expenses		18,268	16,678
Depreciation	13 i 14	2,195	2,029
Value adjustment of other fixed assets	8	-	257
Value adjustment of receivables	8	441	203
Total depreciation and impairment		2,636	2,489
Financial revenue	10	311	90
Financial expenditure	11	1,981	485
Pre-tax profit		5,070	1,114
Corporate tax	12	1,014	125
Current year profit		6,084	1,239
Other comprehensive income not to be reclassified through profit and loss
Revaluation of fixed assets, net of tax		912	770
Other comprehensive profit		912	770
Total comprehensive income for the year		6,996	2,009
Base profit per share (in euros)		8,87	0,84

The accompanying notes below form an integral part of these unconsolidated annual financial statements.

INSTITUT IGH, JSC Unconsolidated statement of financial position for the year ended December 31, 2024

ASSETS

	Notes	2023. thous. EUR	2024. thous. EUR
Non-current assets	13	13	18
Property, plants and equipment	14	6,126	6,123
Investment in property		33	79
Investments in related parties and other investments	15	3,044	3,044
Loans and deposits given	17	22	130
Trade receivables and other receivables	16	161	131
NON-CURRENT ASSETS TOTAL		9,399	9,525
Inventories		75	75
Trade receivables and other receivables	16	3,047	3,161
Loans given and deposits	17	3,963	3,893
Accrued income and prepaid expenses	20	557	903
Contract assets	21	567	1,103
Cash and cash equivalents		410	124
CURRENT ASSETS TOTAL		8,619	9,259
Non-current assets held for sale	19	1,632	-
TOTAL ASSETS		19,650	18,784

EQUITY AND LIABILITIES

	Notes	2023. thous. EUR	2024. thous. EUR
EQUITY TOTAL		5,281	5,619
Share capital	22	14,815	14,815
Own shares	23	400	400
Reserves for own shares	23	192	192
Other reserves	23	100	100
Revaluation reserves	24	1,667	1,483
Accumulated losses		(11,093)	(10,571)
Non-current liabilities	25	3,255	2,873
Loans and borrowings	25	31	-
Lease liabilities	27	1,881	2,231
Provisions	28	987	324
Deferred tax liabilities	12	330	318
Trade and other payables	29	26	-
Current liabilities	25	11,114	10,292
Loans and borrowings	25	2,540	984
Lease liabilities	27	1,356	1,573
Trade and other payables	29	5,796	6,387
Liabilities for advances received	30	783	776
Liabilities for deposits received	30	41	34
Provisions	28	3	3
Contract liabilities	21	137	79
Accrual and deferred income	31	458	456
EQUITY AND LIABILITIES TOTAL		19,650	18,784

The accompanying notes below form an integral part of these unconsolidated annual financial statements.

INSTITUT IGH, JSC Unconsolidated statement of changes in equity for the year ended December 31, 2024

In thous. EUR	Capital	Own shares	Reserves for own shares	Other reserves	Revaluation reserves	Accumulated loss	TOTAL
Status on December 31, 2022	15,476	400	192	100	5,170	(31,210)	(10,672)
Share capital decrease	(9,339)	-	-	-	-	9,339	-
Share capital increase	8,678	-	-	-	-	-	8,678
Transfer from revaluation reserves	-	-	-	-	(3,503)	3,782	279
Current year profit	-	-	-	-	-	6,084	6,084
Other comprehensive income	-	-	-	-	-	912	912
Total comprehensive income	-	-	-	-	-	6,996	6,996
Status on December 31, 2023	14,815	400	192	100	1,667	(11,093)	5,281
Status on January 1, 2024	14,815	400	192	100	1,667	(11,093)	5,281
Transfer from revaluation reserves	-	-	-	-	(184)	2	(182)
Other changes	-	-	-	-	-	(1,489)	(1,489)
Current year profit	-	-	-	-	-	1,239	1,239
Other comprehensive income	-	-	-	-	-	770	770
Total comprehensive income	-	-	-	-	-	2,009	2,009
Status on December 31, 2024	14,815	400	192	100	1,483	(10,571)	5,619

The accompanying notes below form an integral part of these unconsolidated annual financial statements.

INSTITUT IGH, JSC Unconsolidated statement of cash flows for the year ended December 31, 2024

	Notes	2023. tis. EUR	2024. tis. EUR
Cash flow generated from operations
Profit(loss) before tax		5,070	1,114
Adjustments:
Depreciation		2,195	2,029
Value adjustments		286	-
Interest income	2	2	90
Interest expenses	6	673	485
Net decreases in provisions	(454)	(691)
Gains from the sale of long-term assets		-	928
Other adjustments for non-financial transactions and unrealized profit and losses		13,625	(93)
Write-off of liabilities		(5,838)	(1,031)
Decrease (Increase) of receivables		1,750	50
Decrease of contract assets		(64)	(243)
(Decrease) Increase of current liabilities		(14,802)	1,521
(Decrease) of contract liabilities		(1)	(2,374)
Total adjustments for profit and loss reconciliation		(2,632)	491
Net cash flow from operating activities		2,438	1,605
Cash flows from investment activities
Cash flows from loans given		87	-
Outflow for purchase of non-current tangible and intangible assets		1,129	-
Net cash flow from investment activities		(1,042)	-
Cash flow from financial activities
Cash receipts from loan principal, loans and other borrowings	17	283
Cash outflows for rent		1,428	1,608
Net cash flow from financial activities		(1,445)	(1,891)
Net increase or decrease in cash flows		(49)	(286)
Cash and cash equivalents at the beginning of the period		459	410
Cash and cash equivalents at the end of the period		410	124

The accompanying notes below form an integral part of these unconsolidated annual financial statements.

INSTITUT IGH, JSC Notes to the financial statements (continuation) for the year ended on December 31, 2024

1. General information

Foundation and development

Institut IGH, JSC Zagreb, Janka Rakuše 1 street, Croatia (hereinafter: the „Company“), OIB 79766124714, entered in the Commercial Court Register in Zagreb under the registration number 080000959. Company shares, mark IGH-R-A, ISIN: HRIGH0RA0006 are listed on the Zagreb Stock Exchange.

The Company is conducting its business in the field of research and development in the construction industry, which includes: design, preparation of studies, professional supervision, consulting services, research works, proving usability, laboratory testing and calibration.

The Company is certified for the aforementioned activities in accordance with the standards of the sustainable development system, as follows:

HRN EN ISO 9001 – Quality Management Systems
HRN EN ISO 14001 – Environmental Management Systems
HRN EN ISO/IEC 17025 – General qualification requirements – Testing Laboratory
HRN EN ISO/IEC 17025 – General qualification requirements – Metrology Laboratory
HRN EN ISO/IEC 17065 – Conformity assessment – Requirements for bodies carrying out certification of products, processes and services
HRN EN ISO 27001 – Information security management systems
HRN EN ISO 45001 – Occupational Health and Safety Management Systems
HRN EN ISO 50001 – Energy Management Systems

The country of establishment of the Company is the Republic of Croatia. The Company's headquarters are located in Zagreb, Republic of Croatia. The Company's headquarters is located at the address Janka Rakuše 1, 10000 Zagreb, Republic of Croatia.

Except for operations from the headquarters, the Company carries out its operations through foreign subsidiaries in Georgia, Bosnia and Herzegovina, North Macedonia, Armenia and Hungary

Company Bodies:

General Assembly

Chairman - Žarko Dešković

Members of the General Assembly are individual Company shareholders or their proxies.

Supervisory Board

In 2024, the Supervisory Board of Institut IGH, JSC consisted of 5 members, as follows: to:

Žarko Dešković - Chairman of the Supervisory Board Chairman since December 1, 2023
Mariyan Tkach – appointed Deputy Chairman of the Supervisory Board since December 1, 2023
Sergej Gljadelkin – appointed member of the Supervisory Board since December 1, 2023
Igor Aleksandrov Tkach – appointed member of the Supervisory Board since December 1, 2023
Marin Božić – appointed member of the Supervisory Board since June 14, 2021

The Management Board of the Company and the Group

On December 31, 2024, the Management Board consisted of 4 members:

Robert Petrosian – President of the Management Board, represents the Company solely and independently since June 17, 2024
Josip Majer – member of the Management Board, represents the Company together with the President of the Management Board and with other member, since June 17, 2024
Marija Đuroković – member of the Management Board, represents the Company together with the President of the Management Board and with other member, since June 17, 2024
Tatjana Bičanić - member of the Management Board, represents the Company together with the President of the Management Board and with other member, since June 17, 2024

The Audit Committee of the Company and the Group consists of three members:

Gerhard Sattler
Nadica Šalov
Alina Yuvakaeva

2. Basis for preparation

2.1. Statement of compliance – the Company

The unconsolidated financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS), valid throughout the EU. The Company conducts its accounting records in the Croatian language, in accordance with Croatian laws and the accounting principles and practices observed by enterprises in Croatia.

These unconsolidated financial statements were authorized for issue by the Management Board on April 25, 2025. The unconsolidated financial statements for the year ended on December 31, 2024 are available at the company's web site https://www.igh.hr/.

2.2. The adoption of new standards, interpretations and changes to International Financial Reporting Standards („IFRS“)

The first application of the new amendments of existing standards in force to the ongoing reporting period

In the ongoing reporting period, the following amendments to existing standards published by the International Accounting Standards Committee (IASC) and adopted by the European Union and are effective.

Standard Name | Amend.# INSTITUT IGH, JSC Notes to the financial statements (continuation) for the year ended on December 31, 2024

IFRS 16 Leases – lease liability in a sale and leaseback transaction published in September 2022.
Amend. IASC 1 Presentation of financial statements – classification of liabilities as current or non-current published in January 2020.
Amend. IASC 7 and Statement of cash flows (IASC 7) and Financial instruments (IFRS 7) - IFRS 7 disclosure of information about companies' financial arrangements with suppliers published in May 2023.
The adoption of new standards did not lead to material changes in the disclosures or amounts presented in these financial statements.

Standards and amendments to existing standards published by the OMRS and adopted in the European Union but not yet in force
IFRS currently adopted in the European Union do not differ significantly from those adopted by the International Accounting Standards Board (OIAS), with the exception of the following new standards and amendments to existing standards, the adoption of which has not yet been decided by the European Union on one year (the dates of entry into force mentioned below refer to IFRS issued by the OIAS):

Standard Name	Adoption status in the EU
Amend. to IAS 21 (Effective date set by the IASB: January 1, 2025)	Inability to replace Not yet adopted in the EU
Amend. to IAS 7 and IFRS 9 (Effective date set by the IASB: January 1, 2026)	Nature-dependent electricity contracts Not yet adopted in the EU
IFRS 18 Presentation and disclosure in financial statements (Effective date set by the IASB: January 1, 2027)	Not yet adopted in the EU
IFRS 19 Subsidiaries without public liability (Effective date set by the IASB: January 1, 2027)	Not yet adopted in the EU
Amend. to IFRS 10 and IAS 28 Sale or subscription of assets between the investor and its affiliated entity or joint venture (IASB postponed the date of entry into force for an indefinite period, with earlier application permitted)	Adoption procedure postponed until completion of the research project on the topic of application of the share method

The Company is currently assessing the impact of new standards and amendments to existing standards on its financial statements. The Company expects that the adoption of these new standards and amendments to the existing standards will not lead to significant changes in the financial statements during the first application of the standards.

2.3. Basis for measurement

The financial statements are presented in accordance with the historical cost convention, except for the following:
* Revaluations of the value of land and buildings as stated in Note 3.10 (j);
* Investments in real estate as stated in Note 3.12;
* Assets at fair value through other comprehensive income as stated in Note 3.19;
* Non-current assets intended for sale as stated in Note 3.23;
* The methods used to measure the fair value are presented in Note 3.24.

2.4. Functional currency and presentation currency

Items included in the Company's financial statements are stated in the currency of the primary economic environment in which the Company operates - the functional currency. The Company used euros (EUR) for the purposes of preparing its financial statements for the year ended 31 December 2024. The rounding level presented in the financial statements is a thousand Euros.

2.5. Use of estimates and judgments

The preparation of financial statements in accordance with IFRS requires the Management Board to make judgments, estimates and assumptions that affect the application of policies and amounts published for assets and liabilities, income and expenses. Estimates and associated assumptions are based on historical experience and various other factors, which are believed to be reasonable under the circumstances, the result of which forms the starting point for creating estimates of the value of assets and liabilities, which cannot be obtained from other sources. Actual results may differ from such estimates. These estimates and respective assumptions are subject to regular reviews. The impact of an estimate correction is recognized in the period in which the estimate was corrected if the correction affects only the period in which it was made or in the period in which the correction was made and future periods if the correction affects current and future periods. Judgments made by the Management Board in the application of IFRS, which have a significant impact on the financial statements and judgments where the risk of materially significant adjustments in the next year is high, are listed in note 3.1.

INSTITUT IGH, JSC Notes to the financial statements (continuation) for the year ended on December 31, 2024

2.6. Going concern

During 2013, the Company initiated a pre-bankruptcy settlement procedure, through which it reached an agreement with creditors on the restructuring of liabilities and limited exposure to certain related companies. Independently of the financial restructuring, the Company then carried out a capital increase through the issuance of new shares and, in order to ensure the necessary liquidity, initiated the sale of certain assets. The pre-bankruptcy settlement procedure was successfully completed by the Decision of the Commercial Court in Zagreb No. 72. Stpn- 305/13 dated December 5th 2013, which approved the conclusion of the Pre-Bankruptcy Settlement between the debtor Institut IGH, JSC and the creditors of the Pre-Bankruptcy Settlement. The Pre-Bankruptcy Settlement became final on December 28th 2013. The impacts and fulfillment of the Pre-Bankruptcy Settlement plan are described in detail in the Note 35. As of February 15th 2024, the Company settled all obligations under the pre-bankruptcy settlement, which as of December 31, 2023 amounted to EUR 38 thousand. In order to improve the profitability of operations and core business, over the past years the Company has implemented a number of operational restructuring measures and has had a more active market access. IGH Group recorded a decrease in sales revenues in 2023 compared to 2022 of EUR 3.642 thousand, but recorded operating profit in the amount of EUR 3.052 thousand (2022 profit amounting to EUR 5.283 thousand). The IGH Group's capital is positive at EUR 5.281 thousand (in 2022 the capital was negative at EUR 7.640 thousand). On December 31st 2023, short-term liabilities of the IGH Group exceed short-term assets by EUR 863 thousand (2022: short-term liabilities exceed short-term assets by EUR 19.424 thousand). Since the final pre-bankruptcy agreement to December 31st 2023, the Company paid off a total of Euro 56.985 thousand of liabilities incurred before the start of the Pre-bankruptcy agreement proceedings. During 2023, the Company paid off Euro 1.414 thousand of PIK debt, Euro 9.316 thousand of senior debt and Euro 3.378 thousand of respective interest. With the balance sheet date, Senior debt due amounts to Euro 38 thousand which has been fully settled by February 15th 2024. These financial reports have been prepared under the assumption of a going concern basis. In 2025, the IGH Group’s Management Board continues to adjust and change key business processes and activities that are necessary for ensuring the quality and stability of further business, with a focus on strategic goals and future development of the Company. In addition to all of the above, the Board considers that on the basis of business plans and concluded contracts, the Company is capable of continuing its operations. The closure of the pre-bankruptcy settlement was formally completed and confirmed by the Commercial Court in Zagreb on January 17th 2025.

Below given is an outline of significant accounting policies adopted for the preparation of these financial statements. These accounting policies have been consistently applied for all periods included in these statements.

INSTITUT IGH, JSC Notes to the financial statements (continuation) for the year ended on December 31, 2024

3. Principal accounting policies

3.1. Principal accounting judgements and estimates

Key judgements in the application of accounting policies

The Company and the IGH Group recognize revenues and costs under contracts from the design activity based on an assessment of the degree of completion of the contracted operations at the balance sheet date, which requires a certain degree of judgement. If it is not possible to reliably assess the outcome of the contract, revenue under the contract shall be recognized to the extent that the costs incurred by the contract are likely to be recoverable. Contract costs shall be recognized as expenditure of the period in which they are incurred. If the total costs of the contract are likely to exceed the total revenues of the contract, the expected losses shall be recognized immediately as a cost.

(i) Recognition of revenue

(ii) Lifetime of real estate, plant and equipment

The Company and the IGH Group shall review the estimated lifetime of the property, plant and equipment at the end of each annual reporting period. There was no change in the lifetime estimates of fixed assets during the year.The Company regularly checks the recoverability of the assets individually, and if there are indications of impairment, the same shall be done up to the estimated recoverable value.

(iii) Pre-bankruptcy settlement and going concern
The Company shall consider all material information relating to all key risk factors, assumptions and uncertainties that it is aware are relevant to the Company's ability to continue to operate under the assumption of a going concern. The Company continuously invests maximum efforts with the aim of increasing operational business, and the year 2024 is significant for the settlement of almost the entire debt from the pre-bankruptcy settlement. The pre-bankruptcy debt was fully settled by February 15th 2024. The Company points out that it also actively settles liabilities towards other creditors through the sale of non-operating real estate and through refinancing of the operative part of debt. Looking at a stable contract base, a successful deleveraging towards non-financial institutions as well as all information on the progress of restructuring of debt towards financial institutions, the Company considers that it meets all operating requirements under the assumption of going concern.

(iv) Valuation of liabilities according to pre-bankruptcy settlement
The Company has reduced its obligations related to loan obligations that will be settled from the Company's real estate, in accordance with the pre-bankruptcy settlement, to the fair value of the corresponding real estate. The Management took the estimated value of real estate as the reference value of liabilities.

3.2. Investments in subsidiaries
Subsidiaries are companies over which the Company has business control, directly or indirectly. Control is achieved when the Company has the right to manage the company's key activities, and as a consequence is exposed to variable returns as a result of such activities. Investments in subsidiaries are initially recognized at cost, and subsequently at cost less impairment. Impairment testing of investments in subsidiaries is carried out on an annual basis.

INSTITUT IGH, JSC Notes to the financial statements (continuation) for the year ended on December 31, 2024 18

3.3. Investments in associated companies
Associated companies are companies in which the Company has significant influence, but does not have control. Significant influence is the power to participate in decisions about the financial and business policies of the entity in which the investment was made, but it does not represent control or joint control of these policies. Investments in associated companies are initially recognized at cost, and subsequently at cost less impairment. Impairment testing of investments in subsidiaries is carried out on an annual basis.

Transactions eliminated in consolidation
The balance and transactions among Group members and all unrealized profit from transactions among Group members are eliminated at consolidation of the financial statements. Unrealized profit from transactions with companies with shareholdings and mutual companies where the Company shares control with other owners is eliminated up to the Company share level in such companies. Unrealized profit from transactions with companies with shareholdings is eliminated by a decrease of investment into that company. Unrealized losses are eliminated in the same way as unrealized profit but only up to the amount which does not represent permanent decrease of assets.

Transactions with non-controlling interests
Non-controlling interests in subsidiaries are included in the comprehensive capital of the Group. Losses from non-controlling interests in subsidiaries are added to the non-controlling interests in situations when the non-controlling interest are shown with a negative value. Adjustments of non- controlling interest are based on the proportional amount of net assets of the subsidiary without goodwill adjustment and recognition of profit or loss in the profit and loss account. Transactions with non-controlling interest which result in loss of control over the subsidiary are treated by the Group as transactions with majority owners of the Group. When purchasing shares from non- controlling interest, the difference between the paid sum and the respective gained share of the book value of the subsidiary's net assets is shown as capital. Gains and losses from sale of non-controlling interest are also shown as capital.

Loss of control
After the loss of control over a subsidiary, the Group ceases to recognize its assets and liabilities, any minority interest or other components of capital and reserves. Any surplus or deficit resulting from loss of control is recognized in the profit and loss. If the Group retains a part in the subsidiary, such part is shown at fair value at the day the control ceases to exist. After that, it is shown as investment valued according to the equity method or as financial assets available for sale, depending on the level of retained influence.

Goodwill
Goodwill, created by business merger is recognized as cost at the date of acquisition, decreased by any loss owing to decreased value. For the purpose of testing for decrease, goodwill is distributed to every cash generating unit of the Group (or groups of such units) where benefits from synergy, i.e. merger are expected. Cash-generating units to which goodwill is distributed undergo annual check for decreased value, or more often if there are indications of its possible decrease in value. If the reimbursable amount of the cash-generating unit is lower than its book value, the loss created by the decrease is distributed so as to decrease the book value of goodwill distributed to the unit, and after, that proportionally to other property of the cash-generating unit on the basis of the book value of every item in that cash-generating unit. Loss due to decrease of goodwill value is directly recognized as profit or loss in the consolidated statements on comprehensive income. Once recognized loss from decrease of goodwill is not annulled in the next periods. When disposing of the cash-generating unit, respective amount of goodwill becomes a part of the profit or loss from sale.

INSTITUT IGH, JSC Notes to the financial statements (continuation) for the year ended on December 31, 2024 19

3.4. Revenue
Policies for recognition of revenue and enforcement obligations
Revenue is measured on the basis of fee specified in the contract with the customer. A company i.e. IGH Group recognizes revenue when it transfers control of a good or service to a customer. The transfer of control over goods or services may take place either continuously (revenue recognition over time) or on a specific date (recognition at a point in time, upon completion). Before revenue is recognized, the Company and IGH Group identify the contract as well as the various obligations of performance contained in the contract. The number of obligations regarding performance depends on the type of contract and activity. Most contracts of the Company and IGH Group involve only one obligation of performance. Recognition of revenue in accordance with IFRS 15 is applicable to the following sources of revenue:

(i) Construction contracts
The main revenue generated by the Company and IGH Group from construction contracts comes from design, study, supervision, consulting services, laboratory services, survey works and scientific research work for the reconstruction and construction of roads and other civil engineering structures. In accordance with the main IFRS 15 principles, the Company's accounting policies for recognizing revenue from contracts with customers reflect:
• The dynamics by which contractual obligations are fulfilled, corresponding to the transfer of goods or services to the customer;
• The amount the seller expects to be entitled to receive as compensation for their activities.
Contractual terms and the way in which the Group manages construction contracts are mainly derived from projects that contain a single performance obligation. The Company and IGH Group use a cost-based method to measure progress to the completion of construction work i.e. the Management has chosen to use the input method to calculate revenue (expenses incurred until a certain date) from the construction contract. Changes to the contract (relating to the price and/or scope of the contract) are recognized when approved by the client. If the changes relate to new products or services that are considered different and when the contract price increases by an amount reflecting the "standalone selling price" of the additional products or services, the changes are recognized as a separate contract. When a third party (such as a subcontractor) is involved in the delivery of a good or service, the Company and IGH Group determine if it assumes control of that product or service before it is transferred to the client. If control is taken before the transfer to the client, the Company and IGH Group recognize as revenue the gross amount it expects to be entitled to receive on handover. In cases where control is not taken, the Company and IGH Group consider that it is not the originator in the transaction and recognizes as income only the amount corresponding to its remuneration as an intermediary. The cost of obtaining a contract that would not have been incurred had the Group not obtained the contract is recognized as an asset if it is recoverable and is depreciated over the estimated contract life. When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognized only to the extent of the contract costs incurred that are likely to be recoverable. The expected contract loss is recognized immediately in the profit and loss account.# INSTITUT IGH, JSC Notes to the financial statements (continuation) for the year ended on December 31, 2024

Contractual assets and contractual liabilities

Contractual liabilities are entered when the client has made payment for goods or services, and the Company and IGH Group did not fulfil their obligation by delivering these goods or services. If the Company, i.e. IGH Group delivered the goods or services to the client and the client did not pay for these, and the right to compensation is not conditioned by anything except by passing of time until maturity, receivables are recognized. Contractual assets are recognized if the right to compensation is conditioned by something else (e.g. by executing some other obligation).

(ii) Income from state aid

State aid is recognized when there is a reasonable belief that the Company, i.e. IGH Group will fulfil the conditions under which the aid is given and a reasonable belief that the said aid will be given. Accordingly, the Company, i.e. IGH Group do not recognize State aid until there is sufficient assurance that the Company will meet the requirements set for the State aid and that the aid will be received. State aid is recognized as profit or loss on a systematic basis over the period in which the costs for which the aid is intended to be covered are recognized. Receivables for State aid to compensate for expenses or losses already occurred, or for the purpose of providing immediate financial support to the entity without future related costs, are recognized as profit or loss of the period in which the receivables were incurred.

(iii) Financial revenue and costs

Financial revenue and costs comprise interest payable on loans and borrowings using the effective interest method, interest receivable on funds invested, dividend income, gains and losses from foreign exchange differences and gain/ losses from sale of investment in subsidiaries. Income from the write- off of financial liabilities is also reported within the financial revenue. Income from interest is recognized in the profit and loss account on an accrual basis using the effective interest rate method. Dividend income is recognized in the profit and loss account on the date when the Company’s right to pay the dividend is established. Financial costs comprise accrued interest on loans, changes in fair value of financial assets at fair value through profit or loss account, impairment losses from financial assets and losses from exchange rate differences. Costs from borrowings are recognized in the Profit and Loss Account using the effective interest rate method.

(iv) Revenue from rent

Revenue from rent is recognized in the period when the rent was provided and refers to operative rent.

3.5. Leases

a) Impact on the accounting on the Lessee

At the initial recognition these assets are evaluated on the basis of cash flows of the lease agreement. After initial recognition, the right of use will be valued according to international standards for assets under IAS 16, IAS 38 or IAS 40 and therefore applying the cost model, decreased by accumulated depreciation and accumulated impairment losses, the revaluation model or the fair value model. In order to calculate the rent and respective asset with the right of use, discounting of future lease payments according to an appropriate discount rate is done. Thus, future rent payments which are discounted are determined according to contractual provisions, without VAT, since the obligation to pay this tax occurs when the invoice is issued by the Lessor and not on the day of the start of Lease Contract. In order to calculate the rent, discounting of future lease payments are done according to an implicit discount rate, or, if unavailable, at an incremental borrowing rate. The incremental borrowing rate is determined based on the financing cost of liabilities of a similar duration and security as those in a lease agreement. When defining the duration of the lease, a period of irrevocability must be considered defined in the Contract, where the Lessee has the right to use the subject asset also considering potential extension options, if the Lessee is reasonably certain of the extension. In fact, when looking at the contracts which allow the Lessor to tacitly extend the Lease Contract after the first period, the period of lease is determined on the basis of facts such as the length of the first lease period, possible plans for the sale of the leased asset and any other circumstance indicating a reasonable safety of extension. An exception to this is low value lease contracts (up to EUR 4 thousand) and short duration contracts which are recognized as costs in the period to which they refer. The Company, i.e. IGH Group leases certain plants and equipment. Finance leases are capitalized at the beginning of the lease at the lower of the fair value of the leased property or the present value of minimum lease payments. Each lease payment is allocated between the liability and finance costs so as to achieve a constant rate on the balance outstanding. The interest element of finance costs is charged to profit or loss over the lease period. The property, plants and equipment acquired under finance leases are depreciated over the shorter of the useful life of the asset and the lease term.

3.6. Foreign currencies

Transactions and balances in foreign currencies

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currency at the reporting date are translated into the functional currency at the foreign exchange rate prevailing at that date. Foreign exchange gains and losses resulting from the settlement of such transactions and from the conversion of monetary assets and liabilities denominated in foreign currencies are recognized in profit or loss. Non-monetary assets and items that are measured in terms of historical cost of a foreign currency are not converted per new exchange rate. Non-monetary assets and liabilities denominated in foreign currency that are stated at historical cost are converted into the functional currency at the foreign exchange rate prevailing at the date of the transaction.

Official exchange rate of the Georgian currency on December 31st 2024 was 2,8932 GEL for 1 EUR (December 31st 2023: 2,9324 GEL for 1 EUR).
Official exchange rate of the BIH currency on December 31st 2024 was 1,95583 BAM for 1 EUR (December 31st 2023: 1,95583 BAM for 1 EUR).
Official exchange rate of the Macedonian currency on December 31st 2024 was 61,2952 MKD for 1 EUR (December 31st 2023: 61,634498 MKD for 1 EUR).
Official exchange rate of the Armenian currency on December 31st 2024 was 418,228 AMD for 1 EUR (December 31st 2023: 442,170 AMD for 1 EUR).

Items included in the financial statements of subsidiaries are expressed in the currency of its respective primary economic environment in which the subsidiary operates, and which is the reporting currency. Separate financial statements are presented in euros, also the functional currency of the parent Company. Revenue and expenditures and cash flows from foreign undertakings are recalculated into the functional currency of the Group using the exchange rate which most accurately represents the exchange rate on the day of the transaction, and their assets and obligations are recalculated according to exchange rate value at the end of the year.

Net investment into Group members

Exchange rate differences from recalculation of the net investment into foreign undertakings are recognized as part of the principal amount. When selling the foreign undertaking, exchange rate differences are recognized in the profit and loss account as part of profit or loss from sale. Exchange rate differences from recalculation of foreign currency, owing to its non-material amount, are included in the accumulated loss amount.

3.7. Borrowings

Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at depreciated cost; any difference between the proceeds (net of transaction costs) and the surrender value is recognized in the comprehensive income statement over the period of the borrowings using the effective interest method. Borrowings are classified as current liabilities, unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Borrowings from creditors classified as "Secured Creditors" (Note 25.) are carried at fair value of the property under mortgage for the borrowings in question, since the collection of the relevant borrowings is possible solely from the mortgaged property.

3.8. Dividend

Dividend distribution to the Company’s shareholders is recognized as a liability in the financial statements in the period in which the dividends are approved by the Company’s General Assembly of Shareholders.

3.9. Taxation

Corporate tax

The income tax charge comprises current and deferred tax. Income tax is recognized in profit or loss except to the extent that it relates to items recognized directly to equity, in which case it is recognized in other comprehensive income. Current tax is the expected tax payable on the taxable income for the year, using the tax rates enacted at the reporting date, and any adjustments to tax payable in respect of previous periods.

(i) Deferred tax assets and liabilities

Deferred tax is recognized using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.# INSTITUT IGH,JSC Notes to the financial statements (continuation) for the year ended on December 31, 2024

Deferred tax is not recognized for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business merger and that affects neither accounting nor taxable profit as well as differences relating to investments in subsidiaries and mutually controlled companies when it is likely that the situation will not change in the near future. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted by the reporting date. A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which temporary difference can be utilized. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realized. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and if they relate to taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.

(ii) Tax exposure

In determining the amount of current and deferred tax, the Company takes into account the impact of uncertain tax positions and whether additional taxes and interest may be due. This assessment relies on estimates and assumptions and may involve a series of judgements about future events. New information may become available that causes the Company to change its judgement regarding the adequacy of existing tax liabilities; such changes to tax liabilities will impact tax expense in the period when a decision is made.

Value Added Tax (VAT)

The Tax Administration requires the settlement of VAT on a net basis. VAT related to sales and purchases is recognized and disclosed in the financial position statement, on a net basis. Where receivables have been impaired, impairment loss is recorded in the gross amount of receivables, including VAT.

3.10. Property, plants and equipment

(i) Land and buildings

Following initial recognition at cost, land and buildings are recognized at revalued amount, which is the fair value at the date of the revaluation less any subsequent accumulated depreciation on buildings and any impairment. Fair value is based on the market value, being the estimated amount for which an asset could be sold INSTITUT IGH,JSC Notes to the financial statements (continuation) for the year ended on December 31, 2024 23 on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction.

When the carrying amount is increased as a result of revaluation, this increase should be recognized directly in other comprehensive income under revaluation reserves. The revaluation increase is recognized as income to the extent that it reverses a revaluation decrease of the same asset previously recognized as an expense.

When the carrying amount is decreased as a result of revaluation, this revaluation decrease should be recognized directly in revaluation reserves to the extent that the decrease does not exceed the amount held in the revaluation reserve for the same asset, while the remaining amount is charged to expenses for the period.

A valuation is performed with sufficient regularity such that the carrying amount does not differ materially from that which would be determined using fair value at the reporting date.

Certain land and buildings are derecognized upon disposal or when no future benefits are expected from its use or disposal. Gains or losses arising from derecognition of lands and buildings (calculated as the difference between the net disposal proceeds and the carrying amount of the item) are included in profit or loss when they are derecognized. The relevant portion of the revaluation surplus, realized in the previous valuation, is released to profit or loss from the surplus of the valued assets upon the disposal of the revalued asset. Also, any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset, and the net amount is restated to the revalued amount of the asset.

Based on the revaluation performed by independent evaluers, the Company has revalued its properties and created revaluation reserves that are transferred to retained earnings/accumulated losses in accordance with the adopted depreciation policy. Gains and losses from disposal of land and buildings are recognized within other income or expenses in the profit and loss account. When revalued assets are sold, the amounts included in revaluation reserves are transferred to retained earnings.

Plants and equipment

Plants and equipment are initially included in the financial statement at cost less accumulated depreciation and accumulated impairment, if any. Cost includes expenditure that is directly attributable to the acquisition of the items.

Following initial recognition at cost, plants and equipment are carried at revalued amount, which is the fair value at the date of the revaluation less any subsequent accumulated depreciation on plants and equipment and any impairment. Fair value is based on the market value, being the estimated amount for which an asset could be exchanged on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction.

(ii) Assets with right of use

Assets with the right of use are shown in the statement of financial position according to the calculated discounted method depending on the period of use. Gains and losses from the termination of property rights are recognized within the profit or loss account, within other income or expenses.

When the carrying amount is decreased as a result of revaluation, this revaluation decrease should be recognized as expenditure. This revaluation decrease directly impacts the revaluation reserves to the extent that the decrease does not exceed the amount held in the revaluation reserve for the same asset.

A valuation is performed with sufficient regularity such that the carrying amount does not differ materially from that which would be determined using fair value at the reporting date.

Certain land and buildings are derecognized upon disposal or when no future benefits are expected from its use or disposal. Gains or losses arising from derecognition of lands and buildings (calculated as the difference between the net disposal proceeds and the carrying amount of the item) are included in profit or loss when they are INSTITUT IGH,JSC Notes to the financial statements (continuation) for the year ended on December 31, 2024 24 derecognized. The relevant portion of the revaluation surplus, realized in the previous valuation, is released to profit or loss from the surplus of the valued assets upon the disposal of the revalued asset and during its use. Also, accumulated depreciation on the revaluation date is excluded from the gross book value of the asset, and the net amount is adjusted to the revalued amount of the asset.

Based on the revaluation performed by independent evaluers, the Company has revalued the value of equipment classified in the depreciation groups - Laboratory equipment and measuring and control devices, and created revaluation reserves that are transferred to retained earnings / accumulated losses, in accordance with the adopted depreciation policy. Gains and losses from disposal of equipment are recognized within profit or loss within other income or expenses. When revalued assets are sold, the amounts included in revaluation reserves are transferred to retained earnings.

(iii) Subsequent costs

Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other maintenance costs are charged to profit or loss during the financial period in which they are incurred.

(iv) Depreciation

Land and assets under construction are not depreciated. Depreciation of other property items, plants and equipment is calculated using the straight-line method to allocate their cost over their estimated useful lives or to their residual values as follows:

Asset Type	Useful Life
Buildings	20 years
Plants and equipment	1 to 8 years
Other	10 years

The remaining value of an asset is the estimated amount that the Company would currently obtain from the sale less the estimated costs of sale, if the asset were already of the age and in the condition expected at the end of its useful life. The assets’ residual value and useful life are reviewed, and adjusted if appropriate, at each reporting date. If an asset’s carrying amount is greater than its estimated recoverable amount, the difference is written-off to its revocable amount. Gains and losses from sale are determined as the difference between the income from sale and the carrying amount of the sold asset, and are recognized in profit or loss within other income/expenses.

3.11. Intangible assets

Patents, licenses and software

(i) Ownership of assets

Patents, licenses and computer software are capitalized on the basis of acquisition costs and costs arising from bringing assets into working condition.

(ii) Subsequent costs

Subsequent costs are capitalized only if they increase future economic benefits arising from the asset.# INSTITUT IGH,JSC

Notes to the financial statements (continuation)

for the year ended on December 31, 2024

All other costs are treated as costs in the profit and loss account, in the period as incurred.

(iii) Depreciation
Intangible assets under construction are not depreciated. Depreciation of other intangible assets is calculated using the straight-line method to allocate their cost over their estimated useful lives or to their residual values as follows:

The right to use property of third parties	1 to 2 years
software, content and other assets	1 to 2 years

(iv) Goodwill
Goodwill represents the difference between the acquisition cost and the fair value of the Group's share in the net identifiable assets of the acquired subsidiary, the recognized amount of the non-controlling interest and the fair value of the previous share at the date of acquisition. Goodwill arising from the acquisition of a subsidiary is reported under intangible assets.

3.12. Investment into property
Investment into property is recognized as an asset when it is likely that future economic benefits will arise from the investment and when the cost of investment can be reliably measured. Investment into property includes property held either to earn rental income or for capital appreciation or both. Investment into property is initially recognized at cost including transaction costs incurred. Subsequently, investment into property is measured at fair value reflecting market conditions at the balance sheet date. Profit or loss from changes in fair value of investment into property is recognized in the profit or loss account of the period in which they are incurred.

3.13. Inventories
The cost of work in progress and finished goods comprise raw materials, direct labor, other direct costs and related production overheads (based on normal operating capacity). Trade goods are carried at the lower than purchase cost and sales price (less applicable taxes and margins). Small inventory and tools are written-off when put into use.

3.14. Trade receivables
Trade receivables are amounts that relate to services sold in the ordinary course of business. If collection is expected within one year, the receivable is shown within current assets, and if not, then the receivable is shown within non-current assets. Trade receivables are initially recognized at fair value and subsequently measured at amortized cost using the effective interest method, less any expected credit loss. Business model for management of receivables is a depreciated cost model, a business model that is achieved by holding financial assets to collect contractual cash flows (principal and interest). Impairment provisions for trade receivables and contractual assets are measured at an amount equal to the expected credit losses over the life of the loan, i.e. by applying a simplified approach to expected credit losses. The Company uses historical observations (over a minimum of 2 years) to measure the expected credit losses of the Company on the days when the receivables are delayed, adjusted for estimated future expectations in the collection of receivables. Trade receivables are broken down by ageing structure. Receivables are impaired and impairment losses for individual customers are incurred if there is objective evidence of impairment arising from one or more events after the initial recognition of the asset when that event affects the estimated future cash flows of the receivable that can be reliably determined. Objective evidence of impairment of financial assets for expected credit losses includes:
• significant financial difficulties with the issuer or debtor and/or
• breach of contract, such as late payment or non-payment of interest or principal and/o
• the likely initiation of bankruptcy or financial restructuring with the debtor.

3.15. Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, deposits held at call with banks and other short- term highly liquid investments that are readily convertible to known amounts of money with original maturities of up to three months or less and which are subject to a slight risk of change in value. Cash and cash equivalents are measured at amortized cost because: (i) they are held for the purpose of collecting cash flows from contracts that represent an SPPI, and (ii) they are not reported as FVTPL.

3.16. Share capital
Share capital consists of ordinary shares. Gains directly attributable to the issue of new shares or options are shown in equity as a deduction, net of income tax, from the proceeds. Any excess of the fair value of the consideration received over the nominal value of the shares issued is presented in the notes as a share premium. Where the Company purchases its equity share capital (own shares), the consideration paid, including any directly attributable transaction costs (net of income taxes), is deducted from equity attributable to the Company’s shareholders until the shares are cancelled or reissued or disposed of. Where such shares are subsequently sold or reissued, any consideration received, net of any directly attributable transaction costs and the related income tax effects, and is included in equity.

3.17. Employee benefits
(i) Pension obligations and post-employment benefits
In the normal course of business, through salary deductions, the Company makes payments to mandatory pension funds on behalf of its employees, as required by law. All contributions made to the mandatory pension funds are recorded as salary expense when incurred. The Company is not obliged to provide any other post-employment benefits.

(ii) Severance pay
Severance pay are payable when employment is terminated by the Company before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Company recognizes severance pay benefits when it is demonstrably committed to either: terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal; or providing severance pay as a result of an offer made to encourage voluntary redundancy.

(iii) Regular retirement benefits
Benefits falling due more than 12 months after the reporting date are discounted to their present value based on the calculation performed at each reporting date by an independent actuary, using assumptions regarding the number of staff likely to earn regular retirement benefits, estimated benefit cost and the discount rate equal to the rate of return on bonds issued by the Republic of Croatia. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized immediately in profit or loss.

(iv) Share-based payments
As part of the long-term reward plan, the Company employees receive share-based payments in exchange for the services they provide. The fair value on the date of approval is recognized as an employee expense, with the corresponding increase in capital and reserves during the period in which the employees exercise their unconditional right to the award. The recognized cost reflects the share of the total reward for the services rendered, and other non-market conditions that are expected to be met. The cumulative amount of the reward recognized on the date of reward reflects services rendered and non-market conditions satisfied.

3.18. Provisions
Provisions are recognized when the Company and IGH Group have a current obligation (legal or constructive) as a result of a past event and it is probable (i.e. more likely than not) that an outflow of resources will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. Where the effect of discounting is material, the amount of the provision is the present value of the expenditures expected to be required to settle the obligation, determined using the estimated risk free interest rate as the discount rate. Where discounting is used, the discounting impact in each year is recognized as a financial expense and the carrying amount of the provision increases in each year to reflect the passage of time.

3.19. Financial instruments
Non-derivative financial instruments
(i) Recognition and initial measurement
Trade receivables and issued debt securities are initially recognized at the time they arise. All other financial assets and financial liabilities are initially recognized when the Company and IGH Group becomes a party to the contractual provisions of the instrument. A financial asset (unless the trade receivable has no significant financial component) or a financial liability is initially measured at fair value plus an item that is not carried at fair value through profit or loss, for transaction costs directly attributable to the acquisition or issue. Trade receivables without a significant financing component are initially measured at transaction cost.

(ii) Classification and subsequent measurement
Financial assets
Upon initial recognition, financial assets are carried at amortized cost, fair value through other comprehensive income - debt investment, fair value through other comprehensive income - investment in equity or fair value through profit or loss account. Financial assets are not reclassified after initial recognition, unless the Company or IGH Group changes its financial asset management business model, in which case all financial assets are reclassified on the first day of the first reporting period after the business model has been changed.## INSTITUT IGH,JSC Notes to the financial statements (continuation) for the year ended on December 31, 2024

Financial assets are measured at an amortized cost if they meet both of the following conditions and are not classified as assets at fair value through profit and loss account: • it is within a business model aimed at holding assets to collect contractual cash flows; and • based on the contractual terms, on certain dates, it receives cash inflows that represent the sole payment of principal and interest on the outstanding principal amount. All financial assets not classified as financial assets at amortized cost as described above are measured at fair value through profit and loss account. Financial assets at fair value through profit or loss are subsequently measured at fair value. Net gains and losses including all interest or dividend income are recognized in the profit and loss account. Financial assets carried at amortized cost are subsequently measured at amortized cost using the effective interest method. Amortized cost is reduced by impairment losses. Interest income, foreign exchange differences and impairment losses are recognized in the profit and loss account. Any gain or loss from derecognition is recognized in the profit and loss account.

Financial liabilities

Financial liabilities are classified as financial liabilities measured at amortized cost or at fair value through the profit and loss account. Financial liabilities are classified as financial liabilities at fair value through profit or loss when held for trading if it represents a derivative or if classified as such at initial recognition. Financial liabilities measured at fair value through the profit and loss account are measured at fair value, and net gain and loss, including all expenditure for interest, are recognized in the profit and loss account. Other financial liabilities are subsequently measured per amortized cost by applying the effective interest rate method. Expenditure for interest and gains and losses from exchange rate differences are recognized in the profit and loss account. Profit and loss at derecognition are also recognized in the profit and loss account.

(iii) Derecognition

Financial assets

The Company ceases to recognize financial assets when the contractual rights to cash flows from financial assets expire or if the Company transfers the rights to receive contractual cash flows in a transaction in which all key risks and rewards of ownership of the financial assets are transferred, or in which the Company neither transfers nor retains all risks and rewards of ownership and does not retain control over financial assets. The Company enters into transactions in which it transfers assets recognized in the statement of financial position but retains all or almost all of the risks and rewards of the transferred assets. In such cases, the transferred property does not cease to be recognized.

Financial liabilities

The Company ceases to recognize a financial liability when its contractual obligations are fulfilled, cancelled or expired. The Company also ceases to recognize a financial liability when its terms have changed and when the cash flows of the changed liability are materially different, in which case the new financial liability is recognized at fair value under the changed conditions. Upon derecognition of financial liability, the difference between the carrying amount and the amount paid (including any transferred non-monetary assets or liabilities) is recognized in the profit and loss account.

(iv) Netting

Financial assets and financial liabilities are netted and the net amount is disclosed in the income statement when, and only when, the Company currently has a legally enforceable right to offset amounts and intends to settle them on a net basis or to realize the assets and at the same time settle the liability.

Effective interest method

An effective interest method is a method that calculates the amortized cost of a financial asset and distributes interest income over the relevant period. An effective interest rate is the rate at which estimated future cash inflows, including any fees paid or received that are an integral part of the effective interest rate, then transaction costs and other premiums and discounts, are discounted over the expected life of the financial asset or a shorter period, if applicable. Income from debt instruments other than financial assets designated at fair value through profit or loss is recognized on an effective interest basis, recognized on an effective interest basis.

3.20. Financial guarantee for the contracted obligations and financial liabilities

Financial guarantee of contractual obligations

The financial guarantee for the contractual obligation is initially measured at fair value and subsequently measured at a higher value:
* the amount determined in accordance with the model of expected credit losses according to IFRS 9, and
* the amount initially recognized, minus, if necessary, the corresponding cumulative effect recognized in accordance with the revenue recognition policy.

Financial liabilities, classification and measurement

Financial liabilities, including loans, are initially measured at fair value less transaction costs and subsequently measured at amortized cost using the effective interest method, with interest expense recognized on an effective yield basis. The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating interest expense over a specified period. The effective interest rate accurately discounts estimated future cash payments over the expected life of the financial instrument or, where appropriate, for a shorter period to the gross carrying amount of the financial asset or the amortized cost of the financial liability, with the exception of financial assets less credit losses. Financial liabilities are classified as financial liabilities at fair value through profit or loss when held for trading or as defined by the Company. They are measured at fair value, and any related gain or loss is recognized in the profit and loss account, except for changes in the fair value of the liabilities resulting from changes in the Company's own credit risk that are recognized through other comprehensive income. The net gain or loss recognized in the profit and loss account also includes interest paid on a financial liability.

3.21. Operating segment reporting

The Company identifies operating segments on the basis of internal reports about the Company components that are regularly reviewed by the chief operating decision maker (which is identified as being the Company's Management Board) in order to allocate resources to the segments and to assess their performance. Details on the operating segments are disclosed in Note 5. with the Financial Statements.

3.22. Earnings per share

The Company presents basic and diluted earnings per share data for its ordinary shares. Basic and diluted earnings per share are calculated by dividing the profit or loss attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.

3.23. Non-current assets held for sale

Non-current assets held for sale are intended to settle the secured debt to financial institutions that have not waived their right to a separate settlement in the process of the pre-bankruptcy settlement. The estimated market value was determined based on the independent valuers’ report that was based on the cost method, the comparative method and/or the income method depending on the type of property.

3.24. Determination of fair value

The Company has an established control system framework with respect to fair value measurement which assumes the overall responsibility of the Management Board and the Finance Department in relation to monitoring all significant fair value measurements, consultation with external experts and the responsibility to report, with respect to the above, to those charged with corporate governance. Fair values are measured using information collected from third parties in which case the Management Board and the Finance Department assess whether the evidence collected from third parties support the conclusion that such valuations meet the requirements of IFRSs, including the level in the fair value hierarchy where such valuations should be classified. All significant issues related to fair values estimates are reported to the Supervisory Board. Fair values are categorized into different levels in the fair value hierarchy based on the inputs used in valuation techniques as follows:
* Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.
* Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices).
* Level 3 - inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).

The fair value of financial instruments traded on active markets is based on quoted market prices at the reporting date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis. The fair value of financial instruments that are not traded on an active market is determined by using valuation techniques. These valuation techniques maximize the use of observable market data where it is available and rely as little as possible on entity specific estimates.# INSTITUT IGH,JSC

Notes to the financial statements (continuation) for the year ended on December 31, 2024

If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2. If one or more of the significant inputs is not based on observable market data, the fair value estimate is included in level 3. In preparing these financial statements, the Company has made the following significant fair value estimates while preparing the financial statements as further explained in detail in the following notes:

Note 14: Property, plants and equipment
Note 15: Investments in related parties and other investments
Note 19: Non-current assets held for sale

4. Information on segments

The Company is organized into business units according to their locations and sectors of construction industry. Business units are engaged in designing, development of studies, supervision, consulting services, laboratory testing, survey work and scientific research. Reportable segments are an integral part of the internal financial statements. The internal reports are regularly reviewed by the Company's Management Board that is also the chief operating decision maker, who assesses the success of business operations and makes business decisions. Internal reporting of segment results is adjusted to business organization and key indicators for each segment separately, and accordingly disclosure of this information is adjusted for the current year and previous period.

4.1 Revenue per segment

Set out below is an analysis of the Company's revenue and results by its reporting segments, presented in accordance with IFRS 8. The revenue presented below relates to third-party sales. Inter-segment revenues are eliminated when reporting. The Company's management reports net income in its internal reports, i.e. sales revenue less the cost of co-operation. Accordingly, segment revenues are presented at this level.

In thous. EUR	2023.	2024.
Design Division	4.986	5.575
Supervision and Project Management Division	6.099	5.396
Materials and Structures Division	4.635	4.514
Subsidiaries	487	1.830
Management and Administration	100	118
Total per segment	16.307	17.433

INSTITUT IGH,JSC

Notes to the financial statements (continuation) for the year ended on December 31, 2024

4.2 Revenue – per geographical area

In thous. EUR	2023.	2024.
The Republic of Croatia	14.761	14.237
Rest of the World	1.546	3.197
Total	16.307	17.433

4.3 Revenue per category

In thous. EUR	2023.	2024.
Revenue recognized over time	15.733	15.193
Revenue recognized at a point in time	574	1.114
Total	16.307	17.433

The Design Division’s basic activity is the development of design and study documentation for transport infrastructure – roads, railways and airports, including all structures on the roads. Technical Supervision and Project Management Division carries out expert supervision of construction works in civil engineering, building construction and energy. In addition, the activity includes advisory services, conducting professional spatial planning, urban planning, design, feasibility studies, expert opinion and expert assessment, property valuation and construction costs. The Materials and Structures Division deals in tests and certification of building materials. With about 600 test methods accredited according to HRN EN ISO / IEC 17025, our laboratories meet the qualification requirements and make approximately 60% of all laboratories in Croatia accredited in the field of construction. Regional centers Split, Rijeka and Osijek participate in almost all major and significant projects in their areas of service from study development, design (roads with all related facilities, water engineering structures, building construction etc.), conducting expert supervision and providing consultancy services, conducting survey works, laboratory testing and proof of serviceability, and scientific research work in the field of construction. The accounting policies of the reportable segments are the same accounting policies as described in Note 3.21. Segment profit represents the profit earned by each segment without allocating central administration costs, depreciation, provisions, impairment, other revenue and other finance income and costs. The Company does not allocate assets and liabilities by segments.

INSTITUT IGH,JSC

Notes to the financial statements (continuation) for the year ended on December 31, 2024

5. Other operating revenue

In thous. EUR	2023.	2024.
Revenue from written-off liabilities	8.870	1.033
Revenue from compensation, subsidies	87	146
Revenue from sale of assets	448	754
Revenue from rent	115	130
Revenue from cancellation of provisions	753	719
Revenue from subsequently collected receivables	155	101
Revenue from damages	1	110
Other revenue	908	250
Total	11.337	3.243

Revenue from written-off liabilities in year 2024 in the amount of EUR 1 million refers to the write-off of liabilities that have no basis for execution. In 2023, the write-off of liabilities is based on the Restructuring Agreement dated March 25th 2021, and is part of the pre-bankruptcy settlement process concluded on December 5th 2013. before the Commercial Court in Zagreb, 72 Stpn-305/2013, which became final on December 28, 2013. In addition, the net amount from the sale of real estate in Dubrovnik and Karlovac is included under other income.

6. Costs of raw materials and consumables

Cost of raw material and consumables

In thous. EUR	2023.	2024.
Cost of raw material and consumables	91	98
Energy costs	616	528
Cost of small inventory and spare parts	13	22
Total	720	648

Cost of services

In thous. EUR	2023.	2024.
Costs of transport, phone and postal services	162	191
Subcontractors	3.056	2.895
Cost of production services	68	58
Utilities	152	177
Maintenance costs	360	397
Rent	220	292
Other external costs	853	535
Total	4.871	4.544

7. Staff costs

In thous. EUR	2023.	2024.
Net salaries and wages	6.300	6.382
Taxes, contribution and other charges	3.824	3.923
Reimbursement of employee expenses (travel expenses, daily allowances, transportation)	469	408
Severance payments and other employee benefits	403	50
Reserved costs for severance pay and jubilee	85	-
Total	11.081	10.763

INSTITUT IGH,JSC

Notes to the financial statements (continuation) for the year ended on December 31, 2024

On December 31st 2024, the Company had 347 employees (2023: 376 employees). In 2024, the Company paid 54 thousand Euros for non-taxable termination benefits (2023: EUR 6 thousand). During 2024, the Company accounted for pension and other contributions in the total amount of EUR 1.735 thousand (2023: total amount of EUR 1.688 thousand).

8. Value adjustments

In thous. EUR	2023.	2024.
Value adjustment of non-current assets
Value adjustment of investment into real property	-	257
Total	-	257
Value adjustment of current assets
Value adjustment of trade receivables	441	203
Total	441	203

/i/ The value adjustment of current assets in the amount of EUR 203 thousand (2023: EUR 441 thousand) relates to the regular adjustment of trade receivables, which has significantly increased compared to the previous year and relates to two partners. The Company is actively collecting receivables, and there are no significant amounts of value adjustment for all other partners.

9. Other operating costs

In thous. EUR	2023.	2024.
Legal, consultancy and audit services	107	109
Bank fee and charges	117	111
Other expenses	1.048	14
Penalties	18	9
Insurance premiums	58	63
Contributions to public services	59	46
Representation costs	18	26
Education and training expenses	145	267
Taxes not dependent on result	26	78
Total	1.596	723

During 2024 there were no court dispute- related reservations since there were no significant new court disputes. During 2024, employee training and education costs increased, while other costs were significantly reduced, primarily due to classification by type of expense.

10. Financial revenue

In thous. EUR	2023.	2024.
Revenue from foreign exchange	289	59
Revenue from interest	2	1
Revenue from write-offs	20	30
Total	311	90

INSTITUT IGH,JSC

Notes to the financial statements (continuation) for the year ended on December 31, 2024

11. Financial expenditures

In thous. EUR	2023.	2024.
Expenditure due to foreign exchange losses	251	130
Interest expenditures	673	239
Unrealized losses from financial assets	1.053	-
Other financial expenditure	4	116
Total	1.981	485

12. Corporate tax

Tax revenue includes:

DESCRIPTION	2023. In thous. EUR	2024. In thous. EUR
Deferred tax	(1.015)	(125)

Adjustment of effective tax rate

The table below details the alignment of the tax expense shown in the statement of comprehensive income with the legal tax rate:

DESCRIPTION	2023. In thous. EUR	2024. In thous. EUR
Profit/loss before taxation	5.070	1.114
Tax rate 18% (2020: 18%)	913	201
Effects of non-taxable income and other decreases in tax base	(1.625)	(2.020)
Effects of unrecognized expenses and other increases in tax base	1.779	267
Effects of tax losses not recognized as deferred tax assets	(1.067)	1.552
Previously recognized deferred tax liabilities	(1.015)	(125)
Corporate tax	(1.015)	(125)
Effective tax rate	16%	11%

In 2024, the Company used previously unrecognized tax losses based on the value adjustment of financial assets of companies that were deleted from the court register in the total amount of EUR 11,192 thousand. In 2023, the total amount for the transfer of tax losses in the amount of EUR 3,755 thousand was used in full. Unused tax losses are not recognized as deferred tax assets in the statement of financial position, as it is unlikely that there will be sufficient taxable profits realized for the utilization of these deferred tax assets. The Company increased its tax base by EUR 1,486 thousand based on tax-deductible items, which has a tax effect of EUR 267 thousand, while it decreased its tax base by EUR 11,223 thousand based on tax-deductible items, which has an effect on the tax effect of EUR -2,020 thousand. Considering the tax-deductible losses recognized based on the deletion of the companies Geotehnika-inžinjering u stečaju d.o.o.and the company Centar gradski podrum d.o.o. from the court register, the company has no tax liability at the end of the 2024 tax period. In the next tax period, the Company has the opportunity to use the remaining tax loss in the amount of EUR 8,621 thousand.

INSTITUT IGH,JSC Notes to the financial statements (continuation) for the year ended on December 31, 2024

The deferred tax liability arises from the following:

Temporary difference:	Opening balance	Through capital and profit	Through loss	Balance	Closing balance
Revaluation of non-current assets	330	113	(125)		318

(In thous. EUR)

Temporary difference:	Opening balance	Through capital and profit	Through loss	Balance	Closing balance
Revaluation of non-current assets	1.085	260	(1.015)		330

in thousand EUR)

13. Intangible assets

In thous. EUR	PURCHASE VALUE
	Assets under property of third parties	Right of usage of Assets	Total intangible assets
Status as at Dec. 31st 2022	2.764	22	2.786
Increases	19	15	34
Write-off and disposals	(39)	(32)	(71)
Status as at Dec. 31st 2023	2.744	5	2.749
Increases	-	2	2
Revaluation	15	-	15
Write-off and disposals	-	(2)	(2)
Transfer	(2.577)	(1)	(2.578)
Status as at Dec. 31st 2024	182	4	186
	VALUE ADJUSTMENT
Status as at Dec. 31st 2022	2.571	-	2.570
Depreciation	165	-	165
Status as at Dec. 31st 2023	2.736	-	2.736
Depreciation	9	-	9
Transfer	(2.577)	-	(2.577)
Status as at Dec. 31st 2024	168	-	168
	PRESENT VALUE
Status as at Dec. 31st 2024	14	4	18
Status as at Dec. 31st 2023	8	5	13

INSTITUT IGH,JSC Notes to the financial statements (continuation) for the year ended on December 31, 2024

14. Property, plants and equipment

In thous. EUR	Property with right of use	Land	Buildings	Plants and equipment	Assets under construction	Other tangible assets	Advances for	Total
NABAVNA VRIJEDNOST
Status as at Dec. 31st 2022	7.437	579	971	8.495	48	64	65	17.659
Increases	71	-	-	402	-	-	-	473
Revaluation	-	-	-	1.184	-	-	-	1.184
Write-off and disposals	(635)	(117)	(307)	(110)	-	-	-	(1.169)
Transfer	-	-	2	(6)	(10)	-	2	(6)
Status as at Dec. 31st 2023	6.873	462	666	9.971	38	64	67	18.141
Increases	2.173	-	0	77	2	-	-	2.252
Revaluation	-	-	251	381	-	-	-	632
Write-off and disposals	(2.415)	(462)	(375)	(72)	-	-	-	(3.324)
Transfer	-	85	169	-	-	-	(4)	250
Reconciliation	-	-	(135)	(2.698)	-	(1)	-	(2.834)
Status as at Dec. 31st 2024	6.630	85	576	7.659	40	63	63	15.116
VALUE ADJUSTMENT
Status as at Dec. 31st 2022	2.643	-	498	7.411	-	23	24	10.599
Depreciation	1.627	-	43	388	-	-	-	2.058
Write-off and disposals	(516)	-	(94)	(32)	-	-	-	(642)
Status as at Dec. 31st 2023	3.754	-	447	7.767	-	23	24	12.015
Depreciation	1.570	-	2	447	-	-	-	2.019
Write-off and disposals	(2.385)	-	(175)	(61)	-	-	-	(2.621)
Transfer	-	-	(139)	(2.230)	-	-	-	(2.369)
Status as at Dec. 31st 2024	2.939	-	135	5.923	-	23	24	9.044
PRESENT VALUE
Status as at Dec. 31st 2024	3.692	85	441	1.736	40	40	39	6.072
Status as at Dec. 31st 2022	3.119	462	219	2.204	38	41	43	6.126

INSTITUT IGH,JSC Notes to the financial statements (continuation) for the year ended on December 31, 2024

Write-off assets related to leases of commercial real estate and cars, which are managed in accordance with IFRS-16. The net amount of right-of-use assets in the company's books as of December 31st 2024 amounts to EUR 3,692 thousand (Dec. 31st 2023: EUR 3,119 thousand).

The estimated market value for revaluation purposes was determined based on the independent valuers’ report that was based on the cost method, the comparative method and/or the income method depending on the type of property. The estimated market value of laboratory equipment and measuring instruments for revaluation purposes was determined by the Company based on the independent valuers’ calculations who applied the cost method as the most appropriate method because it is based on the economic principle that the buyer of the property will not pay more than the price that the buyer would have paid for an asset of equal utility in case of a new purchase or construction.

(i) Valuation techniques and valuable inputs

The following table summarizes the valuation methods and techniques used in measuring the fair value and significant inputs used in the valuation:

| | Valuation methods and techniques # INSTITUT IGH, JSC Notes to the financial statements (continuation) for the year ended on December 31, 2024

Investments in affiliates

Investments in affiliates refer to companies in which Institut IGH, JSC has no independent management control, independent of the ownership share.

In thous. EUR and voting rights (%)	Share in ownership (%)	Book value	Share in voting rights (%)	Book value
31.12.2023.	31.12.2024.	31.12.2023.	31.12.2024.
Elpida d.o.o. Zagreb	50	4.154	50	4.154
Institut za infrastrukturne projekte, Sofija	50	1	50	1
Centar Gradski podrum d.o.o., Zagreb	37,5	2.858	37,5	-
Sportski grad TPN u stečaju	1	-	1	-
Value adjustment for investments in associates	-	(5.022)	-	(2.164)
Total	1.991	1.991

(i) The company Sportski grad TPN d.o.o. was bankrupt on October 7th 2014 by the Decision No. 5, St- 138/2014.
(ii) The company Gradski Podrum d.o.o. was deleted from the court register on June 1st 2022.

iii. Other investments

In thous. EUR	31.12.2023.	31.12.2024.
Investment into shares in investment funds	305	305
Minus: Value adjustment of share in investment funds	(305)	(305)
Total	-	-

iv. Participating interests

In thous. EUR	31.12.2023.	31.12.2024.
Geotehnika-inženjering d.o.o., Zagreb	7.406	-
Konstruktor-inženjering d.d.	101	101
Viktor Lenac d.d. Rijeka	6	6
GP Dubrovnik d.d. u stečaju, Dubrovnik	358	358
Industrogradnja Grupa d.d.	50	50
Elektrometal d.d., Bjelovar	2	2
Međimurje beton d.d. Zagreb	51	51
Value adjustment of participating interests	(7.974)	(568)
Total	0	0

The Company has participating interests in several companies whose value has been adjusted, and their carrying amount has been reduced to zero. The companies Geotehnika-inženjering d.o.o., Međimurje beton d.d., Industrogradnja Grupa d.d., Elektrometal d.d. Bjelovar have been deleted from the court register, while GP Dubrovnik d.d. is under bankruptcy.

INSTITUT IGH, JSC Notes to the financial statements (continuation) for the year ended on December 31, 2024

16. Trade receivables and other receivables

In thous. EUR	2023	2024
Non-current receivables
Receivables from sale of apartments with deferred payments and other receivables	161	131
Total	161	131
Current receivables
Trade receivables	5.324	5.307
Minus: value adjustment of trade receivables	(2.940)	(3.028)
Receivables from government institutions	89	118
Receivables from employees	179	142
Receivables from affiliated entrepreneurs	262	269
Minus: value adjustment of receivables from affiliated entrepreneurs	(312)	(283)
Receivables from issued advances	424	594
Other receivables	21	41
Total	3.047	3.160

The following tables explain the changes in the corrections for trade receivables by using simplified ECL model between the beginning and end of the annual period:

31.12.2024.

In thous. EUR	January 1, 2024	December 31, 2024
	3.252
Newly created expected credit loss	36
Other changes	255
Cancellation of previous credit loss	(232)
Status as at December 31st		3.311

31.12.2023.

In thous. EUR	January 1, 2023	December 31, 2023
	6.260
Newly created expected credit loss	232
Cancellation of previous credit loss	(3.240)
Status as at December 31st		3.252

For calculation of impairment on trade receivables, the Company applies a model based on expected credit losses (Simplified Approach) in accordance with IFRS 9, and the amount of the impairment does not have a material effect on the financial statements. The Company continues to apply value adjustments based on proven losses under certain conditions.

The ageing structure of trade receivables and other receivables was as follows:

December 31, 2024

(In thous. EUR)	Gross amount	Value adjustment	Net amount
Matured claims	1.380	-	1.380
0-60 days	724	-	724
60-120 days	-	(137)	(137)
120-180 days	193	-	193
180-360 days	-	(16)	(16)
over 360 days	4.174	(3.158)	1.016
Total	6.471	(3.311)	3.160

December 31, 2023

(In thous. EUR)	Gross amount	Value adjustment	Net amount
Matured claims	1.516	(208)	1.308
0-60 days	229	-	229
60-120 days	95	-	95
120-180 days	38	(5)	33
180-360 days	684	-	684
over 360 days	3.737	(3.039)	698
Total	6.299	(3.252)	3.047

INSTITUT IGH, JSC Notes to the financial statements (continuation) for the year ended on December 31, 2024

17. Loans and deposits given

In thous. EUR	2023	2024
Long-term loans
Loans given to subsidiaries	4	4
Loans given to third parties	18	125
Total	22	130
Short-term loans given
Loans given to subsidiaries	19	92
Loans given to third parties	23	21
Deposits and guarantees	3.869	3.772
Interests receivables	48	-
Securities and factoring	19	19
Expected credit loss	(15)	(15)
Total	3.963	3.893
GRAND TOTAL	3.985	4.023

Loans to affiliates were granted with no interest or with a certain interest rate, whereby for determining the profit tax base, the interest rates stated in Art. 14, Paragraph 3. of the Corporate Income Tax Act are taken into account.

INSTITUT IGH, JSC Notes to the financial statements (continuation) for the year ended on December 31, 2024

18. Cash and cash equivalents

In thous. EUR	2023	2024
Giro accounts	374	110
Foreign currency accounts	36	14
Total	410	124

Breakdown of cash and cash equivalents per currency

In thous. EUR	2023	2024
EUR	378	114
BAM	14	5
GEL	11	3
AMD	-	2
Other currencies	7	0
Total	410	124

19. Non-current assets held for sale

In thous. EUR	2023	2024
Acquisition cost
As at January 1st	1.632	-
Sale	-	-
Total	1.632	-

Non-current assets held for sale are intended to settle the secured debt to financial institutions that have not waived their right to a separate settlement in the process of the pre-bankruptcy settlement. The aforementioned assets relate to buildings and land and were derecognized in 2024 upon the closure of the pre-bankruptcy.

(i) Valuation techniques and significant inputs

The following table summarizes the valuation methods and techniques used in measuring the fair value and significant inputs used in the valuation:

Valuation methods and techniques	Significant unobservable inputs
The fair value was estimated using methods applicable to each individual company. The following methods were used: (i) •Valuation of property carried out by authorized independent valuers (methods described in Note 3.10 (i)	Significant inputs are described in Note 3.10
	•Amount of secured debt
	•Review of rights of secured creditors

INSTITUT IGH, JSC Notes to the financial statements (continuation) for the year ended on December 31, 2024

20. Accrued income and prepaid expenses

. In thous. EUR	2023	2024.
Prepaid expenses	104	685
VAT on advances	392	157
Advance payments received on account	49	48
Accrued un-invoiced revenue	12	13
Total	557	903

Prepaid expenses relate primarily to operations in branches and amount to EUR 480 thousand.

21. Contract assets and liabilities with customers

The following table shows information on assets and liabilities with clients based on construction contracts, for which on the reporting date the Company reported receivables from customers pursuant to a contractual obligation or obligations to clients pursuant to a contractual obligation:

In thous. EUR	2023	2024
Contract assets	574	1.114
Expected credit loss	(7)	(11)
Total	567	1.103
Contract liabilities	137	79
Total	430	1.024

Contract assets primarily relate to the Company's rights to compensation for works performed but not collected at the reporting date. Contract assets are transferred to trade receivables when the rights become unconditional. This usually happens when the Company invoices the client. A description of the methodology for calculating expected credit losses on a contract asset is described in Note 21. Contract liabilities primarily relate to deferred income for construction works, for which income is recognized over time.

INSTITUT IGH, JSC Notes to the financial statements (continuation) for the year ended on December 31, 2024

22. Share capital

Number of shares	Ownership share	Number of shares	Ownership share
2023		2024
AVENUE MEHANIZACIJA D.O.O. (1/1)	566.581	38,24%	566.581
FROTIP DEVELOPMENT D.O.O.	301.173	20,33%	301.173
AVENUE ENGINEERING AND CONSTRUCTION LIMITED (1/1)	302.450	20,42%	248.604
SMIRNOV MANAGMENT & TRRANSPORTING	-	0,00%	53.846
J.D.O.O. DRNASIN ANTE	14.196	0,96%	16.000
LEJO IVAN	12.500	0,84%	12.500
OTP BANKA D.D./KL1JENT	321	0,00%	11.955
ČERNOŠEK KRUNOSLAV	-	0,00%	8.250
MIHALJEVIĆ BRANKO	8.100	0,55%	8.100
CAPTURIS D.O.O.	7.895	0,53%	7.895
INSTITUT IGH, D.D. (1/1)	6.659	0,45%	6.659
Other shareholders	261.909	17,68%	239.900
UKUPNO	1.481.463	100,00%	1.481.463

By the Decision no. TT-23/52200-2, on December 29th 2023, the Company underwent recapitalization to cover accumulated losses and improve its financial position. Prior to the capital injection, the Company's share capital consisted of 613.709 shares mark IGH-R-A, ISIN: HRIGH0RA0006, individual nominal amount of EUR 25,22, totaling EUR 15,476 thousand. Shares are listed on the official market of the Zagreb Stock Exchange d.d. Each share has the right of vote in the Assembly and the right to a dividend. The Company's share capital was converted through recapitalization from HRK 116,604,710.00 to EUR 15,476,104.59. The individual nominal amount of the regular share, mark IGH-R-A, was converted from HRK 190.00 to EUR 25.22. Thus, the Company's share capital was reduced from EUR 15,476,104,59 ,by EUR 9,339,014,59 , to EUR 6,137,090,00 by reducing the individual nominal amount of ordinary shares, mark IGH-R-A, from EUR 25,22 by EUR 15,22 to EUR 10,00. The company's share capital was increased from EUR 6,137,090,00 ,by EUR 8,677,540,00 to EUR 14,814,630,00, through the issue of 867,754 ordinary shares mark IGH-R-A with an individual nominal amount of EUR 10,00. After completion, the Company's share capital , entered into the SKDD information system, amounts to EUR 14,814,630.00 and is divided into 1,481,46,3 ordinary shares mark IGH-R-A , nominal amount of EUR 10,00.

23.# Notes to the financial statements (continuation)

Reserves

Under Croatian regulations, companies must place into reserves a twentieth part (5%) of the current year profit until total reserves together with the share premium reach 5% of the Company’s share capital. Both legal reserves and reserves for own shares are non-distributable.

The Company owns 6.659 of own shares. Own shares are recorded at acquisition cost, and are released using the weighted average price method.

Number of own shares	Number of own Dec. 31, 2023	Number of own Dec. 31, 2024
Status as at January 1st	6.659	6.659
Status as at December 31st	6.659	6.659

The Management Board of the Company has the right to receive bonus shares and treasury shares. There was no award on this basis during the year 2024, while the remaining amount will be allocated in accordance with the Company's possibilities in the coming years. The Net Asset Value of treasury shares and bonus shares is presented in Other Reserves according to market value of the share on the reporting date.

24. Revaluation reserves

In thous. EUR	Foreign exchange differences from recalculation of foreign operations	Total
Status as at Dec. 31, 2022	5.210	(40)
Transfer to accumulated losses	(4.726)	-
Increase of reserves	1.223	-
Status as at Dec. 31, 2023	1.707	(40)
Transfer to accumulated losses	(679)	-
Increase of reserves	396	-
Foreign exchange differences from recalculation of foreign operations	-	99
Status as at Dec. 31, 2024	1.424	(40)

Revaluation reserves are not distributable to shareholders.

25. Commitments for loans and borrowings

In thous. EUR	2023	2024
Long-term borrowings	31	1
Other borrowings	1	-
Total	32	1
Short-term borrowings
Bank loans (secured creditors) /v/	1.161	-
Bank loans -current portion of senior /iii/	38	-
Borrowings of associated companies	171	209
Other borrowings	1.020	775
Accrued interest payable	150	-
Total	2.540	984
Loans and borrowings total	2.571	985

In thous. EUR	Bank loans - PIK debt /ii/	Bank loans - Senior secured debt /iii/	Loans from associated companies	Other borrowings /v/	Accrued interest payable	Total
Status as at January 1st 2023	1.413	9.424	1.161	9.748	586	2.521
Payments	-	-	-	-	-	-
Non-monetary repayment	(1.413)	(9.386)	-	(9.577)	465	(2.371)
Loans received	-	-	-	-	-	-
Transfer of commitments	-	-	-	-	-	-
Status as at December 31st 2023	-	38	1.161	171	1.051	150
Status as at January 1st 2024	-	38	1.161	171	1.051	150
Payments	-	(38)	-	38	(25)	-
Non-monetary repayment	-	-	-	-	(250)	(150)
Loans received	-	-	-	-	-	-
Transfer of commitments	-	-	(1.161)	-	-	-
Status as at December 31st 2024	-	-	-	209	776	-

Loan and borrowing liabilities were significantly reduced in 2024, when the pre-bankruptcy closing process was completed. The company settled a large part of its liabilities in 2023, and the remaining debt in the amount of EUR 38 thousand was settled in February 2024. The course of the pre-bankruptcy and debt settlement was as follows:

/ii/ The ‘PIK debt’ represents claims that will be settled by selling pledged assets of the Company or its related parties. The final maturity of the PIK claims is 6 years from the day the pre-bankruptcy settlement became final at an interest rate of 4.5% per annum, which is also paid on final maturity.

/iii/ The ‘Senior debt’ comprises a portion of creditor claims which will be settled by payment in instalments in accordance with the provisions of the settlement and additional agreements with creditors of category a), which fall due on June 30th and December 31st with an interest rate set at 4.5% per annum.

/iv/ Secured creditors have not waived their right for separate settlement in the pre-bankruptcy settlement proceedings, and have the right to initiate separate enforcement procedures to enforce property sales and settlement of their claims. If the sale of pledged assets does not generate sufficient funds to settle secured claims, secured creditors are not entitled to settlement of outstanding claims in full, but their claims are considered to be settled entirely through the sale of the pledged assets. Regarding these borrowings, the Company is not obligated to repay principal or interest from the ordinary course of business, but the settlement is made only from the sale of pledged property. A debt of EUR 1,161 thousand was still recorded in the Company's accounts, however it was settled by immovable property which is also in the Company's books. By derecognition at the end of the process, there is no, and will not be any effect on the financial statements.

/v/ Issued bonds On June 6th 2012 the Company (IGH Group) issued convertible bonds in the amount of EUR 10 million for a partial rescheduling of liabilities arising from previously issued financial instruments and financing of the working capital. On June 10th 2013, the Settlement Council of the Financial Agency adopted the Decision on initiating pre-bankruptcy settlement proceedings over INSTITUT IGH, JSC owners of convertible bonds as secured creditors have not waived their right for separate settlement in the pre-bankruptcy settlement proceedings, and have the right to initiate separate enforcement procedures to enforce property sales and settlement of their claims. In the event that the funds obtained from the realization of the pledge will not be sufficient to cover the claims secured, the bondholders are not entitled to settle up to the full amount of the secured claim but their claim is deemed to be fulfilled by the realization of the pledge. Regarding these bonds, the Company is not obligated to repay principal or interest from the ordinary course of business, but the settlement is made only from the sale of pledged property.

The analytical review of loans and borrowings is as follows:

| Currency | Interest rate | 2023. | Up to a yr. | 1 – 2 yrs. | Financial liabilities | Commercial bank | EUR | 4,50% | 18 | 18 | - |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Unrelated third parties | EUR | 4,50% | 20 | 20 | - |
| Liabilities for interest | EUR | - | 150 | 150 | - |
| Non-interest bearing other liabilities to secured creditors | Unrelated third parties | EUR | - | 1.161 | 1.161 | - |
| Loans from other financial institutions | EUR | - | 91 | 91 | - |
| Other financial liabilities | Loans from related parties | EUR | 2,86% | 171 | 171 | - |
| Loans from unrelated parties | EUR | 4,50% | 960 | 929 | 31 |
| Total | | | 2.540 | | | | | | | |
| | | | | | | | | | | |
| Currency | Interest rate | 2024. | Up to a yr. | 1 – 2 yrs. | | | | | | |
| Financial liabilities | Commercial bank | EUR | - | - | - | - |
| Unrelated third parties | EUR | - | - | - | - |
| Liabilities for interest | EUR | - | - | - | - |
| Non-interest bearing other liabilities to secured creditors | Unrelated third parties | EUR | - | - | - | - |
| Loans from other financial institutions | EUR | - | - | - | - |
| Other financial liabilities | Loans from related parties | EUR | 3,25% | 209 | 209 | - |
| Loans from unrelated parties | EUR | 4,50% | 776 | 775 | 1 |
| Total | | | 985 | | | | | | | |

26. Contingent liabilities

In thous. EUR	2023	2024
Guarantees given - externally	1.536	3.467
TOTAL	1.536	3.467

Potential obligations refer to obligations under performance guarantees and cash deposits with legal entities for the same purpose.

27. Lease obligations

In thous. EUR	2023	2024
Non-current liabilities
Lease obligations	1.881	2.231
Current liabilities
Lease obligations	1.356	1.573
Total	3.237	3.805

The analytical review of lease obligations is as follows:

In thous. EUR	Lease obligations	Net book value
As at January 1st 2023	4.895
Payments	(3.187)
Additions to right-of-use assets	1.529
Status as at December 31st 2023	3.237
As at January 1st 2024	3.237
Payments	(2.682)
Loans received	3.250
Exchange rate difference	-
Status as at December 31st 2024	3.805

Currency	Interest rate	2024.	Up to a yr.	1 – 2 yrs.	2 – 5 yrs.
Other financial liabilities	Operating lease - IFRS 16	EUR	4,50%	3.805	1.573

Currency	Interest rate	2024.	Up to a yr.	1 – 2 yrs.	2 – 5 yrs.
Other financial liabilities	Operating lease - IFRS 16	EUR	4,50%	3.237	1.356

28. Provisions

In thous. EUR	Retirement benefits	Legal disputes	Total
As at Dec. 31, 2023:
Long-term part	85	901	986
Short-term part	-	3	3
Total	85	904	989
Increase in provisions	79	-	79
Cancelled during the year	85	656	741
Status at Dec. 31, 2024:
Long-term part	79	248	327
Short-term part	-	3	3
Total	79	251	330

(i) Retirement benefits In 2024 the Company decreased provisions for retirement benefits in the amount of EUR 6 thousand.

(ii) Legal disputes The amounts of provisions relate to a number of legal disputes initiated against the Company. Based on the expert opinion of a legal counsel, the Company’s Management Board believes that the outcome of these legal disputes will not give rise to any significant loss beyond the amount provided for as at December 31st 2024.

29. Trade payables and other payables

In thous. EUR	2023	2024
Non-current liabilities
Trade payables and other payables	26	-
Total	26	-
Current liabilities
Domestic trade payables	2.808	3.556
Obligations to suppliers based on PSN	-	34
Foreign trade payables	178	1.066
Liabilities towards government institutions	1.255	718
Liabilities to employees	817	335
Municipal charges	323	29
Liabilities towards associated companies	51	373
Other liabilities	367	-
Total	5.798	6.384

The Company's exposure to currency risk and liquidity risk is disclosed in Note 32.

30. Commitments for advances and deposits received

| In thous. EUR | 2023 | 2024 |# INSTITUT IGH,JSC Notes to the financial statements (continuation) for the year ended on December 31, 2024

31. Accrued expenses and deferred income

In thous. EUR	2023	2024
Current liabilities
Accruals and deferred income	123	150
Accrued unused leave	335	306
Total	458	456

The Company's accrued expenses and deferred income stated in the Statement on financial position on December 31, 2024 in the amount of EUR 150 thousand (on December 31, 2023 amounting to EUR 123 thousand) refer to the accrued expenses for which no invoice was received. The provision for compensation for unused annual leave in 2024 was calculated based on the expectation that annual leave entitlements from 2024 will be used in 2025.

32. Financial instruments and Risk management

Financial risk factors

The Company, that is, the Group is exposed to various financial risks related to foreign exchange, interest rate, credit and solvency risk. The Company monitors these risks and seeks to minimize their potential impact on the Company’s financial exposure. The Company does not use derivative financial instruments to actively hedge its financial risk exposure.

a) Market risk

Market risk relates to financial instruments. IFRS defines market risk as the risk of fluctuation of fair value or future cash flows of financial instruments due to changes in market prices. Market risk comprises three types of risk: foreign exchange risk, interest rate risk and other price risks. The Company operates on the Croatian and international markets. The Management Board determines the cost of its services based on the market price of the relevant market.

b) Price risk

The Company is engaged in the professional and scientific research in the field of civil engineering, the area where the financial crisis has had a significant impact causing relative market inactivity. However, positive macroeconomic indicators in the last period have stimulated market recovery and corresponding prices.

c) Currency risk

The Company’s official currency since January 1, 2023 is the Euro (EUR). The company has invested and invests in financial instruments and enters into transactions denominated in currencies representing the functional currency of an issuer established in different countries. Accordingly, the Company is exposed to the risk of changing the currency exchange rate against other currencies in a way that may negatively affect the Company's profit and value. Transactions denominated in foreign currencies are translated into Euros by applying the exchange rates in effect at the balance sheet date. The resulting foreign exchange differences are credited or charged to the income statement. Changes in exchange rates may affect the profits mainly as a result of foreign exchange gains or losses arising on translation of receivables into Euros and borrowings and liabilities contracted with a foreign currency clause (EUR). Due to the part of foreign market revenues and liabilities denominated in other currencies, the Company is exposed to changes in the value of the exchange rate.

The total exposure of the Company to changes in foreign exchange rates at the reporting date was as follows:

In thous. EUR	Liabilities		Assets
	2023.	2024.	2023.	2022.
Bosna i Herzegovina (BAM)	5	82	137	128
USA (USD)	413	16	-	39
Georgia (GEL)	-	162	428	899
Macedonia (MDK)	1	2	8	76
Armenia (ARD)	-	785	-	765

Sensitivity analysis to foreign currency risk

The Company is mainly exposed to fluctuations in the exchange rate of EUR, in terms of received loans, suppliers and trade receivables. The Company is additionally exposed to changes in the EUR exchange rate relative to the GEL due to the operations of the Georgia subsidiary, and ARD due to the operations in the Armenia subsidiary. The sensitivity analysis includes only open cash items in foreign currency and their recalculation at the end of the period based on the percentage change in exchange rates. The sensitivity analysis includes monetary assets and monetary liabilities in the currency. A negative number indicates a decrease in profit where the euro changes against the relevant currency by the percentage specified above. In case of a reverse proportional change of the euro against the relevant currency, there would be an equal and opposite impact on the profit.

The depreciation of Euro against the exchange rate of the currencies shown by 1% would have the following effects on profit:

	Effect of USD currency		Effect of GEL currency		Effect of MDK currency
	2023.	2024.	2023.	2024.	2023.	2024.
In thous. EUR	4	2	(3)	74	-	7
	Effect of BAM currency		Effect of ARD currency
	2023.	2024.	2023.	2024.
In thous. EUR	(1,5)	5	-	(2)

The mean exchange rates of currencies to Euro significant for the Company:

	Dec. 31, 2023.	Dec. 31, 2024.
BAM	1,95583	1,95583
USD	1,105	1,0444
GEL	2,9324	3,0235
MDK	61,6345	61,583
ARD	442,17	418,288

d) Interest rate risk

Interest rate risk is the risk of a change in the value of a financial instrument due to changes in market rates in relation to the interest rates applied to the financial instrument. The Company, i.e. the group use loans with predominantly fixed interest rates and is not exposed to the risk of changing interest rates. The Company does not use active hedging instruments against exposure to interest rate risk.

e) Credit risk

Credit risk is the risk that one party to a financial instrument will cause the other party financial losses due to default, in whole or in part, at the time of maturity. Failure to do so would endanger the liquidity of the Company and reduce the value of its assets. On December 31st 2024, financial assets that could potentially expose the Group to credit risk consist mainly of loans given, trade receivables and other receivables.

The value of financial assets at the reporting date shows the maximum exposure to credit risk. The Group regularly monitors the risk that the other party will not fulfil its obligations. Trade receivables, other receivables, and receivables from given loans are adjusted for the amount of provisions for doubtful and disputed receivables. The Company applies a simplified IFRS 9 approach for measuring expected credit losses, using the expected value adjustment for all trade receivables and contract assets. In order to measure expected credit losses, trade receivables and contract assets are grouped based on common credit risk characteristics and maturity dates. In the same types of contracts, contract assets are tied to the same risk characteristics as trade receivables. Therefore, the Company concluded that expected loss rates for trade receivables can also be used to calculate losses for contractual assets. The expected loss rates are based on collection data for the 24-month period prior to December 31, 2024 and historical credit losses during that period. Furthermore, the Company is exposed to credit risk through cash deposits in banks. As of December 31st 2024, the Company cooperated with five banks where it keeps its money and deposits. Risk management is focused on doing business with the most respectable foreign and domestic banks in the country and abroad. Deposits in banks constitute current account money and deposits held with banks as bank guarantees that are collected at maturity, and therefore classified as held-to-maturity assets in accordance with IFRS 9 and measured at depreciated cost. Credit risk shall be measured using a general approach. The Company shall use the daily value of the CDSs covering the insurance for a period of 5 years. The CDS with 5-year insurance has the highest market liquidity and has therefore been chosen as a benchmark. The CDS is sensitive to an increase in the risk of default — whether or not insurance with a period of 3 or 5 years has been selected. Domestic banks do not have a rating or CDS indicator as a risk measure. The Company took the CDS for the Republic of Croatia to measure the risk, which at December 31st 2024 amounted to 1,02%. The credit risk, calculated according to the formula: amount of deposits * number of days * CDS / 365. For deposits on demand, the Company uses 2 days in calculating the amount of credit risk.

f) Solvency risk

Solvency risk is the risk of the Company facing difficulties in settling its liabilities. Solvency risk arises in the general funding activities of the Company and the management of assets. It includes the risk of being unable to fund assets under appropriate maturities and prices and the risk of being unable to sell its assets at a reasonable price and in an appropriate time frame. Financial instruments include investments that may be insolvent and that the Company is unable to turn into cash to meet its solvency requirements. In order to ensure the necessary solvency, the Management actively monitors and manages the collection of receivables and planned outflows.

Table showing an analysis of the solvency risk

The tables were prepared on the basis of non-discounted cash outflows of financial liabilities at their due date. The tables include both principal and interest cash flows.# INSTITUT IGH,JSC Notes to the financial statements (continuation) for the year ended on December 31, 2024

Contracted Cash Flows

(In thous. EUR)	Net book value	Contracted cash flows	Up to 1 year	From 1 to 2 years	From 2 to 5 years
Year 2023
Non-derivate financial liabilities
Loans received and financial leasing	5.297	5.297	3.386	1.356	556
Trade and other payables	6.649	6.649	6.623	26	-
Total	11.947	11.947	10.009	1.382	556
Year 2024
Non-derivate financial liabilities
Loans received and financial leasing	4.529	4.529	2.298	1.356	876
Trade and other payables	7.261	7.261	7.261	-	-
Total	11.791	11.791	9.559	1.356	876

Non-interest bearing liabilities payable up to one month mainly consist of trade payables and other current liabilities. Interest bearing liabilities include short-term and long-term loans, borrowings and bonds. The tables were prepared on the basis of non-discounted cash inflows of financial assets at their due date. The tables include both principal and interest cash flows.

(In thous. EUR)	Net book value	Contracted cash flows	Up to 1 year	From 1 to 2 years	From 2 to 5 years
Year 2023
Non-derivative financial assets
Loans given	3.984	3.984	209	3.775	-
Trade and other receivables	3.142	3.142	394	2.748	-
Total	7.126	7.126	603	6.523	-
Year 2024
Non-derivative financial assets
Loans given	3.892	3.892	3.775	117	-
Trade and other receivables	2.879	2.879	2.748	131	-
Total	6.771	6.771	6.523	248	-

Fair value of financial instruments

The fair value of financial assets and financial liabilities is determined as follows:

the fair value of financial assets and financial liabilities with standard terms and conditions used for trading on active liquid markets are determined on the basis of quoted market prices,
the fair value of other financial assets and financial liabilities is determined in accordance with generally accepted pricing models, based on discounted cash flow analysis using prices from observable current market transactions and quotes offered for similar instruments.

Financial instruments held to maturity in the ordinary course of business are recorded at the purchase cost or net amount less the portion repaid. Fair value is determined as amount for which a financial instrument could be traded between knowledgeable, willing parties in an arm’s length transaction, except in the event of a forced sale or for liquidation purposes. The fair value of a financial instrument is its quoted securities market price, or the amount obtained using the discounted cash flow method.

As at December 31st 2024, the reported amounts of cash, short-term deposits, receivables, current liabilities, accrued expenses, short-term borrowings and other financial instruments approximate their market values due to the current nature of those assets and liabilities.

INSTITUT IGH,JSC Notes to the financial statements (continuation) for the year ended on December 31, 2024

56 Equity risk management

Net debt-to-equity ratio

The Company monitors capital in line with laws and regulations valid in the Republic of Croatia which require a minimum deposit of EUR 25,000 for joint stock companies. Owners do not require any special measures with regard to management of capital. There are no capital goals internally monitored.

33. Transactions with related parties

The Company considers that their key shareholders and entities under their control or influence (subsidiaries and affiliates), key management (see below), close family members of key management and legal entities that are controlled or significantly influenced by key management personnel and their close family members are directly related parties, in accordance with the provisions set out in International Accounting Standard 24. “Related Party Disclosures”.

Income and expenses for affiliated companies are presented in the table as follows:

DESCRIPTION	2023	2024
In thous. EUR
Sale income
ETZ,EKONOMSKO TEHNIČKI ZAVOD D.D.	1	1
IGH BUSINESS ADVISORY SERVICES D.O.O.	1	-
Total	2	1
Other income
IGH BUSINESS ADVISORY SERVICES D.O.O.	1	1
IGH PROJEKTIRANJE D.O.O.	7	4
INSTITUT IGH d.o.o. Mostar	240	10
Total	248	15
Grand Total	250	16
Service expenses
INSTITUT IGH d.o.o. Mostar	6	6
IGH BUSINESS ADVISORY SERVICES D.O.O.	42	18
IGH PROJEKTIRANJE D.O.O.	89	69
Total	137	93
Other business expenses
INSTITUT IGH d.o.o. Mostar	74	-
IGH PROJEKTIRANJE D.O.O.	-	9
Total	74	9
Financial expenses
INSTITUT IGH d.o.o. Mostar	1	-
Total	1	-
Grand Total	212	102

INSTITUT IGH,JSC Notes to the financial statements (continuation) for the year ended on December 31, 2024

Receivables and value adjustments for affiliated companies are shown in the table as follows:

DESCRIPTION	2023	2024
In thous. EUR
Receivables from subsidiaries
ETZ,EKONOMSKO TEHNIČKI ZAVOD D.D.	1	-
IGH BUSINESS ADVISORY SERVICES D.O.O.	7	7
IGH PROJEKTIRANJE D.O.O.	18	4
INCRO D.O.O.	-	11
INSTITUT IGH d.o.o. Mostar	9	-
Receivables from associated companies
ELPIDA D.O.O.	1	1
SPORTSKI GRAD TPN D.O.O.	63	63
Total	99	86
Adjustment of value of receivables from related companies	(64)	(64)
Loans granted to subsidiaries
INSTITUT IGH d.o.o. Mostar	3	-
INCRO D.O.O.	1	-
IGH BUSINESS ADVISORY SERVICES D.O.O.	5	43
Total	9	43

Liabilities to related and owned companies are presented in the table as follows:

DESCRIPTION	2023	2024
In thous. EUR
Liabilities for loans from affiliated companies
ELPIDA D.O.O.	1	1
ETZ,EKONOMSKO TEHNIČKI ZAVOD D.D.	140	178
IGH PROJEKTIRANJE D.O.O.	31	31
Total	171	209
Liabilities to related companies
IGH PROJEKTIRANJE D.O.O.	36	28
IGH BUSINESS ADVISORY SERVICES D.O.O.	8	3
INSTITUT IGH d.o.o. Mostar	2	1
ETZ,EKONOMSKO TEHNIČKI ZAVOD D.D.	1	-
Total	47	32
Liabilities to equity companies
AVENUE MEHANIZACIJA d.o.o.	5.300	1.466
AVENUE ENGINEERING AND CONSTRUCTION LIMITED	567	152
Total	5.867	1.618

INSTITUT IGH,JSC Notes to the financial statements (continuation) for the year ended on December 31, 2024

58 Management Board and Supervisory Board compensation

The total compensation for the Management Board and the calculated fees for Supervisory Board members in year 2024 amounted to 320 thousand Euros (2023: EUR 153 thousand).

Compensation to Supervisory Board members

Compensation to Supervisory Board members	In thous. EUR	Compensation Participation at sessions
Žarko Dešković	20	5/5
Sergej Gljadelkin	10	2/5
Igor Tkach	10	5/5
Mariyan Tkach	10	5/5
Marin Božić	10	5/5
Total	60

Compensation for Management Board members

In thous. EUR	Salary component – fixed component	Salary variable – Total
Petrosian Robert	99	0
Josip Majer	54	0
Marija Đuroković	54	0
Tatjana Bičanić	53	0
Total	260	0

34. Earnings per share

Basic earnings per share are calculated as follows:

	31.12.2023.	31.12.2024.
In thous. EUR
Profit for the year	6.084	1.238
Weighted average number of shares	686.022	1.481.463
Basic earnings per share (in EUR)	8,87	0,84

35. Pre-bankruptcy settlement

By the decision of the Commercial Court in Zagreb, Tt-24/34060-2 of October 3rd 2024, the entry under ordinal number 4. is deleted - approval of the pre-bankruptcy settlement of the subject of the entry INSTITUT IGH, joint-stock company for research and development in construction, Zagreb, Janka Rakuše 1, MBS 080000959, OIB 79766124714, entered by the decision of the Commercial Court in Zagreb under number Stpn-305/2013. of December 5th 2013 based on the Independent Auditor's Report of July 5th 2024. Liabilities based on the pre-bankruptcy settlement as of December 31st 2023, amounted to EUR 39 thousand, which were fully settled on February 15th 2024. The audit of the settlement of liabilities under the pre-bankruptcy settlement was conducted in June 2024.

INSTITUT IGH,JSC Notes to the financial statements (continuation) for the year ended on December 31, 2024

59 36. The closing of INSTITUT IGH, JSC Russian subsidiary in Moscow

Impact of the war in Ukraine on the Company's business operations

As a result of the war in Ukraine and the sanctions imposed to Russia, the Company's Russian subsidiary found itself with limited business options. In addition, the subsidiary's access to resources is limited, with uncertain market and other developments. The possibility to implement and set up new projects is also limited. Consequently, during the Management Board session on March 2nd 2022, IGH's Management Board decided to close the Company's subsidiary in Russia, Moscow. On August 8th 2024, INSTITUT IGH, JSC subsidiary in Moscow, Russia was officially deleted from the national register of registered branches, representative offices of foreign legal entities. As of December 31st 2024, within the Company's unconsolidated financial statements, receivables and payables relating to the subsidiary INSTITUT IGH, JSC Moscow, Russia, were derecognized from the Company's books. Since the positions of liabilities and receivables were adjusted in value in the previous period, there was no impact on the financial result of the current period.

37. Events after the balance sheet date

After the balance sheet date, the Company initiated bankruptcy proceedings against its subsidiary Marterra d.o.o. Zagreb in January 2025. There were no other significant events that would significantly affect the annual accounts of the IGH Group for 2024, which should consequently be published.

38. The approval of financial statements

The financial statements were adopted by the Management Board and their issuing was approved on April 25th 2025.

Robert Petrosian
Member of the Board

Josip Majer
President of the Board

Marija Đuroković
Member of the Board

Tatjana Bičanić
Member of the Board

Institut IGH, d.d.
Janka Rakuše 1
10 000 Zagreb
Republic of Croatia

AI Terminal

Institut IGH d.d.

Consolidated Statements of Financial Position

As at December 31, 2024 and 2023

(Amounts in EUR)

ITEM 1. BUSINESS

General

Reportable Segments

Foodservice

Fresh Produce Packaging

Food Merchandising

Properties

Legal Proceedings

Management's Discussion and Analysis of Financial Condition and Results of Operations

Liquidity and Capital Resources

Contractual Obligations and Commitments

Off-Balance Sheet Arrangements

Quantitative and Qualitative Disclosures About Market Risk

Risk Factors

Properties

Legal Proceedings

Market Information

Recent Sales of Unregistered Securities and Use of Proceeds

Exhibits and Financial Statement Schedules

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

ITEM 9A. CONTROLS AND PROCEDURES

ITEM 9B. OTHER INFORMATION

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

ITEM 11. EXECUTIVE COMPENSATION

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

TABLE OF CONTENTS

1. INTRODUCTION

2. A WORD FROM THE DIRECTOR

3. BUSINESS ACTIVITIES

o ACTIVITIES ON RECORD:

T H E 2 0 2 4 A N N U A L R E P O R T

4. COMPANY HISTORY

T H E 2 0 2 4 A N N U A L R E P O R T

T H E 2 0 2 4 A N N U A L R E P O R T

T H E 2 0 2 4 A N N U A L R E P O R T

TABLE OF CONTENTS

1. BUSINESS

5. GROUP COMPONENTS

Scheme 1. Group components on the 31.12.2024.

Table 1. Subsidiaries included in the consolidation

Table 2. Subsidiaries included in the consolidation process

6. SIGNIFICANT BUSINESS EVENTS AFTER THE BALANCE SHEET DATE

Table 3. A list of projects in year 2024.

7. MISSION AND VISION

8. THE COMPANY'S 2020-2030 STRATEGY

Employees as our greatest value

Client orientation

Science and research

New sector orientation and service modernization

Financial stability

New markets

Strategy adaptation

9. ORGANIZATIONAL STRUCTURE

10. MATERIAL TOPICS OF IMPORTANCE FOR THE COMPANY

11. THE NON-FINANCIAL REPORT

Management systems

The Quality Management System including Laboratories

Environmental management

Upravljanje okolišem (DISCLOSURE 306)

Environmental data (DISCLOSURE 305)

Social responsibility

Energy management (DISCLOSURE 302-1)

Energetski pokazatelji (DISCLOSURE 302-3)

Water (DISCLOSURE 303)

Occupational Health and Safety Management (DISCLOSURE 403)

12. RELATIONS WITH EMPLOYEES

Staff structure

13. SHARE TRANSACTIONS

IGH-R-A Trade volume and quantities