Podravka d.d. — Annual Report 2011

May 29, 2012

MANAGEMENT BOARD

Koprivnica, 29.03.2012.

PODRAVKA GROUP

2011.

ANNUAL REPORT

PODRAVKA Inc, Koprivnica, Ante Starčevića 32, The Commercial Court Varaždin, MBS: 010006549, PIN: 18928523252,
foundation capital: 1.626.000.900,00 kunas, paid in full, total number of shares issued: 5.420.003, nominal sha president of the Management Board Z. Mršić, members of the Management Board J. Ivanković, O. Jakupec, M. Klepač, J. Pedersen

Appendix 1 Reporting period:	1.1.2011		to	31.12.2011
		Annual financial report of entrepreneur - GFI-POD
Registration number (MB) 03454088
Identification number of subject (MBS) 010006549
18928523252 Personal identification number (OIB)
Issueer company: PODRAVKA prehrambena industrija d.d., KOPRIVNICA
Postal code and place 48000		KOPRIVNICA
Street and number ANTE STARCEVICA 32
E-mail address: podravka@podravka.hr
Internet adress: www.podravka.com
Code and name of comune/town KOPRIVNICA 201
Code and county name 6	KOPRIVNIČKO-KRIŽEVAČKA			mber of employees	6.377
Consolidated statement DA				(at quarter end) NKD/NWC code:	1039
Subsidiaries subject to consolidation (according to IFRS):				Registration number:
BELUPO d.d.			Koprivnica	3805140
DANICA d.o.o.			Koprivnica	0991279
ITAL-ICE d.o.o.			Poreč	3746011
PODRAVKA POLSKA SP z.o.o.			Kostrzyn, Polska	5981449907
PODRAVKA LAGRIS a.s.			Dolni Lhota u Luhačovic, Češka	3042510487
PODRAVKA SARAJEVO d.o.o.			Sarajevo, BiH	20188537
Book keeping service:
Contact person: Celiščak Draga
(authorised person for representation) Phone number: 048 651 200				Fascimile: 048 651 805
E-mail address: draga.celiscak@podravka.hr
Surname and name Mršić Zvonimir (authorised person for representation)
Disclosure documents: 1. Audited annual financial statements 2. Report of the Management Board on position of the Company 3. Statement of responsible persons for preparation of financial statements 4. The decision of the competent authority (the proposal) about the development of the annual financial statements 5. Decision on the allocation of profits or covering of loss

Reflient of responsible persons for preparation of imagical statements.
e decision of the competent authority (the proposal) about the development of the annual financial statements cision on the allocation of profits or covering distance $\mathbb{P}$ $\mathbb{R}$ $\mathbb{R}$ $\mathbb{R}$ $\mathbb{R}$

$\sum_{i=1}^{n}$ (signed by authorised person for representation)

EXPRESS OF BURGER INDUSTRIA d.J.
KOPRIVNICA 173

$\mathcal{N}$

AOP Item Last year (net) (net) code 1 $\overline{2}$ $\overline{4}$ $\overline{3}$ ASSETS A) RECEIVABLES FOR SUBSCRIBED BUT NOT PAID-IN CAPITAL 001 B) LONG-TERM ASSETS (003+010+020+029+033) 002 2.056.625.198 1.891.921.160 I. INTANGIBLE ASSETS (004 to 009) 003 311.927.331 352.332.661 1. Assets development 004 4.235.380 5.647.170 2. Concessions, patents, licences fees, trade and service marks, software 285.308.114 005 3. Goodwill 006 44.293.000 4. Prepayments for purchase of intangible assets 007 0 5. Intangible assets in preparation 008 18.496.167 6. Other intangible assets 009 0 II. TANGIBLE ASSETS (011 to 019) 010 1.642.820.313 1. Land 011 176.061.299 2. Buildings 012 966.278.616 877.174.067 3. Plant and equipment 013 418.780.995 416.715.386 4. Tools, facility inventory and transport assets 014 23.292.232 21.306.708 5. Biological assets 015 $\mathbf 0$ 6. Prepayments for tangible assets 016 5.361.777 13.219.507 7. Tangible assets in progress 017 49.188.929 41.662.125	Obligator: PODRAVKA prehrambena industrija d.d., KOPRIVNICA
				Current year
				244.280.446
				41.129.000
				0
				20.870.715
				1.519.648.607
				145.730.441
8. Other tangible assets 018 3.856.465				3.840.373
9. Investments in buildings 019 $\mathbf 0$
III. LONG-TERM FINANCIAL ASSETS (021 to 028) 020 9.142.431				4.323.161
1. Investments (shares) with related parties 021 0				0
2. Loans given to related parties 022 $\mathbf{0}$
3. Participating interest (shares) 023 330.000				330.000
4. Loans to entrepreneurs in whom the entity holds participating interests 024 $\Omega$
5. Investments in securities 1.274.116 025				180.351
6. Loans, deposits and similar assets 026 7.538.295				3.812.810
7. Other long - term financial assets 20 027				$\mathbf{0}$
8. Investments accounted by equity method $\mathbf 0$ 028 $\circ$				$\mathbf 0$
IV. RECEIVABLES (030 to 032) 029 1. Receivables from related parties 030 $\mathbf 0$				$\circ$ 0
2. Receivables from based on trade loans 031 $\mathbf 0$				0
3. Other receivables 032 $\mathbf 0$
V. DEFERRED TAX ASSETS 033 52.329.793				56.022.061
C) SHORT TERM ASSETS (035+043+050+058) 034 1.933.337.889				1.939.271.583
I. INVENTORIES (036 to 042) 035 700.861.151				758.240.952
1. Raw-material and supplies 036 222.393.816				213.149.271
2. Work in progress 037 36.289.847				50.870.289
3. Finished goods 038 246.637.351				255.608.587
4. Merchandise 039 186.772.762				180.954.554
5. Prepayments for inventories 040
6. Long - term assets held for sales 041 8.767.375				57.658.251
7. Biological assets 042 0 II. RECEIVABLES (044 to 049)				0
043 991.603.792 1. Receivables from related parties 044 0				1.021.565.728
2. Accounts receivable 045 946.272.822				973.000.722
3. Receivables from participating parties 046 0
4. Receivables from employees and members of related parties 2.518.619 047				2.699.198
5. Receivables from government and other institutions 34.687.811 048				41.429.788
6. Other receivables 049 8.124.540				4.436.020
III. SHORT TERM FINANCIAL ASSETS (051 to 057) 050 88.509.487				13.505.061
1. Shares (stocks) in related parties 051 0				0
2. Loans given to related parties 0 052				$\circ$
$\overline{0}$ 3. Participating interests (shares) 053				$\circ$
4. Loans to entrepreneurs in whom the entity holds participating interests 0 054
5. Investments in securities 41.935.216 055				12.721.331
6. Loans, deposits, etc. 056 46.170.596				143.902
7. Other financial assets 057 403.675 IV. CASH AT BANK AND IN CASHIER				639.828
058 152.363.459 D) PREPAID EXPENSES AND ACCRUED REVENUE 18.226.022 059				145.959.842 23.527.372
E) TOTAL ASSETS (001+002+034+059) 060 4.008.189.109				3.854.720.115
F) OFF-BALANCE RECORDS 807.562.291 714.445.958 061

BALANCE SHEET
as at 31.12.2011.

Obligator: PODRAVKA prehrambena industrija d.d., KOPRIVNICA
Item	AOP code	Last year (net)	Current year (net)
$\blacksquare$	$\overline{2}$	$\overline{3}$	$\overline{4}$
LIABILITIES AND CAPITAL
A) CAPITAL AND RESERVES (063+064+065+071+072+075+078)	062	1.634.817.706	1.695.787.380
I. SUBSCRIBED CAPITAL	063	1.626.000.900	1.626.000.900
II. CAPITAL RESERVES	064	22.337.176	24.569.630
III.RESERVES FROM PROFIT (066+067-068+069+070)	065	59.331.755	52.039.980
1. Reserves prescribed by low	066	19.785.012	20.808.012
2. Reserves for treasury shares	067	35.344.592	35.344.592
3. Treasury stocks and shares (deduction)	068	67.604.502	67.604.502
4. Statutory reserves	069	28.036.954	30.705.853
5. Other reserves	070	43.769.699	32.786.025
IV. REVALUATION RESERVES	071	0
V. RETAINED EARNINGS OR ACCUMULATED LOSS (073-074)	072	$-191.434.600$	$-110.891.556$
1. Retained earnings	073	0
2. Accumulated loss	074	191.434.600	110.891.556
VI. PROFIT/LOSS FOR THE CURRENT YEAR (076-077)	075	84.235.325	69.281.062
1. Profit for the current year	076	84.235.325	69.281.062
2. Loss for the current year	077	$\mathsf{O}\xspace$
IX. MINORITY INTERESTS	078	34.347.150	34.787.364
B) PROVISIONS (080 to 082)	079	30.037.638	34.326.066
1. Provisions for pensions, severance pay, and similar liabilities	080	22.431.979	23.334.629
2. Reserves for tax liabilities	081	$\mathbf 0$
3. Other reserves	082	7.605.659	10.991.437
C) LONG - TERM LIABILITIES (084 to 092)	083	566.097.840	904.612.677
1. Liabilities to related parties	084	$\mathbf 0$	$\mathbf 0$
2. Liabilities for loans, deposits etc.	085	$\mathbf{0}$	$\Omega$
3. Liabilities to banks and other financial institutions	086	558.956.840	897.615.677
4. Liabilities for received prepayments	087	0	0
5. Accounts payable	088	$\circ$	$\mathbf 0$
6. Liabilities arising from debt securities	089		0
7. Liabilities to entrepreneurs in whom the entity holds participating	090	$\Omega$	$\Omega$
8. Other long-term liabilities	091	$\Omega$	$\Omega$
9. Deferred tax liability	092	7.141.000	6.997.000
D) SHORT - TERM LIABILITIES (094 to 105)	093	1.682.185.308	1.125.366.071
1. Liabilities to related parties	094	$\mathbf 0$	$\circ$
2. Liabilities for loans, deposits etc.	095	12.068	$\Omega$
3. Liabilities to banks and other financial institutions	096	472.129.696	496.251.565
4. Liabilities for received prepayments	097	2.705.585	2.508.612
5. Accounts payable	098	501.810.449	533.328.778
6. Liabilities arising from debt securities	099	507.084.963	2.400.000
7. Liabilities to entrepreneurs in whom the entity holds participating	100	$\Omega$	$\mathbf{0}$
8. Liabilities to employees	101	61.340.528	59.022.620
9. Liabilities for taxes, contributions and similar fees	102	13.024.738	18.697.962
10. Liabilities to share - holders	103	686.698	684.698
11. Liabilities for long-term assets held for sale	104	$\circ$	$\circ$
12. Other short - term liabilities	105	123.390.583	12.471.836
E) DEFFERED SETTLEMENTS OF CHARGES AND INCOME DEFERRED	106	95.050.617	94.627.921
F) TOTAL - CAPITAL AND LIABILITIES (062+079+083+093+106)	107	4.008.189.109	3.854.720.115
G) OFF-BALANCE RECORDS	108	807.562.291	714.445.958
APPENDIX to balance sheet(to be filled in by entrepreneur that prepares consolidated annual financial report)
CAPITAL AND RESERVES
1. Attributed to equity holders of parent company	109	1.600.470.556	1.661.000.016
2. Attributed to minority interest	110	34.347.150	34.787.364

PROFIT AND LOSS ACCOUNT
for the period 01.01.2011. to 31.12.2011.

Obligator: PODRAVKA prehrambena industrija d.d., KOPRIVNICA
Item	AOP code	Last year	Current year
$\mathbf{1}$	$\overline{2}$	3	$\overline{4}$
I. OPERATING REVENUE (112+113)	111	3.602.421.586	3.739.901.610
1. Sales revenue	112	3.522.272.227	3.625.161.695
2. Other operating revenues	113	80.149.359	114.739.915
II. OPERATING EXPENSES (115+116+120+124+125+126+129+130)	114	3.367.808.306	3.546.177.509
1. Changes in value of work in progress and finished products	115	$-26.527.118$	$-25.889.237$
2. Material costs (117 to 119)	116	2.212.335.178	2.347.231.969
a) Raw material and material costs	117	1.186.802.946	1.277.708.588
b) Costs of goods sold	118	477.606.430	516.034.640
c) Other external costs	119	547.925.802	553.488.741
3. Staff costs (121 to 123)	120	729.640.032	718.177.465
a) Net salaries and wages	121	477.592.124	465.651.531
b) Cost for taxes and contributions from salaries	122	158.726.175	159.413.576
c) Contributions on gross salaries	123	93.321.733	93.112.358
4. Depreciation	124	155.291.996	157.489.065
5. Other costs	125	202.183.739	213.420.932
6. Impairment (127+128)	126	28.216.378	61.565.811
a) Impairment of long-term assets (financial assets excluded)	127	$\Omega$	48.393.035
b) Impairment of short - term assets (financial assets excluded)	128	28.216.378	13.172.776
7. Provisions	129	4.310.755	5.922.865
8. Other operating costs	130	62.357.346	68.258.639
III. FINANCIAL INCOME (132 to 136)	131	50.361.230	47.877.829
1. Interest income, foreign exchange gains, dividends and similar income from related	132	$\mathbf{0}$	$\mathbf{0}$
2. Interest income, foreign exchange gains, dividends and similar income from non -	133	45.212.992	46.951.129
3. Share in income from affiliated entrepreneurs and participating interests	134	$\mathbf{0}$	$\mathbf 0$
4. Unrealized gains (income) from financial assets	135	5.097.263	926.700
5. Other financial income	136	50.975	$\Omega$
IV. FINANCIAL EXPENSES (138 do 141)	137	175.638.356	148.448.430
1. Interest expenses, foreign exchange losses, dividends and similar expenses from	138	$\mathbf{0}$	$\Omega$
2. Interest expenses, foreign exchange losses, dividends and similar expenses from non -	139	133.149.319	138.884.512
3. Unrealized losses (expenses) on financial assets	140	42.489.037	9.563.918
4. Other financial expenses v.	141	$\mathbf 0$	$\overline{0}$
INCOME FROM INVESTMENT - SHARE IN PROFIT OF ASSOCIATED ENTREPRENEURS VI. LOSS FROM INVESTMENT - SHARE IN LOSS OF ASSOCIATED ENTREPRENEURS	142	$\mathbf{0}$ $\mathbf{0}$	$\pmb{0}$
VII. EXTRAORDINARY - OTHER INCOME	143 144	$\mathbf 0$	$\pmb{0}$ $\pmb{0}$
VIII. EXTRAORDINARY - OTHER EXPENSES	145	$\mathbf{0}$	$\overline{0}$
IX. TOTAL INCOME (111+131+142 + 144)	146	3.652.782.816
X. TOTAL EXPENSES (114+137+143 + 145)	147	3.543.446.662	3.787.779.439 3.694.625.939
XI. PROFIT OR LOSS BEFORE TAXATION (146-147)	148	109.336.154	93.153.500
1. Profit before taxation (146-147)	149	109.336.154	93.153.500
2. Loss before taxation (147-146)	150	$\mathbf{0}$	$\mathbf{0}$
XII. PROFIT TAX	151	25.262.095	23.724.438
XIII. PROFIT OR LOSS FOR THE PERIOD (148-151)	152	84.074.059	69.429.062
1. Profit for the period (149-151)	153	84.074.059	69.429.062
2. Loss for the period (151-148)	154	$\overline{0}$	$\theta$
APPENDIX to P&L account (to be filled in by entrepreneur that prepares consolidated financial report)
XIV. PROFIT OR LOSS FOR THE PERIOD
1. Attributed to equity holders of parent company	155	84.235.325	69.281.062
2. Attributed to minority interest	156	161.266	148.000
STATEMENT OF OTHER COMPREHENSIVE INCOME (IFRS)
I. PROFIT OR LOSS FOR THE PERIOD (= 152)	157	84.074.059	69.429.062
II. OTHER COMPREHENSIVE INCOME / LOSS BEFORE TAX (159 do 165)	158	13.521.000	$-10.692.000$
1. Exchange differences on translation of foreign operations	159	13.521.000	$-10.692.000$
2. Movements in revaluation reserves of long - term tangible and intangible assets	160
3. Profit or loss from reevaluation of financial assets available for sale	161
4. Gains or losses on efficient cash flow hedging	162
5. Gains or losses on efficient hedge of a net investment in foreign countries	163
6. Share in other comprehensive income / loss of associated companies	164
7. Actuarial gains / losses on defined benefit plans	165
III. TAX ON OTHER COMPREHENSIVE INCOME FOR THE PERIOD	166
IV. NET OTHER COMPREHENSIVE INCOME OR LOSS FOR THE PERIOD (158-166)	167	13.521.000	$-10.692.000$
V. COMPREHENSIVE INCOME OR LOSS FOR THE PERIOD (157+167)	168	97.595.059	58.737.062
APPENDIX to Statement of other comprenhensive income (to be filled in by entrepreneur that prepares consolidated financial
VI. COMPREHENSIVE INCOME OR LOSS FOR THE PERIOD
1. Attributed to equity holders of parent company	169	97.609.325	58.296.848
2. Attributed to minority interest	170	$-14.266$	440.214

STATEMENT OF CASH FLOWS - INDIRECT METHOD
for the period 01.01.2011. to 31.12.2011.

Obligator: PODRAVKA prehrambena industrija d.d., KOPRIVNICA
Item	AOP	Last year	Current year
	code
	$\overline{2}$	3	$\overline{4}$
CASH FLOW FROM OPERATING ACTIVITIES
1. Profit before tax	001	109.336.153	93.153.500
2. Depreciation	002	155.291.996	157.489.065
3. Increase in short term liabilities	003		$\Omega$
4. Decrease in short term receivables	004	84.719.991	0
5. Decrease in inventories	005	N	$\Omega$
6. Other increase in cash flow	006	100.653.200	88.740.300
I. Total increase in cash flow from operating activities (001 to 006)	007	450.001.340	339.382.865
1. Decrease in short term liabilities	008	158.242.569	70.883.411
2. Increase in short term receivables	009	$\Omega$	50.531.479
3. Increase in inventories	010	49.942.000	7.371.410
4. Other decrease in cash flow	011	45.049.000	57.326.482
II. Total decrease in cash flow from operating activities (008 to 011)	012	253.233.569	186.112.782
A1) NET INCREASE IN CASH FLOW FROM OPERATING ACTIVITIES	013	196.767.771	153.270.083
A2) NET DECREASE IN IN CASH FLOW FROM OPERATING ACTIVITIES	014	0
CASH FLOW FROM INVESTING ACTIVITIES
1. Cash inflows from sales of long-term tangible and intangible assets	015	10.446.000	8.249.000
2. Cash inflows from sales of equity and debt instruments	016	75.176.000	111.103.000
3. Interests receipts	017	9.191.000	9.237.000
4. Dividend receipts	018	O
5. Other cash inflows from investing activities	019	3.080.000	73.962.000
III. Total cash inflows from investing activities (015 to 019)	020	97.893.000	202.551.000
1. Cash outflow for purchase of long-term tangible and intangible assets	021	91.068.000	102.249.000
2. Cash outflow for acquisition of equity and debt financial instruments	022	68.299.600	97.843.000
3. Other cash outflow for investing activities	023	2.417.000	7.133.700
IV. Total cash outflow for investing activities (021 do 023)	024 025	161.784.600	207.225.700
B1) NET INCREASE IN CASH FLOW FROM INVESTING ACTIVITIES (020-		0
B2) NET DECREASE IN CASH FLOW FROM INVESTING ACTIVITIES CASH FLOW FROM FINANCIAL ACTIVITIES	026	63.891.600	4.674.700
1. Cash inflow from issuing property and debt financial instruments		0
2. Proceeds from the credit principal, promissory notes, borrowings and	027 028	758.899.400	679.468.000
3. Other proceeds from financial activities	029	0	$\Omega$
V. Total cash inflows from financial activities (027 to 029)	030	758.899.400	679.468.000
1. Cash outflow for repayment of credit principal and bonds	031	879.617.000	830.791.000
2. Cash outflow for dividends paid	032	0
3. Cash outflow for financial lease	033	5.065.000	3.676.000
4. Cash outflow for purchase of treasury shares	034
5. Other cash outflow for financial activities	035
VI. Total cash outflow for financial activities (031 to 035)	036	884.682.000	834.467.000
C1) NET INCREASE IN CASH FLOW FROM FINANCIAL ACTIVITIES (030-	037	0
C2) NET DECREASE IN CASH FLOW FROM FINANCIAL ACTIVITIES	038	125.782.600	154.999.000
Total increase in cash flow (013 - 014 + 025 - 026 + 037 - 038)	039	7.093.571
Total decrease in cash flow $(014 - 013 + 026 - 025 + 038 - 037)$	040	$\Omega$	6.403.617
Cash and cash equivalents at the beginning of the period	041	145.269.888	152.363.459
Increase of cash and cash equivalents	042	7.093.571
Decrease of cash and cash equivalents	043	$\Omega$	6.403.617
Cash and cash equivalents at the end of the period	044	152.363.459	145.959.842

STATEMENT OF CHANGES IN EQUITY
for the period 1.1.2011 do 31.12.2011

Item		Last year	Current year
1	$\overline{2}$	$\overline{3}$	$\Delta$
1. Subscribed capital	001	1.626.000.900	1.626.000.900
2. Capital reserves	002	22.337.176	24.569.630
3. Reserves from profit	003	59.331.755	52.039.980
4. Retained earnings or accumulated loss	004	$-191.434.600$	$-110.891.556$
5. Profit or loss for the current year	005	84.235.325	69.281.062
6. Revaluation of long - term tangible assets	006
7. Revaluation of intangible assets	007	O	0
8. Revaluation of financial assets available for sale	008
9. Other revaluation	009	34.347.150	34.787.364
10. Total capital and reserves (AOP 001 do 009)	010	1.634.817.706	1.695.787.380
11. Currency gains and losses arising from net investement in foreign operations	011	13.521.000	$-10.692.000$
12. Current and deferred taxes (part)	012	0
13. Cash flow hedging	013	$\Omega$
14. Changes in accounting policy	014	$\Omega$
15. Correction of significant errors in prior period	015	U
16. Other changes of capital	016	82.200.715	71.661.674
17. Total increase or decrease in capital (AOP 011 do 016)	017	95.721.715	60.969.674
17 a. Attributed to equity holders of parent company	018	95.735.981	60.529.460
17 b. Attributed to minority interest	019	$-14.266$	440.214

Notes

The accounting policy in 2011 year did not change.

$\frac{1}{2}$

Koprivnica, 29 March 2012

MANAGEMENT REPORT ON THE CONSOLIDATED AND AUDITED BUSINESS RESULTS OF THE PODRAVKA GROUP FOR THE YEAR 2011

The Podravka Group achieved operating income in the amount of 3.740 billion HRK in the year 2011, which is a 4% increase compared to the year 2010.

Sales revenue, which in the total operating income structure participates with 97%, was realized in the amount of 3.625 billion HRK and represents an increase of 3%.

Sales of the SBA Food and Beverages totalled 2.829 billion HRK, which represents a sales increase of 2% compared to the year 2010. The aforesaid sales increase results from a higher level of sales on foreign markets (4%), primarily on the market of South-East Europe (7%) with the highest contribution coming from the markets of Serbia (16%), Bosnia and Herzegovina (6%) and Slovenia (4%). The market of Western Europe, overseas countries and the Orient also achieved an increase in the sales of the SBA Food and Beverages (2%) with a significant growth from the market of Australia (15%), while the markets of Central Europe achieved a sales increase of the aforesaid SBA by 1% with the highest contribution from the market of the Czech Republic (9%).

The SBA Pharmaceuticals achieved sales in the amount of 796.3 million HRK, which represents a sales increase of 7% compared to the same period of the year 2010. The sales increase of the SBA Pharmaceuticals is mostly contributed by foreign markets which recorded a growth of 13% with the highest contribution coming from the markets of Russia (22%), Bosnia and Herzegovina (8%) and Slovenia (28%). Sales on the Croatian market have also increased (3%) due to a higher level of sales of prescription drugs (2%) and a growth of sales of OTC products (1%).

The total operating costs/expenses amounted to 3.546 billion HRK and compared to the year 2010 have increased by 5%. The increase of costs of raw material and material due to a significant rise in the prices of raw material had the highest impact on the stated increase.

In the year 2011, the Podravka Group realised net profit in the amount of 69.3 million HRK. Nonrecurrent items had a significant influence on the achieved business results. Positive nonrecurrent items refer to the return of insurance funds in the amount of 23.7 million HRK in the SBA Pharmaceuticals (as 4.9 million HRK were tax liabilities, the net profit was corrected by 18.8 million HRK), recording of the SMS brand (7.8 million HRK) and recording gains in respect of options generated as a positive difference between the recorded liabilities in prior years and paid obligations in accordance with the Settlement Agreement between Podravka d.d., OTP and MOL concluded at the year end of 2011 (19.1 million HRK).

COMPANY MANAGEMENT

Negative non-recurrent items referred to the impairment of long-term assets held for sale (16.6) million HRK), loss from reduced values of brands and pharmacy rights (41 million HRK), bond value adjustments (3.7 million HRK), impairment of goodwill (7.1 million HRK), value adjustments of fund investments (3.5 million HRK) and severance payments (8.7 million HRK). Most of the aforementioned negative non-recurrent items refer to the impairment of assets acquired through acquisitions in previous years.

The total value of assets of the Podravka Group as of 31 December 2011 is 3.855 billion HRK and compared to the year before has been reduced by 153.5 million HRK.

The total indebtedness of the Podravka Group as of 31 December 2011 is 1.383 billion HRK and compared to the year before has been reduced by 9% or 128.5 million HRK, respectively. The financial stability of the Podravka Group has been assured with the completion of the refinancing process in the first year half of 2011.

In the last quarter, or more precisely on 23 November 2011, Podrayka d.d., OTP Bank Plc and MOL Hungarian Oil and Gas Company, Plc from Budapest concluded a Settlement Agreement by which all mutual claims and liabilities of the contractual parties arising from the contracts of 27 March 2009 referring to 10.64% of Podravka shares have been discharged.

The past year was a year of consolidation and creating a healthy foundation to enable major breakthrough in the forthcoming period. The New Management Board has set ambitious plans based on sales growth, efficiency and profitability. We wish to achieve this along with optimizing the product portfolio and highly focusing on brands that are the strength of the company. Innovation and higher productivity, taking into account market competitiveness, will guarantee Podravka the status of region leader. Podravka is returning to the values built over many years which will provide further development, satisfied employees and shareholders, respecting the requests of all our consumers.

President of the Management Board Zvonimir Mršić

COMPANY MANAGEMENT

Koprivnica, 29 March 2012

STATEMENT FROM EXECUTIVES RESPONSIBLE FOR PREPARING FINANCIAL STATEMENTS

The consolidated and audited financial statements of the Podrayka Group for the period January - December 2011 have been prepared in compliance with the Accounting Act of the Republic of Croatia and International Financial Reporting Standards (IFRS) and provide an overall and true presentation of assets and liabilities, profit and loss, financial position and business operations of the Group and all related companies involved in the consolidation.

The audited financial statements of the Podravka Group significantly differ from the unaudited earlier disclosed statements due to an impairment of value of both tangible assets for sale and intangible assets (brands, goodwill).

Accounting Directer Draga Celiščak aliscol

Board Member: Miroslav Klepa

SUPERVISORY BOARD

Number: NO-81-2-2012. Koprivnica, 29 March 2012

Pursuant to Articles 300.c and 300.d of the Company Act (Official Gazette "Narodne novine" no. 111-1993, 34-1999, 121-1999, 52-2000, 118-2003, 107-2007, 146-2008 and 137-2009), the Supervisory Board of Podravka d.d. at its 81^st session on 29 March 2012 adopted the following

DECISION

on the approval of establishing the annual financial statements of Podravka d.d. and dependant companies and the state of the company reports for the business year 2011

I.

The annual financial statements of Podravka d.d. and dependant companies (consolidated statements of the Podravka Group) for the business year 2011 with the accompanying reports and opinions of certified auditors are hereby established.

П.

The following annual financial statements for the business year 2011 which the company Management has drawn up in compliance with applicable regulations are hereby established:

• 1. Statement of total income
• 1. Company statement of financial position
• 1. Statement of changes in equity
• 1. Statement of cash flow
• 1. Notes to financial statements
• 1. Annual report

$III.$

The Statement of total income for the business year 2011, in which profit in the amount of 69,281 thousand HRK has been declared, is hereby established.

The Statement of financial position as of 31 December 2011 shows the sum of assets and liabilities, respectively, in the amount of 3,854,720 thousand HRK.

IV.

The Annual report of the Management Board of Podravka d.d. on the business operations of Podravka d.d. and dependant companies and the state of the company for the business year 2011 is hereby established.

V.

This Decision shall enter into force on the day of its adoption.

PODRAVKA d.d., Koprivnica, Ante Starčevića 32, Commercial Court of Varaždin, Company no. Company no. 010006549, PIN 18928523252

Privredna banka Zagreb d.d., Zagreb, Račkoga 6, Giro account no. 2340009-1100098526, share capital 1,626,000,900.00 HRK paid in full, number of shares: 5,420,003, nominal share value: 300.00 HRK, President of the Supervisory Board: D. Štimac, President of the Management Board: Z. Mršić, Board members: J. Ivanković, O. Jakupec, M. Klepač, J. Pedersen

SUPERVISORY BOARD

Number: NO-81-3-2012. Koprivnica, 29 March 2012

Pursuant to Article 27 of the Articles of Association of Podravka d.d. Koprivnica and Article 23 of the Rules of Procedure of the Supervisory Board of Podravka d.d., the Supervisory Board of Podravka d.d. at its 81^st session on 29 March 2012 adopted the following

DRAFT DECISION on the carried forward loss of the business year 2011

I.

The loss of Podravke d.d. (Company no. 03454088, PIN 18928523252) for the business year 2011 amounts to 9,534,378.44 HRK.

The realised loss shall be carried forward to the future period.

Ш.

This Draft decision shall be referred to the General Assembly of Podravka d.d. for adoption.

President of the Supervisory Board: DUSTRIJA d d IVNICA 173

PODRAVKA d.d., Koprivnica, Ante Starčevića 32, Commercial Court of Varaždin, Company no. Company no. 010006549, PIN
18928523252

Privredna banka Zagreb d.d., Zagreb, Račkoga 6, Giro account no. 2340009-1100098526, share capital 1,626,000,900.00 HRK paid in full,
number of shares: 5,420,003, nominal share value: 300.00 HRK, President of the Superviso Management Board: Z. Mršić, Board members: J. Ivanković, O. Jakupec, M. Klepač, J. Pedersen