Podravka d.d. — Annual Report 2012

Apr 26, 2013

MANAGEMENT BOARD

Koprivnica, 26 April 2013.

PODRAVKA GROUP AUDITED CONSOLIDATED FINANCIAL REPORT FOR THE YEAR 2012.

PODRAVKA d.d., Koprivnica, Ante Starčevića 32, Trgovački sud u Bjelovaru, MBS 010006549
Privredna banka Zagreb d.d., Zagreb, Račkoga 6, žiro račun br. 2340009-1100098526, temeljni kapital 1.626.000.900,00 kuna
uplaćen u ci

Appendix 1 Reporting period:	1.1.2012 to	31.12.2012
	Annual financial report of entrepreneur - GFI-POD
03454088 Registration number (MB)
010006549 Identification number of subject (MBS)
18928523252
Personal identification number (OIB) Issueer company: PODRAVKA prehrambena industrija d.d., KOPRIVNICA
48000 Postal code and place	KOPRIVNICA
Street and number ANTE STARCEVICA 32
E-mail address: podravka@podravka.hr
Internet adress: www.podravka.com
KOPRIVNICA Code and name of comune/town 201
6 Code and county name	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: Celiscak Draga (authorised person for representation)		Fascimile: 048 220 562
Phone number: 048 651 200
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 firtancial statements 5. Decision on the allocation of profits or covering of loss	REHRAMBENA INDUSTRIJA (1.4). REHRAMBENA INDUSTRIJA (1.4). KOPRIVNICA 173	(signed by authorised person for representation)

BALANCE SHEET

as at 31.12.2012.

Obligator: Podravka prehrambena industrija d.d., Koprivnica Item		Last year (net)	Current year (n e t)
п		3	$\boldsymbol{A}$
ASSETS
A) RECEIVABLES FOR SUBSCRIBED BUT NOT PAID-IN CAPITAL	001
B) LONG-TERM ASSETS (003+010+020+029+033)	002	1.845.090.492	1.721.143.991
I. INTANGIBLE ASSETS (004 to 009)	003	304.127.331	279.641.788 5.839.794
1. Assets development	004 005	5.647.170 236.480.446	210.946.610
2. Concessions, patents, licences fees, trade and service marks, software and other rights	006	41.129.000	41.983.000
3. Goodwill 4. Prepayments for purchase of intangible assets	007	0
5. Intangible assets in preparation	008	20.870.715	20.872.384
6. Other intangible assets	009
II. TANGIBLE ASSETS (011 to 019)	010	1.476.007.000	1.400.738.837
1. Land	011	45.703.946	45.995.536
2. Buildings	012	933.558.955	882.052.504
3. Plant and equipment	013	416.715.386	383.931.370
4. Tools, facility inventory and transport assets	014	21.306.708	18.257.354
5. Biological assets	015	0
6. Prepayments for tangible assets	016	13.219.507	276.374
7. Tangible assets in progress	017	41.662.125	68.046.263
8. Other tangible assets	018	3.840.373	2.179.436
9. Investments in buildings	019
III. LONG-TERM FINANCIAL ASSETS (021 to 028)	020	4.323.161	5.343.367
1. Investments (shares) with related parties	021
2. Loans given to related parties	022
3. Participating interest (shares)	023	330.000	983.600
4. Loans to entrepreneurs in whom the entity holds participating interests	024	0
5. Investments in securities	025	180,351	167.438
6. Loans, deposits and similar assets	026	3.812.810	4.192.329
7. Other long - term financial assets	027	Ω	0
8. Investments accounted by equity method	028	0	0
IV. RECEIVABLES (030 to 032)	029	$\theta$	$\mathbf{O}$
1. Receivables from related parties	030	0	0
2. Receivables from based on trade loans	031	0	0
3. Other receivables	032	0	$\bf{0}$
V. DEFERRED TAX ASSETS	033	60.633.000	35.420.000
C) SHORT TERM ASSETS (035+043+050+058)	034	1.919.462.882	1.881.578.696
I. INVENTORIES (036 to 042)	035	738.432.251	695.533.146
1. Raw-material and supplies	036	213.149.271	225.184.409
2. Work in progress	037	50.870.289	40.020.809
3. Finished goods	038	255.608.587	213.453.413
4. Merchandise	039	161.145.853	152.458.369
5. Prepayments for inventories	040		$\Omega$
6. Long - term assets held for sales	041	57.658.251	64.416.146
7. Biological assets	042	0	$\Omega$
II. RECEIVABLES (044 to 049)	043	1.021.565.728	1.062.608.440
1. Receivables from related parties	044
2. Accounts receivable	045	973.000.722	1.011.101.739
3. Receivables from participating parties	046	0	$\Omega$
4. Receivables from employees and members of related parties	047	2.699.198	2.569.918
5. Receivables from government and other institutions	048	41.429.788	46.107.062
6. Other receivables	049	4.436.020	2.829.721
III. SHORT TERM FINANCIAL ASSETS (051 to 057)	050	13.505.061	5.229.582
1. Shares (stocks) in related parties	051
2. Loans given to related parties	052
3. Participating interests (shares)	053
4. Loans to entrepreneurs in whom the entity holds participating interests	054
5. Investments in securities	055	12.721.331	4.002.211
6. Loans, deposits, etc.	056	143,902	1.227.371
7. Other financial assets	057	639.828	$\overline{0}$
IV. CASH AT BANK AND IN CASHIER	058	145.959.842	118.207.528
D) PREPAID EXPENSES AND ACCRUED REVENUE	059	23.527.372	14.949.622
E) TOTAL ASSETS (001+002+034+059)	060	3.788.080.745	3.617.672.309
F) OFF-BALANCE RECORDS	061	714.445.958	858.816.749

Obligator: Podravka prehrambena industrija d.d., Koprivnica
Item		Last year (net)	Current year (net)
п		з	4
LIABILITIES AND CAPITAL
A) CAPITAL AND RESERVES (063+064+065+071+072+075+078)	062	1.629.147.380	1.627.791.411
I. SUBSCRIBED CAPITAL	063	1.626.000.900	1.626.000.900
II. CAPITAL RESERVES	064	24.569.630	26.465.000
III.RESERVES FROM PROFIT (066+067-068+069+070)	065	37.749.948	105.899.405
1. Reserves prescribed by low	066	18.325.000	18,325.000
2. Reserves for treasury shares	067	21.761.692	21.761.692
3. Treasury stocks and shares (deduction)	068	67.604.502	67.604.502
4. Statutory reserves	069	30.705.853	35.243.962
5. Other reserves	070	34.561.905	98.173.253
IV. REVALUATION RESERVES	071	0
V. RETAINED EARNINGS OR ACCUMULATED LOSS (073-074)	072	-134.429.556	$-148.498.899$
1. Retained earnings	073
2. Accumulated loss	074	134.429.556	148.498.899
VI. PROFIT/LOSS FOR THE CURRENT YEAR (076-077)	075	40.469.094	$-14.101.876$
1. Profit for the current year	076	40.469.094
2. Loss for the current year	077	$\Omega$	14.101.876
IX. MINORITY INTERESTS	078	34.787.364	32.026.882
B) PROVISIONS (080 to 082)	079	34.326.066	46.777.777
1. Provisions for pensions, severance pay, and similar liabilities	080	23.334.629	25.838.060
2. Reserves for tax liabilities	081
3. Other reserves	082	10.991.437	20.939.717
C) LONG - TERM LIABILITIES (084 to 092)	083	901.305.677	733.553.063
1. Liabilities to related parties	084	0
2. Liabilities for loans, deposits etc.	085
3. Liabilities to banks and other financial institutions	086	894.308.677	727.255.063
4. Liabilities for received prepayments	087
5. Accounts payable	088
6. Liabilities arising from debt securities	089		$\Omega$
7. Liabilities to entrepreneurs in whom the entity holds participating interests	090
8. Other long-term liabilities	091
9. Deferred tax liability	092	6.997.000	6.298.000
D) SHORT - TERM LIABILITIES (094 to 105)		1.128.673.702	1.106.272.027
1. Liabilities to related parties	093 094	0
2. Liabilities for loans, deposits etc.	095	0
3. Liabilities to banks and other financial institutions	096	499.558.565	477.866.741
4. Liabilities for received prepayments	097	2.508.612	3.155.766
5. Accounts payable	098	533.328.778	546.406.547
6. Liabilities arising from debt securities	099	2.400.000	0
7. Liabilities to entrepreneurs in whom the entity holds participating interests	100	$\Omega$	$\Omega$
8. Liabilities to employees	101	59.022.620	55.823.800
9. Liabilities for taxes, contributions and similar fees	102	18.697.962	9.408.218
10. Liabilities to share - holders	103	684.698	681.378
11. Liabilities for long-term assets held for sale	104
12. Other short - term liabilities	105	12.472.467	12.929.577
E) DEFFERED SETTLEMENTS OF CHARGES AND INCOME DEFERRED TO FUTURE	106	94.627.921	103.278.032
F) TOTAL - CAPITAL AND LIABILITIES (062+079+083+093+106)	107	3.788.080.745	3,617.672.309
G) OFF-BALANCE RECORDS	108	714.445.958	858.816.749
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	1.594.360.016	1.595.764.529
2. Attributed to minority interest	110	34.787.364	32.026.882

PROFIT AND LOSS ACCOUNT for the period 1.1.2012. to 31.12.2012.

Obligator: Podravka prehrambena industrija d.d., Koprivnica
Item	AOP code	Last year	Current year
H	$\mathbf{2}$	з	A
I. OPERATING REVENUE (112+113)	111	3.708.378.610	3.700.062.176
1. Sales revenue	112	3 625 161 695	3.626.666.307
2. Other operating revenues	113	83.216.915	73.395.870
II. OPERATING EXPENSES (115+116+120+124+125+126+129+130)	114	3.548.130.615	3.602.375.014
1. Changes in value of work in progress and finished products	115	$-25.889.237$	51.503.557
2. Material costs (117 to 119)	116	2.346.862.075	2.305.898.688
a) Raw material and material costs	117	1.277.708.588	1,236.106.240
b) Costs of goods sold	118	515.664.746	519.827.650
c) Other external costs	119 120	553.488.741 718.177.465	549.964.798 720.698.292
3. Staff costs (121 to 123)	121	435.784.020	436.406.334
a) Net salaries and wages	122	182.654.020	186.869.837
b) Cost for taxes and contributions from salaries c) Contributions on gross salaries	123	99.739.425	97.422.121
4. Depreciation	124	159.812.065	153.689.989
5. Other costs	125	213.420.932	249.529.826
6. Impairment (127+128)	126	61.565.811	51.107.288
a) Impairment of long-term assets (financial assets excluded)	127	48.393.035	20.100,000
b) Impairment of short - term assets (financial assets excluded)	128	13.172.776	31,007,288
7. Provisions	129	5.922.865	15,573,299
8. Other operating costs	130	68.258.639	54.374.074
III. FINANCIAL INCOME (132 to 136)	131	47.877.829	38.065.425
1. Interest income, foreign exchange gains, dividends and similar income from related parties	132		0
2. Interest income, foreign exchange gains, dividends and similar income from non - related parties and other entities	133	46.951.129	37.910.306
3. Share in income from affiliated entrepreneurs and participating interests	134	O	0
4. Unrealized gains (income) from financial assets	135	926.700	155.119
5. Other financial income	136		O
IV. FINANCIAL EXPENSES (138 do 141)	137	148.448.430	105.638.899
1. Interest expenses, foreign exchange losses, dividends and similar expenses from related parties	138		0
2. Interest expenses, foreign exchange losses, dividends and similar expenses from non - related parties and other entities	139 140	138 884 512 9.563.918	102.170.988 3.467.911
3. Unrealized losses (expenses) on financial assets	141	0	$\boldsymbol{0}$
4. Other financial expenses V. INCOME FROM INVESTMENT - SHARE IN PROFIT OF ASSOCIATED ENTREPRENEURS	142	0	0
VI. LOSS FROM INVESTMENT - SHARE IN LOSS OF ASSOCIATED ENTREPRENEURS	143		0
VII. EXTRAORDINARY - OTHER INCOME	144		0
VIII. EXTRAORDINARY - OTHER EXPENSES	145		$\bf{0}$
IX. TOTAL INCOME (111+131+142 + 144)	146	3.756.256.439	3.738.127.601
X. TOTAL EXPENSES (114+137+143 + 145)	147	3.696.579.045	3.708.013.913
XI. PROFIT OR LOSS BEFORE TAXATION (146-147)	148	59.677.394	30.113.689
1. Profit before taxation (146-147)	149	59.677.394	30.113.689
2. Loss before taxation (147-146)	150	0	0
XII. PROFIT TAX	151	19.060.300	45.569.724
XIII. PROFIT OR LOSS FOR THE PERIOD (148-151)	152	40.617.094	$-15.456.035$
1. Profit for the period (149-151)	153	40.617.094	$\ddot{\mathbf{0}}$
2. Loss for the period (151-148)	154	$\overline{0}$	15.456.035
APPENDIX to P&L account (to be filled in by entrepreneur that prepares consolidated financial report)
XIV, PROFIT OR LOSS FOR THE PERIOD	155	40.469.094	$-14.101.876$
1. Attributed to equity holders of parent company	156	148.000	$-1.354.159$
2. Attributed to minority interest STATEMENT OF OTHER COMPREHENSIVE INCOME (IFRS)
I. PROFIT OR LOSS FOR THE PERIOD (= 152)	157	40.617.094	$-15.456.035$
II. OTHER COMPREHENSIVE INCOME / LOSS BEFORE TAX (159 do 165)	158	$-10.692.000$	13.639.170
1. Exchange differences on translation of foreign operations	159	$-10.692.000$	13.639.170
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	$-10.692.000$	13.639.170
V. COMPREHENSIVE INCOME OR LOSS FOR THE PERIOD (157+167)	168	29.925.094	$-1.816.865$
APPENDIX to Statement of other comprenhensive income (to be filled in by entrepreneur that prepares consolidated financial report)
VI. COMPREHENSIVE INCOME OR LOSS FOR THE PERIOD
1. Attributed to equity holders of parent company	169 170	29.484.880	-491.865
2. Attributed to minority Interest		440,214	$-1.325.000$

$\mathcal{C}_{\rm eff}$

STATEMENT OF CASH FLOWS - INDIRECT METHOD for the period 1.1.2012. to 31.12.2012.

Obligator: Podrayka prehrambena industrija d.d., Koprivnica AOP Current year Last year Item code $\overline{4}$ $\overline{2}$ $\overline{3}$ CASH FLOW FROM OPERATING ACTIVITIES $001$ 59.677.394 30.113.689 1. Profit before tax 002 159.812.065 153,689.989 2. Depreciation 3. Increase in short term liabilities 003 17.104.000 004 4. Decrease in short term receivables 46.364.731 005 5. Decrease in inventories 84.216.223 83.958.000 006 6. Other increase in cash flow 303.447.459 331.488.632 I. Total increase in cash flow from operating activities (001 to 006) 007 008 68.894.000 1. Decrease in short term liabilities 26.808.567 41.939.000 2. Increase in short term receivables 009 010 7.741.000 3. Increase in inventories $011$ 47.710.892 41.216.632 4. Other decrease in cash flow 83.155.632 II. Total decrease in cash flow from operating activities (008 to 011) 012 151.154.459 A1) NET INCREASE IN CASH FLOW FROM OPERATING ACTIVITIES (007-012) 013 152.293.000 248.333.000 A2) NET DECREASE IN IN CASH FLOW FROM OPERATING ACTIVITIES (012-007) 014 $\Omega$ $\overline{0}$ CASH FLOW FROM INVESTING ACTIVITIES 8.249.000 4.249.000 1. Cash inflows from sales of long-term tangible and intangible assets $015$ 2. Cash inflows from sales of equity and debt instruments 016 111.103.000 92.686.000 017 9.237.000 7.098.000 3. Interests receipts 018 4. Dividend receipts 019 73.962.000 2.524.000 5. Other cash inflows from investing activities III. Total cash inflows from investing activities (015 to 019) 020 202.551.000 106.557.000 1. Cash outflow for purchase of long-term tangible and intangible assets 102.249.000 94.682.000 021 2. Cash outflow for acquisition of equity and debt financial instruments 97.843.000 022 92.819.000 6.156.000 3.358.000 023 3. Other cash outflow for investing activities 206.248.000 190.859.000 024 IV. Total cash outflow for investing activities (021 do 023) B1) NET INCREASE IN CASH FLOW FROM INVESTING ACTIVITIES (020-024) 025 Ó 3.697.000 84.302.000 B2) NET DECREASE IN CASH FLOW FROM INVESTING ACTIVITIES (024-020) 026 CASH FLOW FROM FINANCIAL ACTIVITIES 1. Cash inflow from issuing property and debt financial instruments 027 $\Omega$ 028 679,468.000 187.669.400 2. Proceeds from the credit principal, promissory notes, borrowings and other loans 029 3. Other proceeds from financial activities 030 679.468,000 187.669.400 V. Total cash inflows from financial activities (027 to 029) 373.693.714 031 830.791.617 1. Cash outflow for repayment of credit principal and bonds 2. Cash outflow for dividends paid 032 1.435.000 033 3.676.000 4.324.000 3. Cash outflow for financial lease 034 $\mathcal{C}_{\mathcal{C}}$ $\overline{0}$ 4. Cash outflow for purchase of treasury shares $\Omega$ 035 Ò 5. Other cash outflow for financial activities 834.467.617 379.452.714 036 VI. Total cash outflow for financial activities (031 to 035) C1) NET INCREASE IN CASH FLOW FROM FINANCIAL ACTIVITIES (030-036) 037 C2) NET DECREASE IN CASH FLOW FROM FINANCIAL ACTIVITIES (036-030) 154.999.617 191.783.314 038 Total increase in cash flow (013 - 014 + 025 - 026 + 037 - 038) 039 040 6،403.617 27.752.314 Total decrease in cash flow (014 - 013 + 026 - 025 + 038 - 037) 152.363.459 145.959.842 Cash and cash equivalents at the beginning of the period 041 Increase of cash and cash equivalents 042 043 6.403.617 27.752.314 Decrease of cash and cash equivalents 118.207.528 044 145.959.842 Cash and cash equivalents at the end of the period

STATEMENT OF CHANGES IN EQUITY
for the period 1.1.2012. to 31.12.2012.

AOP Last year code	Current year
з	Æ
1.626.000.900 001	1.626.000.900
24.569.630 002	26.465.000
37.749.948 003	105.899.405
$-134.429.556$ 004	$-148.498.899$
40.469.094 005	$-14.101.876$
006
007
008
34.787.364	32.026.882
1.629.147.380	1.627.791.411
$-10.692.000$	13.639.170
	$-14.995.139$
32.156.380	$-1.355.969$
31.716.166	1.404.513
	009 010 011 012 013 014 015 42.848.380 016 017 018

Notes

The accounting policy in 2012 year did not change.

Koprivnica, 26th April 2013

MANAGEMENT REPORT ON THE ACHIEVED BUSINESS RESULTS OF THE PODRAVKA GROUP FOR THE PERIOD JANUARY - DECEMBER 2012

Significant events year 2012

• 1. On the session of the Supervisory Board held on 20 December 2012, a decision was made to extend the Management Board of Podravka d.d. by appointing Hrvoje Kolarić as Board member. This extension is aimed at strengthening the pharmaceutical division of Podravka Group operations and providing a better utilisation of the synergy of the food and pharmaceutical business segments.
• 1. As part of the optimisation process of the Podravka Group a decision was made to close the cattle slaughtering line at Danica d.o.o. as it had continued producing loss and therefore endangered the total profitability of Danica d.o.o.
• 1. The Management Board of Podravka d.d. made a decision to reduce the product portfolio by approximately 660 products which had not reached the expected profitability and a positive effect on the gross margin is thus anticipated. At the same time, the Management Board of Podravka d.d. made a decision on restructuring the bakery program in order to cut production costs and improve profitability.
• 1. In 2012 Podravka Group conducted the redundancy program for employees for whom severance payments had been paid and mentioned program is continued in year 2013.

Expected future development

1. The goal of the Podravka Group is to be the leading food company on strategic markets and a recognizable provider of pharmaceutical products.

PODRAVKA d.d., Koprivnica, Ante Starčevića 32, Commercial Court of Varaždin, Company no. MBS 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. Stimac, President of the Management Board: Z. Mršić, Board members: J. Ivanković, O. Jakupec, M. Klepač, H Kolarić, J. Pedersen

• 1. The Podravka Group wishes to reach a level of efficiency that is above the average of industries in countries in which it operates thus realizing the interests of its owners, to enable cash flow improvements by better financial management which is essential for optimal business operations and company stability and to enable greater investments in marketing, research and development by reducing the costs of purchasing, sales, distribution, general and administrative expenses.
• 1. The highest contribution to the increase of revenue in Croatia, South-East and Central Europe is expected from the further development of current products and the launching of new products within the most significant and most profitable categories. The Podravka Group shall continue its anorganic growth with acquisitions and strategic alliances on the markets of South-East, Central and Eastern Europe.

Research and Development activities

The basic activities of Research and Development are focused on the development of new products and the advancement of current products by following the developments of food science and consumer trends and the products are continuously tailored to meet the present public awareness of a proper and healthy diet. Special attention is given to the organoleptic quality and nutrient features as well as the design and quality of information on product declarations.

Research and development is constantly working on the improvement of production and controlling processes. The use of modern technology and the Central semi-industrial lab, unique in this region, create new opportunities that are essential for company progress and growth.

Information on the redemption of own shares

There was no redemption of own shares in the previous period nor is there any intention of own share redemption.

Related companies

The Podravka Group consists of the parent company Podravka d.d. and 24 subsidiary companies of which 8 companies are located in Croatia and 16 abroad.

COMPANY MANAGEMENT

Financial risk management and company exposure to price, credit, liquidity and cash flow risks

As the Group is exposed to price changes of raw material for the food industry, world trends on the commodity exchange are carefully monitored and "market" reports" of strategic suppliers are used as the grounds to react on a spot market at the moment when prices of raw material are most favourable.

Credit risk and the risk of outstanding payments or non-fulfilment of contractual liabilities from customers have impact on the Group's contingent financial loss which is the reason why the Group has adopted the "Credit Risk Management"

Procedure" that it applies in dealing with customers. The Group collects payment insurance instruments whenever possible in order to protect itself from contingent financial risk and loss due to non-fulfilled payments or contractual liabilities.

The Group is largely financed by loans in foreign currency and therefore exposed to the risk of exchange rate differences. The Group uses loans with fixed and variable interest rates where the majority of loans has been agreed with variable interest rates and is therefore exposed to the risk of interest rate changes.

The Management establishes an adequate frame of liquidity risk management in order to manage short-term, medium-term and long-term financial and liquidity requirements. The Group manages liquidity risk by maintaining adequate reserves and credit lines, continuously comparing the planned and realized cash flow and monitoring due receivables and current liabilities.

Comments on the reported period

In the year 2012, the Podravka Group achieved operating income in the amount of 3,700 million HRK, which is almost at the same level as the year before. The sales revenue of the Podravka Group totalled 3,626.7 million HRK and is 1.5 million HRK higher compared to the same period of last year.

Sales of the SBA Food and Beverages totalled 2,799.3 million HRK and are 1% less than in 2011. A somewhat lower level of sales results from the drop of sales on the market of Croatia (-2%) and the markets of Central Europe (-3%) and Eastern Europe (-5%). Other foreign markets have achieved a sales growth. The market of South-East Europe recorded an increase of 2% with the highest contribution from the markets of Macedonia, Kosovo, Montenegro and Bosnia and Herzegovina, and the market of Western Europe, overseas countries and the Orient (3%) with the highest sales increase on the markets of Australia and the USA.

PODRAVKA d.d., Koprivnica, Ante Starčevića 32, Commercial Court of Varaždin, Company no. MBS 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. Stimac, President of the Management Board: Z. Mršić, Board members: J. Ivanković, O. Jakupec, M. Klepač, H Kolarić, J. Pedersen

COMPANY MANAGEMENT

The SBA Pharmaceuticals achieved sales in the amount of 827.4 million HRK. which is an increase of 4% compared to the year 2011. The sales growth of the SBA Pharmaceuticals is mostly contributed by foreign markets (11%) with the highest contribution from the markets of Russia and Bosnia and Herzegovina. Sales on the market of Croatia are 2% lower compared to the year 2011.

Other operating income realised in the year 2012 is 73.4 million HRK and is 12% less compared to the year 2011.

The total operating costs and expenses are achieved in the amount of 3,602.4 million HRK and are 2% higher than those achieved last year. The majority of operating costs and expenses refers to material costs (64%) and employee costs also hold a significant share in the structure of operating costs and expenses (20%). The highest contribution to increase of operating expenses have severance payments paid to workers who left the company. In 2012 Podravka Group conducted the redundancy program and total costs for redundant workers were 49.9 million HRK.

Financial expenses realized in the year 2012 total 105.6 million HRK and are 29% lower than those realized in the same period of the year before.

The realised operating profit is 103.3 million HRK, while the end result of the year 2012 is a loss realized in the amount of 14.1 million HRK. The business results for the Podravka Group for 2012 are under a significant influence of non-recurrent items and main reasons are severance payments and value reductions of intangible and tangible assets.

The total value of assets of the Podravka Group as of 31 December 2012 is 3,617.7 million HRK and compared to the year end of 2011 is 170.4 million HRK less. The greatest influence on the reduction of asset value comes from the reduction of long-term tangible and intangible assets, deffered tax assets, stocks and cash and cash equivalents.

The indebtedness of the Podravka Group as of 31 December 2012 is 1,197.9 million HRK and compared to the year end of 2011 has been reduced by 185.5 million HRK. The net debt as of 31 December 2012 is 1,079.7 million HRK which is a reduction of 157.7 million HRK compared to the year 2011.

President of the Management Board:

Zvonimir Mršić

PODRAVKA d.d., Koprivnica, Ante Starčevića 32, Commercial Court of Varaždin, Company no. MBS 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. Stimac, President of the Management Board: Z. Mršić, Board members: J. Ivanković, O. Jakupec, M. Klepač, H Kolarić, J. Pedersen

COMPANY MANAGEMENT

Koprivnica, 26 April 2013

STATEMENT FROM EXECUTIVES RESPONSIBLE FOR PREPARING FINANCIAL STATEMENTS

Consolidated and audited financial statements of the Podravka Group for the period January -December 2012 have been prepared in compliance with the Accounting Act of the Republic of Croatia and International Financial Reporting Standards (IFRS) and provide and overall and true presentation of assets, liabilities, profit and loss, financial position and business operations of the Group and all related companies involved in the consolidation.

Compared to previously disclosed consolidated unaudited financial statements of the Podravka Group for the period January - December 2012, corrections of revaluation of land and buildings from year 1999 were made, and Belupo d.d. increased the amount of reinvested profits.

During the observed period, there were no changes in accounting policies of the Podravka Group.

Director of Finance: Draga Celiščak relincall &

Board Member: Miroslav Klepač

PODRAVKA d.d., Koprivnica, Ante Starčevića 32, Commercial Court of Varaždin, Company no. MBS 010006549, PIN 18928523252
Privredna banka Zagreb d.d., Zagreb, Račkoga 6, Giro account no. 2340009-1100098526, share capital 1,6

No: NO-92-2-2013.

Koprivnica, 26 April 2013

Pursuant to Articles 300.c and 300.d of the Company Act (Official Gazette no. 152/11.-clear version and 111/12), the Supervisory Board of Podrayka Inc. at its 92^nd session held on 26 April 2013 adopted the following

DECISION

on Approval of the Management Board Decision regarding establishing of the Annual Financial Statements of Podravka Inc. and its related companies and Annual Report on the Status of the Company for the business year 2012

Ï

The Annual Financial Statements of Podravka Inc. and its related companies (Consolidated Statements of Podravka Group) for the business year 2012 with the Reports and opinion of certified auditors are hereby established.

Ш

The Annual Financial Statements for the business year 2012, prepared by the Management Board of Podravka Inc. in compliance with applicable regulations, are hereby established as follows:

• 1. Statement on Total Income
• 1. Statement on the Company's Financial Position
• 1. Statement on Changes in Equity
• 1. Statement on Cash Flow
• 1. Notes to Financial Statements
• 1. Annual Report on the Status of the Company.

The Statement on Total Income for the business year 2012, in which the loss in the amount of HRK 14.102 thousand has been declared, is hereby established.

The Statement on Financial Position as of 31 December 2012 shows the sum of assets and liabilities, respectively, in the amount of HRK 3.617.672 thousand.

IV

The Annual Report of the Management Board of Podravka Inc. on the business operations of Podravka Inc. and its related companies and of the Status of the Company for the business year 2012 is hereby established.

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

President of the Supervisory Board: Dubravko Štimac

Podravka d.d., Koprivnica, Ante Starčevića 32, Commercial Court of Varaždin, 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. Stimac, President of the Management Board: Z. Mršić, Board members: J. Ivanković, O. Jakupec, M. Klepač, J. Pedersen

No: NO-92-1-2013.

Koprivnica, 26 April 2013

Pursuant to Articles 300.c and 300.d of the Company Act (Official Gazette no. 152/11.-clear version and 111/12), the Supervisory Board of Podravka Inc. at its 92^nd session held on 26 April 2013 adopted the following

DECISION

on Approval of the Management Board Decision regarding establishing of the Annual Financial Statements of Podravka Inc. and Annual Report on the Status of the Company for the business year 2012

$\mathbf{I}$

The Annual Financial Statements of Podravka Inc. (M.B. 03454088, OIB 18928523252) for the business year 2012 with the Reports and opinion of certified auditors are hereby established.

The Annual Financial Statements for the business year 2012, prepared by the Management Board of Podravka Inc. in compliance with applicable regulations, are hereby established as follows:

• 1. Statement on Total Income
• 1. Statement on the Company's Financial Position
• 1. Statement on Changes in Equity
• 1. Statement on Cash Flow
• 1. Notes to Financial Statements
• 1. Annual Report on the Status of the Company.

Ш

The Statement on Total Income for the business year 2012, in which the loss in the amount of HRK 20.690.808.64 has been declared, is hereby established.

The Statement on Financial Position as of 31 December 2012 shows the sum of assets and liabilities, respectively, in the amount of HRK 2.517.097.762,02.

IV

The Annual Report of the Management Board of Podravka Inc. on the Status of the Company for the business year 2012 is hereby established.

v

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

Dubravko Štimac

Podravka d.d., Koprivnica, Ante Starčevića 32, Commercial Court of Varaždin, 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 Supervi President of the Management Board: Z. Mršić, Board members: J. Ivanković, O. Jakupec, M. Klepač, J. Pedersen

SUPERVISORY BOARD

No: NO-92-3-2013.

In Koprivnica, 26^th April 2013

In accordance with Articles 263 par 3 and 280 par 3 of the Company Law (Official Gazette No 152/11 - clear version and 111/12), the Supervisory Board of PODRAVKA Inc. on its 92^nd session held on 26^th April 2013 adopted the following

DECISION PROPOSAL On the loss coverage for the business year 2012

ı.

The loss of Podravka Inc., M.B. 03454088, OIB 18928523252 (hereinafter: the Company) stated in the audited Annual Financial Statements of the Company for the business year 2012, amounts HRK 20.690.808,64.

H.

The loss of the Company for 2012 in amount of HRK 7.932.559,53 shall be covered on account of the Company legal and other reserves, and the remaining portion of the loss in amount of HRK 12.758.249,11 shall be covered by reduction of the Company share capital.

$III.$

This Decision Proposal will be submitted to the General Assembly of the Company.

President of the Supervisory Board: Dubravko Štimac PREHRAMBENA INDUSTRIJA d.d. KOPRIVNICA 272