Podravka d.d. — Interim / Quarterly Report 2018

Oct 30, 2018

Koprivnica, 29 October 2018

PODRAVKA INC.

UNCONSOLIDATED FINANCIAL REPORT

FOR 1-9 2018 PERIOD

Content:

• General information
• Management interim report on the achieved business results of Podravka Inc. for the period 1-9 2018
• Unconsolidated financial reports for the period 1-9 2018
• Statement from executives responsible for preparing financial statements
• Contact

General information

Podravka prehrambena industrija Inc., Koprivnica, is incorporated in the Republic of Croatia. Today it is included in leading companies in industry operating in the area of South-Eastern, Central and Eastern Europe. The principal activity of the Company comprises production of a wide range of foodstuffs and non-alcoholic beverages.

The Company is headquartered in Koprivnica, Croatia, Ante Starčevića 32.

The Company's shares are listed on the official market of the Zagreb Stock Exchange.

Management Board members as at 30 September 2018

• President Marin Pucar
• Member Ljiljana Šapina
• Member Davor Doko
• Member Hrvoje Kolarić
• Member Marko Đerek

The unconsolidated financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union ("IFRS").

Koprivnica, 29 October 2018

MANAGEMENT INTERIM REPORT ON THE BUSINESS RESULTS OF PODRAVKA INC. FOR THE PERIOD 1-9 2018

Key business highlights of 1-9 2018

In 1-9 2018, Podravka Inc. recorded sales revenues of HRK 1,441.8 million, which is 2.5% higher than in the same period of the previous year. The growth in sales revenues came on the back of higher sales and marketing activities. Total operating expenses are 3.8% lower, mostly due to share options and termination benefits costs, which were significantly higher in 2017, which, coupled with higher sales and a better sales mix, resulted in positive HRK 160.1 million of operating profit. Operating profit in the comparative period amounted to HRK 73.0 million.

In 1-9 2018, finance income of HRK 46.2 million was recorded, with HRK 31.6 million of finance costs, while the effective tax rate was 17.2%. Profit for the 1-9 2018 period amounted to HRK 144.7 million.

As at 30 September 2018, total assets of Podravka Inc. amount to HRK 3,018.8 million, 2.2% lower compared to the end of 2017. The most significant decrease on the assets side was in the line item cash with bank and cash in hand. On the equity and liabilities side, the most significant decrease was recorded in the line item non-current liabilities to banks and other financial institutions.

Cash flow from operating activities in 1-9 2018 amounted to positive HRK 79.3 million, as a consequence of business operations and movements in the working capital. Cash flow from investing activities at the same time amounted to negative HRK 28.6 million, primarily due to cash used for the purchase of non-current tangible and intangible assets. In the same period, cash flow from financing activities amounted to negative HRK 158.5 million due to the repayment of a part of borrowings. In total, in 1-9 2018 cash and cash equivalents decreased by HRK 107.7 million, and consequently the amount of cash and cash equivalents as at 30 September 2018 was HRK 24.3 million.

UNCONSOLIDATED FINANCIAL REPORTS FOR THE PERIOD 1-9 2018

Appendix 1 Reporting period:	1.1.2018.	to	30.09.2018.
	Quarterly financial report of entrepreneur - TFI-POD
Registration number (MB)	03454088
Identification number of subject (MBS)	010006549
Personal identification number (OIB)	18928523252
Issueer company: PODRAVKA prehrambena industrija d.d., KOPRIVNICA
Postal code and place	48000	KOPRIVNICA
Street and number ANTE STARČEVIĆA 32
E-mail address: podravka@podravka.hr
Internet adress: www.podravka.com
Code and name of comune/town 201	KOPRIVNICA
Code and county name $6\phantom{1}$	KOPRIVNIČKO-KRIŽEVAČKA		Number of employees	3294
Consolidated statement NO			(at quarter end) NKD/NWC code:	1039
Subsidiaries subject to consolidation (according to IFRS):		Headquarters	Registration number:
Book keeping service:
Contact person: Artner Kukec Julijana
Phone number: 048 653 055	(authorised person for representation)		Fascimile: 048 220 562
E-mail address: Julijana.ArtnerKukec@podravka.hr
Surname and name Pucar Marin
	(authorised person for representation)
Disclosure documents: 1. Financial statements (balance sheet, profit and loss account, cash flow statement, statement of changes in

Obligator: Podravka prehrambena industrija d.d., Koprivnica Item		Last Year		Current year
	code	Cumulative	Quarterly	Cumulative	Quarterly
	$\overline{2}$			5
I. OPERATING REVENUE (112+113)	111	1.437.313.678	522.115.693	1.472.011.773	516.841.466
1. Sales revenue	112	1.406.498.312	514.967.931	1.441.764.949	508.964.552
2. Other operating revenues II. OPERATING EXPENSES (115+116+120+124+125+126+129+130)	113	30.815.366	7.147.762	30.246.824	7.876.914
1. Changes in value of work in progress and finished products	114 115	1.364.316.264	475.333.175	1.311.949.612	457.225.677
2. Material costs (117 to 119)	116	$-5.472.550$ 916.394.730	$-29.318.366$ 355,843,641	$-14.164.590$ 923.394.245	$-27.452.439$ 339.995.590
a) Raw material and material costs	117	593.849.942	230.887.774	594.800.663	222.087.243
b) Costs of goods sold	118	211.983.695	88.992.549	207.529.499	74.920.086
c) Other external costs	119	110.561.093	35.963.318	121.064.083	42.988.261
3. Staff costs (121 to 123)	120	275.809.444	98.335.961	268.469.271	98.847.758
a) Net salaries and wages	121	171.190.498	61.499.704	167.353.167	61.839.924
b) Cost for taxes and contributions from salaries	122	64.410.331	22.819.083	62.526.257	23.109.856
c) Contributions on gross salaries	123	40.208.615	14.017.174	38.589.847	13.897.978
4. Depreciation	124	70.439.710	22.007.121	64.810.924	20.831.443
5. Other costs	125	82.786.598	21.214.717	51.565.024	16.995.088
6. Impairment (127+128)	126	4.983.352	2.331.045	2.106.250	2.365.033
a) Impairment of long-term assets (financial assets excluded)	127
b) Impairment of short - term assets (financial assets excluded) 7. Provisions	128 129	4.983.352	2.331.045	2.106.250	2.365.033
8. Other operating costs	130	1.261.640 18.113.340	28.568 4.890.488	£ 15.768.488	5.643.204
III. FINANCIAL INCOME (132 to 136)	131	44.471.761	22.838.763	46.238.784	2.704.293
1. Interest income, foreign exchange gains, dividends and similar income from related parties	132	35.555.475	25.607.740	34.731.248	2.884.288
2. Interest income, foreign exchange gains, dividends and similar income from non - related parties and other entities	133	7.732.093	$-2.670.381$	10.784.619	189.152
3. Share in income from affiliated entrepreneurs and participating interests	134	$\Omega$	$\sqrt{ }$	$\mathfrak{g}$	$\Omega$
4. Unrealized gains (income) from financial assets	135	1.184.193	$-98.596$	722.917	$-369.147$
5. Other financial income	136
IV. FINANCIAL EXPENSES (138 do 141)	137	47.557.065	10.954.136	31.596.148	9.360.860
1. Interest expenses, foreign exchange losses, dividends and similar expenses from related parties	138	26.082.239	3.402.889	16.318.851	1.821.187
2. Interest expenses, foreign exchange losses, dividends and similar expenses from non - related parties and other entities	139	19.310.633	5.387.054	13.654.847	5.917.223
3. Unrealized losses (expenses) on financial assets	140	ſ
4. Other financial expenses	141	2.164.193	2.164.193	1.622.450	1.622.450
INCOME FROM INVESTMENT - SHARE IN PROFIT OF ASSOCIATED ENTREPRENEURS V VI.	142	$\epsilon$
LOSS FROM INVESTMENT - SHARE IN LOSS OF ASSOCIATED ENTREPRENEURS VII. EXTRAORDINARY - OTHER INCOME	143	$\mathfrak{c}$	$\circ$	$\mathbf 0$	$\Omega$
VIII. EXTRAORDINARY - OTHER EXPENSES	144 145	$\mathbf{C}$ $\mathfrak{c}$	$\Omega$	$\mathbf{0}$	$\circ$ $\Omega$
IX. TOTAL INCOME (111+131+142 + 144)	146	1.481.785.439	544.954.456	1.518.250.557	519.545.759
TOTAL EXPENSES (114+137+143 + 145) X.	147	1.411.873.329	486.287.311	1.343.545.760	466.586.537
XI. PROFIT OR LOSS BEFORE TAXATION (146-147)	148	69.912.110	58.667.145	174.704.797	52.959.222
1. Profit before taxation (146-147)	149	69.912.110	58.667.145	174.704.797	52.959.222
2. Loss before taxation (147-146)	150		$\theta$	$\overline{0}$
XII. PROFIT TAX	151	8.482.777	6.379.008	30.033.353	11.549.885
XIII. PROFIT OR LOSS FOR THE PERIOD (148-151)	152	61.429.333	52.288.137	144.671.444	41,409,337
1. Profit for the period (149-151)	153	61.429.333	52.288.137	144.671.444	41.409.337
2. Loss for the period (151-148)	154	$\mathbf 0$	$\mathbf{0}$	$\mathbf{0}$
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 2. Attributed to minority interest	155	$\mathbf 0$	$\pmb{0}$	$\mathbf{0}$	$\mathbf{C}$
STATEMENT OF OTHER COMPREHENSIVE INCOME (IFRS)	156	$\mathbf 0$	$\mathbf 0$	$\mathbf 0$	$\mathbf{0}$
I. PROFIT OR LOSS FOR THE PERIOD (= 152)	157	61.429.333	52.288.137	144.671.444	41.409.337
II. OTHER COMPREHENSIVE INCOME / LOSS BEFORE TAX (159 do 165)	158	C	0	0	$\epsilon$
1. Exchange differences on translation of foreign operations	159	$\mathbf 0$	$\Omega$	$\Omega$	$\circ$
2. Movements in revaluation reserves of long - term tangible and intangible assets	160	$\Omega$	$\mathbf 0$	$\Omega$	$\mathbf{0}$
3. Profit or loss from reevaluation of financial assets available for sale	161	$\Omega$	$\Omega$	$\Omega$	$\circ$
4. Gains or losses on efficient cash flow hedging	162	$\epsilon$	$\Omega$	$\Omega$	$\mathbf{0}$
5. Gains or losses on efficient hedge of a net investment in foreign countries	163	$\epsilon$	$\mathbf 0$	$\mathbf 0$	$\bf{0}$
6. Share in other comprehensive income / loss of associated companies	164	$\epsilon$	$\mathbf{0}$	$\mathbf 0$	$\overline{0}$
7. Actuarial gains / losses on defined benefit plans	165	$\epsilon$	$\Omega$	$\Omega$	$\Omega$
III. TAX ON OTHER COMPREHENSIVE INCOME FOR THE PERIOD	166		$\circ$	$\circ$	$\Omega$
IV. NET OTHER COMPREHENSIVE INCOME OR LOSS FOR THE PERIOD (158-166)	167		$\Omega$	$\overline{0}$
V. COMPREHENSIVE INCOME OR LOSS FOR THE PERIOD (157+167)	168	61.429.333	52.288.137	144.671.444	41.409.337
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	0	$\circ$	$\circ$	$\mathbf 0$
2. Attributed to minority interest	170	$\mathbf{0}$	$\overline{0}$	$\mathbf 0$	$\bf{0}$

Obligator: Podravka prehrambena industrija d.d., Koprivnica
Item	AOP code	Last year (net)	Current year (net)
1	$\overline{2}$	$\overline{3}$	4
ASSETS
A) RECEIVABLES FOR SUBSCRIBED BUT NOT PAID-IN CAPITAL	001	$\mathbf{0}$	$\mathbf{0}$
B) LONG-TERM ASSETS (003+010+020+029+033) I. INTANGIBLE ASSETS (004 to 009)	002	1.911.584.109 92.249.491	1.887.216.997 87.970.729
1. Assets development	003 004	0	$\mathbf{0}$
2. Concessions, patents, licences fees, trade and service marks, software and other rights	005	83.189.290	71.840.185
3. Goodwill	006	0	$\overline{0}$
4. Prepayments for purchase of intangible assets	007	$\overline{0}$	$\mathbf{0}$
5. Intangible assets in preparation	008	9.060.201	16.130.544
6. Other intangible assets	009	$\overline{0}$	$\mathbf{0}$
II. TANGIBLE ASSETS (011 to 019)	010	827.301.621	826.884.558
1. Land	011	45.420.448	45.420.448
2. Buildings	012	455.299.171	444.965.322
3. Plant and equipment	013	264.671.519	253.980.167
4. Tools, facility inventory and transport assets	014	21.605.771	24.413.905
5. Biological assets	015	0	$\mathbf{0}$
6. Prepayments for tangible assets	016	288.564	2.834.574
7. Tangible assets in progress	017	39.300.078	54.551.808
8. Other tangible assets	018	716.070	718.334
9. Investments in buildings	019	$\overline{0}$	$\overline{0}$
III. LONG-TERM FINANCIAL ASSETS (021 to 028)	020	959.515.702	954.567.109
1. Investments (shares) with related parties	021	946.700.274	947.099.786
2. Loans given to related parties	022	9.219.984	4.802.080
3. Participating interest (shares)	023	1.225.020	1.025.020
4. Loans to entrepreneurs in whom the entity holds participating interests	024	$\mathbf{0}$	$\bf{0}$
5. Investments in securities	025	$\overline{0}$	$\mathbf{0}$
6. Loans, deposits and similar assets	026	2.370.424	1.640.223
7. Other long - term financial assets	027	$\overline{0}$	$\mathbf{0}$
8. Investments accounted by equity method	028	$\overline{0}$	$\mathbf 0$
IV. RECEIVABLES (030 to 032)	029	$\overline{0}$	$\overline{0}$
1. Receivables from related parties	030	$\overline{0}$	$\bf 0$
2. Receivables from based on trade loans	031	$\mathbf{0}$	$\mathbf{0}$
3. Other receivables	032	$\overline{0}$	$\mathbf{0}$
V. DEFERRED TAX ASSETS	033	32.517.295	17.794.601
C) SHORT TERM ASSETS (035+043+050+058)	034	1.171.669.710	1.127.823.461
I. INVENTORIES (036 to 042)	035	479.169.008	520.519.013
1. Raw-material and supplies	036	117.037.484	152.120.279
2. Work in progress	037	44.313.087	37.754.612
3. Finished goods	038	140.886.458	161.239.681
4. Merchandise	039	43.379.267	35.826.489
5. Prepayments for inventories	040	0	$\bf{0}$
6. Long - term assets held for sales	041	133.552.712	133.577.952
7. Biological assets	042	0	$\mathbf{0}$
II. RECEIVABLES (044 to 049)	043	467.705.229	509.729.141
1. Receivables from related parties	044	288.498.889	278.420.940 229.761.661
2. Accounts receivable	045	177.755.132
3. Receivables from participating parties	046	0	$\Omega$
4. Receivables from employees and members of related parties	047	645.019	689.982
5. Receivables from government and other institutions	048	674.630 131.559	742.714 113.844
6. Other receivables	049 050	92.781.798	73.301.185
III. SHORT TERM FINANCIAL ASSETS (051 to 057) 1. Shares (stocks) in related parties	051	0	0
2. Loans given to related parties	052	91.432.811	71.811.750
3. Participating interests (shares)	053	0	$\mathbf{0}$
4. Loans to entrepreneurs in whom the entity holds participating interests	054	$\overline{0}$	$\mathbf{0}$
5. Investments in securities	055	210.000	200.000
6. Loans, deposits, etc.	056	627.489	1.009.272
7. Other financial assets	057	511.498	280.163
IV. CASH AT BANK AND IN CASHIER	058	132.013.675	24.274.122
D) PREPAID EXPENSES AND ACCRUED REVENUE	059	3.640.252	3.730.904
E) TOTAL ASSETS (001+002+034+059)	060	3.086.894.071	3.018.771.362
F) OFF-RALANCE RECORDS	061	1047050826	1.060.123.729

Obligator: Podravka prehrambena industrija d.d., Koprivnica
Item	AOP code	Last year	Current year
1	$\overline{2}$	3	$\overline{4}$
CASH FLOW FROM OPERATING ACTIVITIES
1. Profit before tax	001	69.912.110	174.704.797
2. Depreciation	002	70.439.710	64.810.924
3. Increase in short term liabilities	003	$\Omega$	0
4. Decrease in short term receivables	004	32.489.981	$\vert$
5. Decrease in inventories	005	$\Omega$	$\overline{0}$
6. Other increase in cash flow	006	27.749.789	7.237.023
I. Total increase in cash flow from operating activities (001 to 006)	007	200.591.590	246.752.744
1. Decrease in short term liabilities	008	75.261.967	41.970.042
2. Increase in short term receivables	009	$\mathbf{0}$	39.650.151
3. Increase in inventories	010	39.671.278	41.324.764
4. Other decrease in cash flow	011	32.724.000	44.532.787
II. Total decrease in cash flow from operating activities (008 to 011)	012	147.657.245	167.477.744
A1) NET INCREASE IN CASH FLOW FROM OPERATING ACTIVITIES (007-012)	013	52.934.345	79.275.000
A2) NET DECREASE IN IN CASH FLOW FROM OPERATING ACTIVITIES (012-007)	014	$\overline{0}$	$\mathbf{0}$
CASH FLOW FROM INVESTING ACTIVITIES
1. Cash inflows from sales of long-term tangible and intangible assets	015	1.568.706	3.158.813
2. Cash inflows from sales of equity and debt instruments	016	$\mathbf{0}$	321.016
3. Interests receipts	017	1.297.207	582.870
4. Dividend receipts	018	25.000.000	16.482
5. Other cash inflows from investing activities	019	12.887.254	36.176.872
III. Total cash inflows from investing activities (015 to 019)		40.753.167	40.256.053
1. Cash outflow for purchase of long-term tangible and intangible assets	020 021	49.616.555	61.403.751
2. Cash outflow for acquisition of equity and debt financial instruments	022	1.310.303	399.512
3. Other cash outflow for investing activities	023	45.289.020	7.005.033
IV. Total cash outflow for investing activities (021 do 023)	024	96.215.878	68.808.296
B1) NET INCREASE IN CASH FLOW FROM INVESTING ACTIVITIES (020-024)	025	$\mathbf{0}$
B2) NET DECREASE IN CASH FLOW FROM INVESTING ACTIVITIES (024-020)	026	55.462.711	28.552.243
CASH FLOW FROM FINANCIAL ACTIVITIES
1. Cash inflow from issuing property and debt financial instruments	027	$\mathbf{0}$
2. Proceeds from the credit principal, promissory notes, borrowings and other loans	028	127.523.749	69.565.288
3. Other proceeds from financial activities	029	6.945.454
V. Total cash inflows from financial activities (027 to 029)	030	134.469.203	69.565.288
1. Cash outflow for repayment of credit principal and bonds	031	191.047.083	179.309.425
2. Cash outflow for dividends paid	032	48.642.321	48.718.173
3. Cash outflow for financial lease	033	$\mathbf{0}$	$\Omega$
4. Cash outflow for purchase of treasury shares	034	$\mathbf{0}$	$\overline{0}$
5. Other cash outflow for financial activities	035	$\Omega$
VI. Total cash outflow for financial activities (031 to 035)	036	239.689.404	228.027.598
C1) NET INCREASE IN CASH FLOW FROM FINANCIAL ACTIVITIES (030-036)	037	$\Omega$
C2) NET DECREASE IN CASH FLOW FROM FINANCIAL ACTIVITIES (036-030)	038	105.220.201	158.462.310
Total increase in cash flow (013 - 014 + 025 - 026 + 037 - 038)	039	$\Omega$
Total decrease in cash flow $(014 - 013 + 026 - 025 + 038 - 037)$
	040	107.748.567	107.739.553
Cash and cash equivalents at the beginning of the period	041	136.553.033 $\Omega$	132.013.675
Increase of cash and cash equivalents	042
Decrease of cash and cash equivalents	043	107.748.567	107.739.553
Cash and cash equivalents at the end of the period	044	28.804.466	24.274.122

Obligator: Podravka prehrambena industrija d.d., Koprivnica
Item		Last year	Current year
	$\overline{2}$	$\overline{3}$	4
1. Subscribed capital	001	1.566.400.660	1.566.400.660
2. Capital reserves	002	182.267.472	178.486.909
3. Reserves from profit	003	284.908.054	327.752.089
4. Retained earnings or accumulated loss	004	2.558.087	3.696.000
5. Profit or loss for the current year	005	86.437.219	144.671.444
6. Revaluation of long - term tangible assets	006
7. Revaluation of intangible assets
8. Revaluation of financial assets available for sale
9. Other revaluation	009
10. Total capital and reserves (AOP 001 do 009)	010	2.122.571.492	2.221.007.102
11. Currency gains and losses arising from net investement in foreign operations	011
12. Current and deferred taxes (part)	012
13. Cash flow hedging	013		$\Omega$
14. Changes in accounting policy	014
15. Correction of significant errors in prior period	015
16. Other changes of capital	016	46.491.955	98.435.610
17. Total increase or decrease in capital (AOP 011 do 016)	017	46.491.955	98.435.610
17 a. Attributed to equity holders of parent company	018		O
17 b. Attributed to minority interest	019		$\Omega$

Notes to the financial statements:

The accounting policy in 1-9 2018 did not change.

STATEMENT FROM EXECUTIVES RESPONSIBLE FOR PREPARING FINANCIAL STATEMENTS

Koprivnica, 29 October 2018

Contact

Podravka Inc. Ante Starčevića 32, 48 000 Koprivnica, Croatia www.podravka.hr

Investor relations e-mail: ir@podravka.hr Tel: +385 48 65 16 65