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Zagrebačka burza d.d.

Quarterly Report Oct 19, 2020

2105_10-q_2020-10-19_69b7cbe6-fc0e-4ec3-9b97-33ea4929c7bb.pdf

Quarterly Report

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Zagreb Stock Exchange, Inc.

Unconsolidated unaudited financial results for

01/01/2020 – 30/09/2020

19 October 2020

CONTENTS

1 INTERIM MANAGEMENT REPORT FOR THE PERIOD BETWEEN 01/01/2020 AND 30/09/2020 1
1.1 Significant business events of the Zagreb Stock Exchange, Inc. in the period between 01/01/2020 and
30/09/2020 1
1.2 Zagreb Stock Exchange trading overview 4
1.3 Expected future development of the Company 7
1.4 Research & Development activities 7
1.5 Information on repurchase of own shares 7
1.6 Subsidiaries of the Company 8
1.7 Financial instruments used by the Company 8
1.8 Company's objectives and policies related to financial risk management 8
1.9 Company's exposure to price risk, credit risk, liquidity risk and cash flow risk 9
1.10 Statement of transactions and transfers between the Company and its subsidiaries and shareholders
9
1.11 Statement of events which might have an adverse effect on Company operations 9
1.12 Business results for 01/01/2020 – 30/09/2020 10
2 Declaration of responsibility for the preparation of financial statements 13
Unconsolidated unaudited financial statements of the Company for 01/01/2020 – 30/09/2020 14

1 INTERIM MANAGEMENT REPORT FOR THE PERIOD BETWEEN 01/01/2020 AND 30/09/2020

1.1 Significant business events of the Zagreb Stock Exchange, Inc. in the period between 01/01/2020 and 30/09/2020

In the first three quarters of 2020, the Zagreb Stock Exchange, Inc. (hereinafter: the Company or the Exchange) recorded the following significant business events:

  • On January 7, 2020, the Company made a decision on termination of the listing of the stocks of HOTELI BRELA d.d., HOTEL TUČEPI d.d. and ZLATNI RAT HOTELI d.d. due to merging the said companies with the joint-stock company SUNCE HOTELI d.d., which led to terminating the Issuer and the financial instrument.
  • On January 8, 2020, the stock of ALPHA ADRIATIC d.d. has been moved to a lower market segment, from Official to Regular Market.
  • On January 10, 2020, the Company made a decision on termination of the listing of the stocks of AGROMEĐIMURJE d.d. following the decision of the General Assembly to withdraw all stocks from listing on the regulated market.
  • On January 16, 2020, the Company made a decision on termination of the listing of the stocks of TERMES GRUPA d.d. following the decision of the General Assembly to withdraw all stocks from listing on the regulated market.
  • In January 2020, a campaign for the company STEMI was completed on the Funderbeam SEE platform, raising EUR 318,000.
  • On March 3, 2020, two new bonds of the Ministry of Finance of the Republic of Croatia were listed on the Official Market of the Exchange.
  • On March 6, 2020, the "Ring the bell for gender equality" event was attended by the President of the Republic of Croatia, Mr. Zoran Milanović, and a significant media presence of the event and the Zagreb Stock Exchange was achieved.
  • On March 16, 2020, following the opinion of the Market Protection Measures Committee, the level of severity and effects of breaches of the Exchange Rules on investors and the proper functioning of the market, the Company made a decision on the termination of the listing of the following Agrokor d.d. issuer's stocks: BELJE d.d., JAMNICA d.d., LEDO d.d., PIK-VINKOVCI d.d., TISAK d.d., VUPIK d.d. and STAR d.d.
  • As of March 16, 2020, the Exchange has been operating out of the office. The offices of the Exchange are closed until further notice, and business is regularly carried out at secondary locations and employees work from home. The objective of the Exchange is to ensure

continuous trading throughout the trading day, as long as objective circumstances permit. The decision was made in order to protect the health of employees and clients as well as the longterm sustainability of the business. On May 4, 2020, the Zagreb Stock Exchange started operating in two teams in such a way that the first team works in the offices of the Stock Exchange for one week, and the second team works in secondary locations during that time. The Ljubljana Stock Exchange started operating in two teams on May 11, 2020. In accordance with favorable epidemiological conditions, on May 18, 2020, all employees of the Ljubljana Stock Exchange began working in offices, while the operations of the Zagreb Stock Exchange take place again at the primary location on June 1, 2020.

  • On March 20, 2020, following the opinion of the Market Protection Measures Committee, the level of severity and effects of breaches of the Exchange Rules on investors and the proper functioning of the market, the Company made a decision on the termination of the listing of ELEKTROPROMET d.d.
  • On April 21, 2020, the Zagreb Stock Exchange successfully completed the annual accreditation process for a local operator LEI (Local Operating Unit (LOU)) by the Global Legal Entity Identifier Foundation (GLEIF), which once again confirmed the quality Exchange services as a local operator of LEI tags.
  • On April 30, 2020, the shares of HELIOS FAROS d.d. were listed on the Regular Market of the Exchange.
  • On May 6, 2020, a new bond of the Ministry of Finance of the Republic of Croatia was listed on the Official Market of the Stock Exchange.
  • On May 20, 2020, issuers from the Zagreb Stock Exchange, namely AD Plastik, Arena Hospitality Group, Ilirija and the Zagreb Stock Exchange, were included in the EBRD research program aimed at increasing the public availability of analytical materials for small and medium enterprises listed on regional stock exchanges.
  • On June 9, 2020, the shares of THE GARDEN BREWERY d.d. were listed on the Regular Market of the Exchange.
  • On June 10, 2020, the 11th annual training for issuers was held, organized by the Zagreb Stock Exchange, the Croatian Financial Services Supervisory Agency and the Central Depository and Clearing Company, and the educational meeting was held virtually for the first time, with a record 160 representatives.
  • On July 6, 2020, the General Assembly of the Zagreb Stock Exchange was held at which the Annual Financial Statements and consolidated financial statements of the Exchange for 2019 were presented, decisions were made on the use of profit generated in 2019, on granting discharge to the members of the Management Board and the Supervisory Board for 2019, and on the appointment of the Stock Exchange auditor for 2020.

  • On September 29, 2020, the Zagreb Stock Exchange signed an annex to the main framework agreement with the Vienna Stock Exchange which extends the use and maintenance of the Xetra T7 trading system, index calculation, member connection services with the trading system, etc.

1.2 Zagreb Stock Exchange trading overview

The largest securities turnover in the first three quarters of 2020 was realized in the period from the end of February to the end of April under the influence of the Covid-19 appearance in the Republic of Croatia. For this reason, in the first quarter, the securities turnover was by far the largest compared to the other two quarters of 2020, i.e. even three times higher turnover compared to the first quarter of last year (visible in the graphic below). Securities turnover has been declining since the beginning of May 2020, so that trading days in the third quarter would end with mostly lower turnover than the 2019 daily average. Therefore, the turnover in the second quarter was slightly higher than in the same period last year, while in the third quarter there was twice as less securities turnover as in the third quarter of 2019. It should be taken into account that in September 2019, the focus of trading was on Kraš shares due to the then takeover process, and then only HRK 40 million lower securities turnover was achieved than in the record March 2020, when turnover was affected by the Covid -19 appearance in the Republic of Croatia.

Securities turnover

Looking only at the third quarter of 2020, the total orderbook turnover amounted to HRK 403 million (-54.15% less compared to the third quarter of 2019). Orderbook stock turnover amounted to HRK 365 million or -55.9% less than in the third quarter of the last year. Overall, the orderbook turnover in the first three quarters of 2020 amounted to HRK 2.07 billion or +17.13% more than in the first three quarters of the last year, of which the stock turnover accounted for HRK 1.90 billion, which is +16.77% more than in the first nine months of 2019.

Compared to the last day of the third quarter of 2019, the market value measured by market capitalization on September 30, 2020, is higher by a total of +5 billion HRK or +2.06%, while the equity market capitalization is lower by almost -15 billion or -10.17%. In addition to the already known Covid-19 impact, the reason for the decline in the equity market capitalization is reflected in the fewer number of listed shares (above graph). On 30 September 2020, a total of 18 shares were listed less than on the same day in 2019, 17 shares less on the Regular, and one share less on the Official Market.

1-3Q 2019 1-3Q 2020 change
Securities turnover (HRK)
Orderbook turnover 1,763,180,030 2,065,253,161 17.13%
Stocks 1,624,991,993 1,897,517,253 16.77%
Bonds 138,188,037 167,735,908 21.38%
Equity Block Turnover 335,754,754 337,298,535 0.46%
Debt Block Turnover 0 0
TOTAL 2,098,934,784 2,402,551,696 14.47%
Equity Market Capitalization (HRK)
Prime market 15,061,296,301 12,148,433,961 -19.34%
Official market 57,917,787,394 56,564,718,242 -2.34%
Regular market 72,518,008,548 61,993,668,313 -14.51%
TOTAL 145,497,092,242 130,706,820,516 -10.17%
Number of securities listed
Stocks 124 106 -14.52%
Prime market 5 5 0.00%
Official market 24 23 -4.17%
Regular market 95 78 -17.89%
Bonds 25 26 4.00%
TOTAL 149 132 -11.41%

Trading overview

With the exception of CROBEXkonstrukt, which increased by a significant +74.8%, and CROBEXindustrija, which increased slightly by +1.43%, all other stock indices ended the third quarter of 2020 with a lower value compared to September 30 last year. The largest decline was recorded by CROBEXnutris (-18.48%), followed by CROBEXturist (-18.21%), CROBEX (-18.08%), CROBEXprime (- 17.30%), CROBEXtr (-17.15%), CROBEX10 (-14.1%), CROBEXplus (-6.54%). The regional index ADRIAprime decreased by -6.33% since September 30 last year. Debt indices also recorded a decline compared to the same period last year: CROBIS (-3.96%), CROBIStr (-1.22%). In May 2020, the Stock Exchange introduced a new stock index, CROBEX10tr, while the calculation of the CROBEXtransport index ceased after October 2019. The above data are visible in the following table.

Index 30.9.2019 30.9.2020 Change Turnover
(HRK) 3Q 2019
Turnover
(HRK) 3Q 2020
Change
CROBEX 1,963,54 1,608,54 -18.08% 336,955,786 301,004,391 -10.67%
CROBEXtr 1,312,35 1,087,33 -17.15% 336,955,786 301,004,391 -10.67%
CROBEX10 1,166,18 1,001,75 -14.10% 263,657,529 222,767,221 -15.51%
CROBEX10tr \ 999,19 \ \ 204,534,868 \
CROBEXprime 1,137,26 940,47 -17.30% 132,773,083 99,551,345 -25.02%
CROBEXplus 1,125,42 1,051,78 -6.54% 678,532,240 318,174,774 -53.11%
CROBEXindustrija 864,50 876,88 1.43% 36,988,478 60,242,631 62.87%
CROBEXkonstrukt 421,84 737,36 74.80% 4,935,809 41,928,860 749.48%
CROBEXnutris 771,06 628,54 -18.48% 420,989,766 52,756,421 -87.47%
CROBEXtransport 742,91 \ \ 13,852,062 \ \
CROBEXturist 3,577,52 2,926,09 -18.21% 75,353,774 45,897,593 -39.09%
CROBIS 116,90 112,27 -3.96% 2,151,050,210 1,506,640,908 -29.96%
CROBIStr 187,86 185,57 -1.22% 2,151,050,210 1,506,640,908 -29.96%
ADRISprime 1,052,56 985,94 -6.33% \ \ \

Indices – value and turnover (3Q 2019 vs. 3Q 2020)

However, the comparison of the data for the third quarter with the data for the first quarter of the current year shows a stable and positive trend. Namely, after a sharp decline in the indices value since the end of February 2020 due to a significant increase in securities turnover, the values of the indices began to normalize and continue to grow continuously from May. The following table shows how all stock indices rose relative to the closing value on March 31, 2020. The largest increase was recorded by CROBEXkonstrukt (+142.33%), CROBEXindustrija (+41.18%), CROBEXplus (+28.72%), CROBEXturist (+15.18) and CROBEXprime (+12.6%), while other indices increased slightly less than +10%, CROBEXtr (+9.72%), CROBEX10 (+9.21%) and CROBEX (+8.65%). The regional index ADRIAprime increased by +17.82%, and the dept indices by +2.35% (CROBIStr), and +1.04% (CROBIS).

Index 31.1.2020 30.9.2020 Change Turnover
(HRK) 1Q 2019
Turnover
(HRK) 3Q 2019
Change
CROBEX 1,480,51 1,608,54 8.65% 833,729,502 301,004,391 -63.90%
CROBEXtr 990,99 1,087,33 9.72% 833,729,502 301,004,391 -63.90%
CROBEX10 917,27 1,001,75 9.21% 726,698,762 222,767,221 -69.35%
CROBEX10tr \ 999,19 \ \ 204,534,868 \
CROBEXprime 835,20 940,47 12.60% 319,143,034 99,551,345 -68.81%
CROBEXplus 817,11 1,051,78 28.72% 806,419,202 318,174,774 -60.54%
CROBEXindustrija 621,12 876,88 41.18% 135,462,693 60,242,631 -55.53%
CROBEXkonstrukt 304,28 737,36 142.33% 5,455,560 41,928,860 668.55%
CROBEXnutris 568,63 628,54 10.54% 121,086,165 52,756,421 -56.43%
CROBEXturist 2,540,45 2,926,09 15.18% 202,364,961 45,897,593 -77.32%
CROBIS 111,11 112,27 1.04% 7,889,119,416 1,506,640,908 -80.90%
CROBIStr 181,30 185,57 2.35% 7,889,119,416 1,506,640,908 -80.90%
ADRISprime 836,85 985,94 17.82% \ \ \

Indices – value and turnover (1Q 2020 vs. 3Q 2020)

1.3 Expected future development of the Company

In 2020, the Company will continue to focus on restoring confidence and raising Corporate Governance standards and reporting on a regulated market. The Company will also focus on greater promotion of existing issuers, with a focus on Prime Market.

The Company will press on with previously initiated projects, placing the greatest emphasis on the project of regional SME capital market development (Progress), and further activities related to financing and investing in start-ups (Funderbeam SEE).

The Company will continue to edit new websites and develop new and improve existing functionalities to make information even more accessible and understandable to users.

1.4 Research & Development activities

The Company has pressed on with continuous efforts at developing and improving its own service offering and at expending service provision to the Slovenian market as well.

During the second half of 2019, the Company began migrating the Ljubljana Stock Exchange's downstream system to the Company's internally developed data warehouse system. Work on the full implementation of this system has also been carried over to the first part of 2020.

1.5 Information on repurchase of own shares

As of September 30, 2020, the Company held no own shares.

The Company did not acquire own shares between 1 January 2020 and 30 September 2020.

1.6 Subsidiaries of the Company

The Ljubljana Stock Exchange, Inc., a company domiciled in Ljubljana. The issued share capital of the Ljubljana Stock Exchange is EUR 1,401,000, in which the Zagreb Stock Exchange, Inc. participates with 100 %.

SEE Link d.o.o., a company domiciled in Skopje. The issued share capital of SEE LINK is EUR 80,000, in which the Zagreb Stock Exchange, Inc. participates with 33.33%.

Funderbeam South East Europe d.o.o., a company domiciled in Zagreb. The issued share capital of Funderbeam South East Europe d.o.o. is HRK 244,000, and the share of the Zagreb Stock Exchange, Inc. in the share capital as of July 7, 2020 is 30% 1 .

On December 18, 2019, the Zagreb Stock Exchange acquired 148 shares, or 5.3% of the Macedonian Stock Exchange's share capital.

1.7 Financial instruments used by the Company

The Company is fully funded by its own capital. The financial instruments the Company invests in are investment funds (money market and bond funds) and bank deposits.

1.8 Company's objectives and policies related to financial risk management

All employees of the Company, including its Management and Supervisory Board, are involved in the implementation of internal control and risk management systems.

1 On July 7, 2020, the Zagreb Stock Exchange signed Share purchase and transfer agreement representing 10% of the share capital of Funderbeam SEE d.o.o. Following the acquisition, the share of the Zagreb Stock Exchange in the total share capital of Funderbeam SEE d.o.o. is 30%.

The Company manages risks, including financial risks, particularly through two mutually independent control functions: monitoring of compliance with relevant regulations and internal audit function.

These control functions process and monitor the work of all organizational units, Company activities and support services.

1.9 Company's exposure to price risk, credit risk, liquidity risk and cash flow risk

The Company places its excess cash on deposit and invests in open-end money market and bond investment funds. Its investments are carried at fair value. The Company mitigates the price risk by diversifying its portfolio of open-end investment funds it by investing in different types of funds managed by different fund management companies, and by investing in low-risk funds.

The Company has no loans received, rather its cash and financial assets exceed substantially the liabilities of the Company, and consequently, the Company's liquidity position is satisfactory.

1.10 Statement of transactions and transfers between the Company and its subsidiaries and shareholders

The Company confirms that in the first three quarters of 2020 there were no transactions between the Company and its subsidiaries and shareholders in excess of EUR 100,000.

1.11 Statement of events which might have an adverse effect on Company operations

The emergence and spread of Covid-19 virus in the Republic of Croatia and the measures taken to stop the spread and suppression of the virus will certainly have negative effects on the entire Croatian economy. To mitigate these effects, the Government of the Republic of Croatia has introduced a series of measures to support the economy.

However, given the recent developments, the uncertainty over how long prevention measures will be in place, and the fact that measures are being developed to support the economy, it is not currently possible to reliably assess their effects.

With its infrastructure and working procedures, the Company is fully trained and ready to ensure business continuity so that trading can proceed smoothly. Infrastructure and work processes are adapted to work in crisis situations, employees are on standby, additional investments were made to work from home, and tests related to work in such circumstances have been successfully carried out, ensuring that trading and business are carried out without difficulty even in emergency situations. The Company will continue to closely monitor the development of the situation to ensure the orderly functioning of the market, financial stability and protection of investors.

1.12 Business results for 01/01/2020 – 30/09/2020

In the first three quarters of 2020, the Company generated a total of HRK 10,695 thousand of operating revenues, which is HRK +536 thousand or +5.3% more than in the same period last year when operating revenues amounted to HRK 10,159 thousand. Compared to the first three quarters of last year, sales revenue increased from HRK 6,687 to HRK 7,907 thousand, i.e. by a significant HRK +1,220 thousand, within which the largest increase was recorded by revenues from listing maintenance fees (increase from HRK 2,851 to HRK 3,212 thousand, i.e. HRK +711 thousand or +24.9%). The main source of income, commissions and membership fees, increased from HRK 2,859 to HRK 3,212 thousand, i.e. by HRK +353 thousand or +12.3%, which was greatly influenced by the already mentioned increased trading volume from the end of February to the end of April 2020. However, observing only the third quarter of the current year, commissions and membership fees almost halved compared to last year's third quarter (down from HRK 1,222 to HRK 669 thousand, or HRK -553 thousand or -45.2%), which is a reflection of the decline in securities turnover of mid-2020 and the one-time impact of the turnover increase in September 2019 due to trade in the Kraš share. In addition to the higher number of newly listed securities than in the same period last year (three shares and three bonds were listed in the first nine months of 2020, while two shares and one bond were listed in the same period last year), income from quotation maintenance also increased within sales revenues (increase from HRK 676 to HRK 856 thousand, or by HRK +180 thousand or +26.6%), while revenue from assigning and administering LEIs fell from HRK 301 to 277 thousand (HRK -24 thousand or -8%). Compared to the first nine months of 2019, in the first three quarters of 2020, other operating income fell by a total of HRK -683 thousand (a decrease from HRK 3,472 to HRK 2,787 thousand, or HRK -684 thousand or -19.7%), within which income from the supply of information increased from HRK 1,738 to HRK 1,790 thousand (HRK +52 thousand or +3%), and other income decreased from HRK 1,733 to HRK 998 thousand (HRK -736 thousand or -42.4%). The significantly lower amount of other income in the first nine months of 2020 compared to the same period last year, mostly due to fewer educations, which is why last year's higher revenues from seminars were missing (in the first three quarters of 2019 seminar revenues amounted to HRK 705 thousand). However, despite the COVID-19 crisis, the Company organized educations through online platforms and in the first nine months generated smaller but significant income from seminars in the amount of HRK 260 thousand. Within the item other income, an increase was also recorded in revenues from Progress (HRK +67 thousand or +239%), revenues from LJSE (HRK +69 thousand or +168%), and revenues from OTC data disclosure fees (HRK +55 thousand or +15%).

The Company's total operating expenses in the first three quarters of 2020 amounted to HRK 9,622 thousand, which is a decrease of HRK -1,010 thousand or -9.5% compared to the same period last year when operating expenses amounted to HRK 10,632 thousand. This significant decline in operating expenses is directly related to the changed way of working due to the coronavirus pandemic, primarily working from home. The decrease in operating expenses was mostly due to the decrease in other costs (HRK -511 thousand or -31.5%, i.e. from HRK 1,621 to HRK 1,110 thousand), which was due to the decrease in costs of translation, attorney, notary, and consulting services, royalties related to education, representation, business trips, and PR. Compared to the same period last year, in the first nine months of 2020, the decline was recorded in other operating expenses (HRK -363 thousand or - 92.3%; from HRK 393 to HRK 30 thousand), material costs (HRK -338 thousand or -12,2%; from HRK 2,759 to HRK 2,421 thousand), and value adjustment of fixed and current assets (HRK -52 thousand or -36.3%; from HRK 142 to HRK 90 thousand), while staff costs increased by HRK +222 thousand or +4.5% (from HRK 4,902 to HRK 5,125 thousand) which is within the planned, and depreciation by HRK +31 thousand or +3.8% (from HRK 813 to HRK 844 thousand).

HRK 000 1-3Q 2019 1-3Q 2020 change 3Q 2019 3Q 2020 change
Number of shares (in thousands) 4,636 4,636 0.00% 4,636 4,636 0.00%
Share capital 46,357 46,357 0.00% 46,357 46,357 0.00%
Capital and reserves 40,671 41,933 3.10% 40,671 41,933 3.10%
Total assets 45,972 47,387 3.08% 45,972 47,387 3.08%
Operating income 10,159 10,695 5.27% 3,769 3,240 -14.04%
sales revenue 6,688 7,907 18.24% 2,508 2,358 -5.98%
other operating income 3,472 2,788 -19.70% 1,261 882 -30.08%
Operating expenses 10,632 9,622 -9.50% 3,449 2,980 -13.58%
material costs 2,759 2,421 -12.24% 911 711 -21.98%
staff costs 4,903 5,125 4.54% 1,536 1,609 4.75%
depreciation and amortization 814 845 3.81% 271 279 2.75%
other costs 2,157 1,231 -42.91% 730 382 -47.72%
EBIT -472 1,073 -327.30% 320 259 -19.04%
EBITDA 341 1,918 461.85% 591 538 -9.05%
Financial income 1,814 565 -68.88% 515 453 -11.96%
Financial expenses 57 285 397.85% 18 -239
Pre-tax profit or loss 1,285 1,353 5.32% 818 952 16.41%
Income tax 0 0 0 0
Profit or loss for the period 1,285 1,353 5.32% 818 952 16.41%

The Company's key business indicators

The Company's operating profit in the first nine months of 2020 amounts to HRK 1,073 thousand, while in the same period last year the operating loss amounted to HRK -472 thousand. At the level of the third quarter of 2020, the Company generated operating profit in the amount of HRK 259 thousand, while operating profit in the same period last year amounted to HRK 320 thousand. Financial revenues in the first three quarters of 2020 amounted to HRK 565 thousand (a decrease of HRK -1,249 thousand or -68.9% compared to the same period in 2019), and most of this amount (HRK 453 thousand) was realized only in the third quarter, which indicates significantly reduced or even negative returns of bond funds in which the Company invested free funds in the first half of this year. In the middle of this year, the income from the sale of financial assets obtained by the Company in the process of prebankruptcy settlement of one issuer was realized. In the first nine months of this year, financial expenses amounted to HRK 285 thousand (HRK +228 thousand or +397.9%), while only in the third quarter, unrealized losses from financial assets decreased, and financial expenses amounted to HRK 239 thousand (HRK -221 thousand).

Given the above mentioned, the Company's net profit in the first three quarters of 2020 amounted to HRK 1,353 thousand, which is HRK +68 thousand (+5.3%) more than in the same period in 2019 when the Company's net profit amounted to HRK 1,285 thousand. In the third quarter of 2020, the Company's net profit amounted to HRK 952 thousand, which is HRK +134 thousand (+16.4%) more than HRK 818 thousand of net profit for the same period last year.

Operating profit before interest, taxes, depreciation, and amortization is positive and for the period for the first nine months of 2020 amounts to HRK 1,918 thousand, i.e. HRK +1,577 thousand more than in the first three quarters of 2019, while in the third quarter of 2020 alone, it amounts to HRK 538 thousand, i.e. HRK -53 thousand less than in the same period last year.

2 Declaration of responsibility for the preparation of financial statements

Financial statements of the Zagreb Stock Exchange, Inc. prepared for the period between 01/01/2020 and 30/09/2020 give a fair and true account of facts in accordance with the International Standards of Financial Reporting and the Croatian Accounting Act.

Unconsolidated financial statements for the period between 01/01/2020 and 30/09/2020 give an objective, complete and true statement of assets and liabilities, financial position and operations of the Company.

The management report for the first three quarters of 2020 contains a true and fair view of the development and results of operations, with a description of the principal risks and uncertainties to which the Company is exposed.

Unconsolidated financial statements for the first three quarters of 2020 have not been audited.

Contact Zagreb Stock Exchange, Inc. Ivana Lučića 2a/22 10000 Zagreb Croatia

Phone number: +385/ 1 4686 806 E-mail: [email protected]

Unconsolidated unaudited financial statements of the Company for 01/01/2020 – 30/09/2020

Annex 1 ISSUER'S GENERAL DATA
Reporting period: 1.1.2020 to 30.9.2020
Year: 2020
Quarter: 3
Quarterly financial statements
Registration number (MB): 03749606 Issuer's home HR
Entity's registration Member State code:
number (MBS):
Personal identification
080034217
number (OIB):
Institution
84368186611 LEI: 7478000050A040C0D041
code: 4
Name of the issuer: Zagreb Stock Exchange, Inc
Postcode and town: 10000 Zagreb
Street and house number: Ivana Lučića 2a/22
E-mail address: [email protected]
Web address: www.zse.hr
Number of employees
(end of the reporting
2 4
Consolidated report: KN (KN-not consolidated/KD-consolidated) KN KD
Audited: RN (RN-not audited/RD-audited) RN RD
Names of subsidiaries (according to IFRS): Registered office: MB:
Ljubljana, Slovenija 5316081
Ljubljanska borza vrednostnih papirjev d.d.
Yes
Bookkeeping firm: Yes (Yes/No) Sigma Tax Consulting d.o.o. No
Contact person: Martina Butković (name of the bookkeeping firm)
Telephone: 01/4699-555 (only name and surname of the contact person)
E-mail address: [email protected]
Audit firm: (name of the audit firm)
BALANCE SHEET
balance as at 30.9.2020
in HRK
Submitter: Zagreb Stock Exchange, Inc
Item ADP
code
Last day of
the preceding
business
year
At the
reporting
date of the
current
period
1 2 3 4
ASSETS
FIXED ASSETS 002+003+009+012
I INTANGIBLE ASSETS
1
2
23.522.947
1.080.165
23.436.795
1.014.806
II TANGIBLE ASSETS 004+…+008 3 1.297.386 1.276.593
1 Land and buildings 4 0 0
2 Computer equipment 5 160.729 640.897
3 Other tangible assets 6 3.282 3.231
4 Leasehold improvements 7 1.133.375 632.465
5 Assets under construction 8 0 0
III FIXED FINANCIAL ASSETS 010+011 9 21.145.396 21.145.396
1 Investments in associates, subsidiaries and joint ventures 10 19.375.969 19.375.969
2 Financial assets at amortised cost
DEFERRED TAX ASSETS
11
12
1.769.427
0
1.769.427
0
B CURRENT ASSETS 014+020+024 13 22.369.360 23.183.513
I RECEIVABLES 015++019 14 2.467.873 1.782.901
1 Trade receivables 15 1.703.240 1.133.731
2 Receivables from employees and members of the undertaking 16 390 123
3 Receivables from government and other institutions 17 6.074 15.309
4 Receivables from connected undertakings 18 199.833 27.536
5 Other receivables 19 558.336 606.202
III SHORT-TERM FINANCIAL ASSETS 021+…+023
1 Financial assets at amortised cost
20
21
19.583.059 20.030.292
2 Financial assets at fair value through other comprehensive 22 0
0
2.500.005
0
3 Financial assets at fair value through statement of profit or 23 19.583.059 17.530.287
III CASH AND CASH EQUIVALENTS 24 318.428 1.370.320
C PREPAID EXPENSES AND ACCRUED INCOME 25 725.743 766.593
D TOTAL ASSETS 001+013+025 26 46.618.050 47.386.901
E OFF-BALANCE SHEET ITEMS 27 0 0
LIABILITIES
A CAPITAL AND RESERVES 029+030+031+036+037+038 28 40.579.874 41.932.716
I INITIAL CAPITAL 29 46.357.000 46.357.000
II CAPITAL RESERVES
III PROFIT RESERVES 032++035
30
31
13.860.181
141.000
13.860.181
141.000
1 Legal reserves 32 141.000 141.000
2 Reserves for treasury shares 33 0 0
3 Fair value reserves
4 Other reserves 34 0 0
35 0 0
IV RETAINED PROFIT OR LOSS BROUGHT FORWARD 36 -20.972.058 -19.778.307
V PROFIT OR LOSS FOR THE YEAR 37 1.193.751 1.352.842
VI MINORITY INTEREST 38 0 0
B PROVISIONS 39 0 0
C SHORT-TERM LIABILITIES 041+046 40 1.841.918 1.088.206
1 Liabilities for advance payments 41
42
11.351
488.763
26.493
79.228
2 Trade payables
3 Liabilities to employees
43 310.224 292.224
4 Taxes, contributions and similar liabilities 44 295.767 222.759
5 Liabilities to connected undertakings 45 2.233 0
6 Other short-term liabilities 46 733.580 467.502
D LONG-TERM LIABILITIES 47 301.761 65.589
E DEFERRED TAX LIABILITY 48 0 0
F ACCRUALS AND DEFERRED INCOME
G TOTAL LIABILITIES 028+039+040+047+048+049
49
50
3.894.497
46.618.050
4.300.390
47.386.901
H OFF-BALANCE SHEET ITEMS 51 0 0
Appendix to the balance sheet (position for consolidated financial statements)
I Capital and reserves 053+054 52 0 0
1 Attributable to owners of the parent 53 0 0
STATEMENT OF PROFIT OR LOSS
For the period 01.01.2020. to 30.9.2020
in HRK

Submitter: Zagreb Stock Exchange, Inc

Item Same period of the previous year Current period
code Cumulative Quarter Cumulative Quarter
1 2 3 4 5 6
A OPERATING INCOME 002+009 1 10.159.381 3.768.785 10.695.151 3.239.522
I Sales revenue 003++008 2 6.687.706 2.507.980 7.907.319 2.358.008
1 Commissions and membership fees 3 2.859.378 1.222.184 3.212.341 669.324
2 Listing maintenance fees 4 2.850.984 979.427 3.561.770 1.269.718
3 Income from quotation maintenance 5 675.892 209.580 855.780 326.427
4 Income from auctions 6 0 0 0 0
5 Income from memberships 7 0 0 0 0
6 Revenue from assigning and administering LEIs 8 301.452 96.789 277.428 92.539
II Other operating income 010++012 9 3.471.675 1.260.805 2.787.832 881.514
1 Income from application programming interface (API) services 10 0 0 0 0
2 Income from the supply of information 11 1.738.402 645.065 1.790.257 607.118
3 Other income 12 1.733.273 615.740 997.575 274.396
B OPERATING EXPENSES 014+017+021+022+023+026+027 13 10.631.581 3.448.613 9.621.861 2.980.315
I Material costs 015+016
1 Costs of raw materials
14
15
2.758.853
348.239
911.261
119.921
2.421.066
394.061
711.011
111.226
2 Other external costs 16 2.410.614 791.340 2.027.005 599.785
II Staff costs 018++020 17 4.902.506 1.535.938 5.125.088 1.608.829
1 Net salaries and wages
2 Tax and contributions from salary costs
18
19
2.681.040
1.543.227
848.125
477.287
2.835.038
1.607.047
895.672
498.795
3 Payroll contributions 20 678.239 210.526 683.003 214.362
III Depreciation 21 813.543 271.318 844.534 278.775
IV Other costs 22 1.620.841 398.080 1.110.050 380.888
V Value adjustment 024+025 23 142.240 0 90.631 0
1 fixed assets (other than financial assets) 24 0 0 0 0
2 current assets (other than financial assets) 25 142.240 0 90.631 0
VI Provisions 26 0 0 0 0
VII Other operating expenses 27 393.598 332.016 30.492 812
C FINANCIAL INCOME 029++034 28 1.813.960 514.988 564.593 453.405
1 Interest, exchange rate differences, dividends and similar 29 420.681 105 357.213 356.602
2 Interest, exchange rate differences, dividends and similar 30 143.009 110.910 77.884 67.023
3 Income share from associates and participating interests 31 0 0 0 0
4 Unrealised gains (income) from financial assets 32 1.247.823 403.973 21.829 21.829
5 Profit from reversal of provisions for impairment for expected 33 0 0 0 0
6 Other financial income 34 2.447 0 107.667 7.951
D FINANCIAL EXPENSES 036++040 35 57.254 17.555 285.041 -239.142
1 Interest, exchange rate differences and other expenditures with 36 432 11 518 370
2 Interest, exchange rate differences and other expenditure from 37 56.822 17.544 52.378 9.327
3 Unrealised losses (expenses) from financial assets 38 0 0 0 -267.670
4 Loss on impairment for expected credit losses 39 0 0 0 0
5 Other financial expenses 40 0 0 232.145 18.831
E TOTAL INCOME 001+028 41 11.973.341 4.283.773 11.259.744 3.692.927
F TOTAL EXPENDITURE 013+035 42 10.688.835 3.466.168 9.906.902 2.741.173
G Share in profit/loss of associates and subsidiaries 43 0 0 0 0
H PRE-TAX PROFIT OR LOSS 041-042+043 44 1.284.506 817.605 1.352.842 951.754
I INCOME TAX 45 0 0 0 0
J PROFIT OR LOSS FOR THE PERIOD 044-045 46 1.284.506 817.605 1.352.842 951.754
1 Change in revaluation reserves (property, plant, 47 0 0 0 0
2 Actuarial gains/losses on defined benefit pension plans 48 0 0 0 0
3 Unrealised gains/losses on financial assets at fair value 49 0 0 0 0
through other comprehensive income
4 Gains/losses on hedging instruments in a cash flow hedge 50 0 0 0 0
5 Gains/losses arising from translation of financial 51 0 0 0 0
6 Income tax on other comprehensive income 52 0 0 0 0
K OTHER COMPREHENSIVE INCOME 047+…+052 53 0 0 0 0
TOTAL COMPREHENSIVE INCOME 046+053 54 1.284.506 817.605 1.352.842 951.754
M RECLASSIFICATION ADJUSTMENTS 55 0 0 0 0
Appendix **
Attributable to owners of the parent 56 0 0 0 0
Attributable to non-controlling interest 57 0 0 0 0
17

STATEMENT OF CASH FLOWS - indirect method for the period 01.01.2020. to 30.9.2020

in HRK
Submitter: Zagreb Stock Exchange, Inc
Item ADP
code
Same period of
the previous
year
Current period
1 2 3 4
CASH FLOW FROM OPERATING ACTIVITIES
1 Pre-tax profit 1 1.284.506 1.352.842
2 Depreciation 2 813.543 844.534
3 Increase in short-term liabilities 3 0 0
4 Decrease in short-term receivables 4 0 594.341
5 Decrease in inventories 5 0 0
6 Loss on impairment for expected credit losses 6 0 0
7 Other cash flow increase 7 0 173.036
I Total cash flow increase from operating activities
001++007
8 2.098.049 2.964.753
1 Decrease in short-term liabilities 9 346.941 753.713
2 Increase in short-term receivables 10 552.179 0
3 Increase in inventories 11 0 0
4 Profit from reversal of provisions for impairment for expected 12 0 0
5 Other cash flow decrease 13 1.062.056 0
II Total cash flow decrease from operating activities
009++013
14 1.961.176 753.713
CASH FLOW FROM INVESTMENT ACTIVITIES
1 Cash receipts from sale of fixed tangible and intangible assets 15 0 0
2 Cash receipts the from sale of equity instruments and debt 16 0 82.302
3 Interest received 17 0 0
4 Dividends received 18 0 410.642
5 Other cash receipts from investment activities 19 320.000 2.342.462
III Total cash receipts from investment activities 015++019 20 320.000 2.835.406
1 Cash payments for the purchase of fixed tangible and intangible 21 422.228 758.382
2 Cash payments for the acquisition of equity financial 22 0 0
3 Other cash payments from investment activities 23 1.000.000 3.000.000
IV Total cash payments from investment activities
021++023
24 1.422.228 3.758.382
CASH FLOW FROM FINANCING ACTIVITIES
1 Cash receipts from the issue of equity financial instruments and
debt financial instruments
25 0 0
2 Cash receipts from credit principals, debentures, loans and
other borrowings
26 0 0
3 Other cash receipts from financing activities 27 0 0
V Total cash receipts from financing activities 025++027 28 0 0
1 Cash payments for credit principals and bonds 29 0 0
2 Cash payments for dividends 30 0 0
3 Cash payments for finance lease 31 0 0
4 Cash payments for the redemption of treasury shares 32 0 0
5 Other cash payments from financing activities 33 563.923 236.172
VI Total cash payments from operating activities 029++033 34 563.923 236.172
VII Cash and cash equivalents at the beginning of period 35 2.078.607 318.428
VIII Increase of cash and cash equivalents 36 0 1.051.892
IX Decrease of cash and cash equivalents 37 1.529.278 0
X Cash and cash equivalents at the end of period 38 549.329 1.370.320
STATEMENT
OF
CHANGES EQUITY
IN
for the period from 1.1.2020 to 30.9.2020 in HRK
Attributable to owners of the
parent
Item ADP Subscribed
capital
Capital
reserves
Profit
reserves
Profit
or loss
for
the
year
(period)
Retained
profit
or loss
brought
forward
Fair
value
reserves
Other
revaluation
reserves
Attributable
to
non-controlling
interests
capital
Total
and
reserves
1 2 3 4 5 6 7 8 9 10 11
Balance
on the
first
day
of
the
previous
business
year
1 46.357.000 13.860.181 141.000 1.310.533 -22.282.591 0 0 0 39.386.123
Change
in
accounting
policies
2 0 0 0 0 0 0 0 0 0
Correction
of
errors from
prior
periods
3 0 0 0 0 0 0 0 0 0
Balance
on the
first
day
of
the
previous
business
year (restated)
4 46.357.000 13.860.181 141.000 1.310.533 -22.282.591 0 0 0 39.386.123
Profit
or loss
for
the
period
5 0 0 0 1.193.751 0 0 0 0 1.193.751
Unrealised
gains
or losses
on financial
assets at
fair
value
through
other
comprehensive
income
6 0 0 0 0 0 0 0 0 0
Other
changes
in
equity
unrelated
to owners
7 0 0 0 0 0 0 0 0 0
Total
directly
recognized
income
and
expenses of
the
previous
year (previous
year periods)
8 0 0 0 1.193.751 0 0 0 0 1.193.751
Increase/decrease
in
subscribed
capital
9 0 0 0 0 0 0 0 0 0
Other
contributions
by
owners
10 0 0 0 0 0 0 0 0 0
profit/dividend
Payment
of
share
in
11 0 0 0 0 0 0 0 0 0
Other
distribution
to owners
12 0 0 0 -1.310.533 1.310.533 0 0 0 0
Balance
on the
last
day
of
the
previous
business
year reporting
period
13 46.357.000 13.860.181 141.000 1.193.751 -20.972.058 0 0 0 40.579.874
Balance
on the
first
day
of
the
current
business
year
14 46.357.000 13.860.181 141.000 1.193.751 -20.972.058 0 0 0 40.579.874
Change
in
accounting
policies
15 0 0 0 0 0 0 0 0 0
Correction
of
errors from
prior
periods
16 0 0 0 0 0 0 0 0 0
first
of
Balance
on the
day
the
current
year (restated)
business
17 46.357.000 13.860.181 141.000 1.193.751 -20.972.058 0 0 0 40.579.874
Profit
or loss
for
the
period
18 0 0 0 1.352.842 0 0 0 0 1.352.842
Unrealised
gains
or losses
on financial
assets at
fair
value
through
other
comprehensive
income
19 0 0 0 0 0 0 0 0 0
Other
changes
in
equity
unrelated
to owners
20 0 0 0 0 0 0 0 0 0
directly
recognised
income
Total
and
current year (current
expenses of
the
period)
21 0 0 0 1.352.842 0 0 0 0 1.352.842
Increase/decrease
in
subscribed
capital
22 0 0 0 0 0 0 0 0 0
Other
contributions
by
owners
23 0 0 0 0 0 0 0 0 0
Payment
of
share
in
profit/dividend
24 0 0 0 0 0 0 0 0 0
Other
distribution
to owners
25 0 0 0 -1.193.751 1.193.751 0 0 0 0 19
Balance
on the
last
day
of
the
current
business
year reporting
period
26 46.357.000 13.860.181 141.000 1.352.842 -19.778.307 0 0 0 41.932.716

NOTES TO FINANCIAL STATEMENTS - TFI (drawn up for quarterly reporting periods)

Name of the issuer: Zagreb Stock Exchange, Inc

Personal identification number (OIB): 84368186611

Reporting period: 1.1.2020 - 30.9.2020

Notes to financial statements for quarterly periods include:

a) an explanation of business events relevant to understanding changes in the statement of financial position and financial performance for the quarterly reporting period of the issuer with respect to the last business year: information is provided regarding these events and relevant information published in the last annual financial statement is updated

b) information on the access to the latest annual financial statements, for the purpose of understanding information published in the notes to financial statements drawn up for the quarterly reporting period

c) a statement explaining that the same accounting policies are applied while drawing up financial statements for the quarterly reporting period as in the latest annual financial statements or, in the case where the accounting policies have changed, a description of the nature and effect of the changes

d) a description of the financial performance in the case of the issuer whose business is seasonal.

AOP 11 Financial assets at amortized costs

The balance sheet position AOP 11 "2 Financial assets at amortized cost", as of 30 September 2020 in total amount of HRK the amount of HRK 1.769.427 (31 December 2019: HRK 1.769.427) consists of the long term financial assets other than investments in associates, subsidiaries and joint ventures which are reported at position AOP 10. Financial assets at AOP 11 consists of:

1) Given loans and deposits at amortized cost in the amount of HRK 467.161 (31 December 2019: HRK 467.161), and

2) Financial assets at fair value through other comprehensive income in the amount of HRK 1.302.266 (31 December 2019: HRK 1.302.266)

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