ATLANTIC GRUPA Financial results in 2014 (audited) Business growth - - PowerPoint PPT Presentation

ATLANTIC GRUPA

Financial results in 2014 (audited) Business growth coupled with the largest investment cycle in the company’s history

Zagreb – 24th February 2015

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CONTENT KEY DEVELOPMENTS IN 2014 PERFORMANCE ON CAPITAL MARKET IN 2014 FINANCIAL RESULTS IN 2014 GUIDANCE FOR 2015 APPENDIX

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 Continued integration of information technologies  Performance in line with guidance despite unfavourable macroeconomic situation Distribution of Unilever portfolio in Croatia and Slovenia  New energy bars factory in Nova Gradiška – the largest capex in Atlantic Grupa’s history  Signing the agreement for the acquisition of Foodland d.o.o., Serbia  Development of own brands and opening of new pharma locations KEY BUSINESS DEVELOPMENTS IN 2014  Further deleveraging and growth of cash flow from operating activities  Risk management

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KEY BUSINESS DEVELOPMENTS: OWN AND PRINCIPAL BRANDS

DISTRIBUTION: UNILEVER  Globally famous brands Knorr, Hellman's, Axe, Rexona, Brut, Signal, Coccolino, Domestos, Cif and many others  Distribution started at the beginning of 2014  Distribution in Croatia and Slovenia  Confirms status of the leading distributor in the region SBU BEVERAGES  Donat Mg won several distinguished marketing and product quality awards  Financial Times: Cockta among 4 best cola drinks in the world  New Cedevita packaging for home and HoReCa consumption

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SBU COFFEE  Barcaffe: 4 gold medals on International Coffee Tasting SBU SAVOURY SPREADS  Argeta won Euro Effie for campaign „Approved by moms”  Argeta exclusive a la Subida in cooperation with chef from Michelin starred restaurant SBU SNACKS  Launching chips under brand Chipsos SBU PHARMA AND PERSONAL CARE  7 new specialized stores

KEY BUSINESS DEVELOPMENTS: OWN AND PRINCIPAL BRANDS

Market share

Barcaffe/ Grand kafa Argeta Smoki Cedevita

Volume share

2014 2013 2014 2013 2014 2013 2014 2013 Croatia 10.1% 7.2% 12.0% 8.7% 16.6% 10.9% 73.6% 66.9% Serbia 48.8% 48.1% 12.7% 11.8% 62.8% 61.4% 81.9% 82.7% Slovenia 65.7% 63.8% 34.7% 33.7% 42.7% 41.1% 80.2% 79.7% B&H

• 42.2%

40.50% 42.3% 40.9% 74.0%

• Source: Nielsen Retail Panel for food and non-food categories. Period: YTD 11/2014

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KEY BUSINESS DEVELOPMENTS: OWN AND PRINCIPAL BRANDS

 Research of the Valicon agency: Argeta, Barcaffe, Cedevita, Cockta and Smoki are among top 10 brands in the region  The strength of brands was calculated on the basis

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their recognisability, experience and use. Top 10 in the region Top 5 Slovenia Top 5 Croatia Top 5 Serbia Top 5 B&H Top 5 Macedonia 1 Milka Barcaffe Jana Plazma Argeta Argeta 2 Coca Cola Milka Cedevita Milka Milka Stobi flips 3 Vegeta Radenska Vegeta Smoki Coca Cola Coca Cola 4 Cedevita Argeta Jamnica Coca Cola Violeta Milka 5 Argeta Alpsko mleko Coca Cola Knjaz Miloš Vegeta Pelisterka 6 Orbit 7 Smoki 8 Cockta 9 Nivea 10 Pepsi

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KEY BUSINESS DEVELOPMENT: NEW ENERGY BARS FACTORY IN NOVA GRADIŠKA

 Transferring the production from the contractual producer to own plant  Project with the total value of HRK 100 million  All works performed in time:  11/2013 Real estate acquired  01/2014 Permissions acquired  03/2014 Technology chosen/equipment ordered  04/2014 Building work starts  10/2014 Building work finished  11/2014 First line delivered & installed  12/2014 Test productions start  02/2015 Full scale production starts

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KEY BUSINESS DEVELOPMENT: ACQUISTION OF FOODLAND (1/2)

 Established in 1998 with headquarter in Belgrade,Serbia  Production of high-quality products under own brands:  Bakina Tajna or Granny’s Secret (paprika relish, jams, fruit butters, juices)  Amfissa (olives, cornichons, roasted red peppers, capers, dried tomatoes, etc)  Own production facility in Igros, southern Serbia  Sales of EUR 8.3 m* in FY2014 * Preliminary unaudited results

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KEY BUSINESS DEVELOPMENT (IV): ACQUISTION OF FOODLAND (2/2)

REASONING FOR THE ACQUISTION  International expansion potential  Granny’ Secret with its palette of supreme quality products prepared in a traditional way, without additives or preservatives, meets both aims defined in AG’s development strategy: expanding the current brand portfolio with international potential (alongside Argeta, Donat Mg, Multipower, Bebi and Cedevita GO!) and internationalization.  Regional expansion  Using the strength of AG’s distribution network and infrastructure to increase distribution reach of brand Granny’s Secret across the region and Amfissa and principal brands in Serbia and Montenegro.  Cost synergies  More efficient procurement of raw/packaging materials, centralized transportation management, merging of logistics activities, processes and spaces, more efficient production, better customer control, higher marketing power.

Serbia 60% Regional markets 12% Other markets 28% Geographic sales profile in 2014 Amfissa 26% Principal brands 15% Other 9% Sweet products 30% Vegetables product 20% Granny's secret 50% Sales profile 2014

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CONTENT KEY DEVELOPMENTS IN 2014 PERFORMANCE ON CAPITAL MARKET IN 2014 FINANCIAL RESULTS IN 2014 GUIDANCE FOR 2015 APPENDIX

31% 34% 7%

• 38%

18% 48%

• 47%
• 3%

3% 0%

• 18%

5% 16%

• 67%

1% 2%

• 1%
• 15%

10%

• 80%
• 40%

0% 40%

2014. 2013 2012 2011 2010 2009 2008

Performance on capital market

ATGR-R-A Crobex Crobex10 11

PERFORMANCE ON CROATIAN CAPITAL MARKET

 In August 2014 the highest historic price of HRK 1,080.50. With growth of 31% in 2014 it outperformed both indices.  November 2014: German development bank – DEG reduced its ownership share from 8.5% to 2.3% in the accelerated bookbuilt process (ABB).  Strong demand of investors: oversubscribed book by 1.7x  The complete offering was allocated at HRK 925  The transaction amounted to EUR 25 million  58% investment funds, 39% pension funds and 3% banks and individual investors  65% domestic investors and 35% foreign investors

Valuation 2014 2013 Last price in reporting period 940.0 718.0 Market capitalization* (in HRK millions) 3,134.2 2,394.0 Average daily turnover (in HRK thousands) 299.5 237.8 EV (in HRK millions) 5,064.3 4,504.7 EV/EBITDA 8.5 7.6 EV/EBIT 11.5 10.6 EV/sales 1.0 0.9 EPS (in HRK) 60.0 58.5 P/E 15.7 12.3

* Closing price multiplied by the total number of shares Tedeschi Emil 50.2% EBRD 8.5% Tedeschi Fiorio Lada 5.8% Management 1.1% Other 14.1% Raiffeisen OMF 9.6% AZ OMF 3.9% Erste Plavi OMF 3.3% PBZ CO OMF 1.4% Raiffeisen DMF 1.4% Other pension funds 0.6% Pension funds 20.3%

Ownership structure as of 31.12.2014

* Free float: 35.5%

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CONTENT

KEY DEVELOPMENTS IN 2014 PERFORMANCE ON CAPITAL MARKET IN 2014 FINANCIAL RESULTS IN 2014 GUIDANCE FOR 2015 APPENDIX

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RESULTS IN LINE WITH GUIDANCE

(in HRKm)

2014A/2014E: 98.1 2014A/2013A: 102.4 2014A/2014E : 96.3 2014A/2013A: 101.1 2014A/2014E : 95.8 2014A/2013A: 103.8

100 200 300 400 500 600 700 EBITDA EBIT

597 441 620 460 591 425

2014A 2014E 2013A 4,400 4,600 4,800 5,000 5,200 Sales

5,118 5,220 4,999*

2014A 2014E 2013A

* Sales for 2013 were restated, as explained on the following slide

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SALES BY STRATEGIC BUSINESS UNITS AND STRATEGIC DISTRIBUTION UNITS

* In 2014 the classification of contracted marketing expenses has changed from “Marketing and selling expenses” to decrease in “Sales revenues”, and classification of support for contracted marketing expenses has changed from decrease in “Marketing and selling expenses” to decrease in “Cost of merchandise sold”. In accordance with this change, sales revenue, referring to sales from the distribution company Atlantic Trade Zagreb and sales of SBU Savoury Spreads and BU Baby Food in the market of Russia for segment information in 2013 has been restated, but no restatement has been made for sales revenue referring to SBU Savoury Spreads on markets outside the region and Russia due to immateriality. ** Other segments include SDU HoReCa, SDU CIS, BU Baby Food, DU Macedonia and business activities not allocated to business and distribution units (headquarters and support functions in Serbia, Slovenia and Macedonia) which are excluded from the reportable operating segments. *** Line item “Reconciliation” relates to the sale of own brands which is included in the appropriate SBU and BU and in SDUs and DUs through which the products were distributed.

 SBU Beverages: unstable weather conditions, floods in May, drop in the overall market categories; strong growth of Donat Mg and Kala.  SBU Coffee: price competition in Serbia, partially compensated by the growth in Slovenia and Croatia.  SBU Snacks: drop of flips, biscuits and wafers, partly mitigated by launching chips as a new category.  SBU Savoury spreads: growth in the region and on international markets (Russia and Austria).  SBU Sports and Functional Food: drop of private label; growth

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• wn

brands Multipower and Champ.  SBU Pharma and Personal Care: drop of Dietpharm product range which is partially compensated by the growth of the pharmacy chain Farmacia.  SDU Croatia and DU Slovenia: primarily influenced by Unilever’s distribution.  SDU Serbia: depreciation of the dinar, natural disasters, price competition.  SDU International markets: growth in the sports and functional food and Donat Mg. (HRK 000) 2014 2013* 2014/

2013 SBU Beverages 638,817 644,137 (0.8%) SBU Coffee 1,026,680 1,091,348 (5.9%) SBU (Sweet and Salted) Snacks 614,426 616,517 (0.3%) SBU Savoury Spreads 471,385 457,035 3.1% SBU Sports and Functional Food 779,075 781,080 (0.3%) SBU Pharma and Personal Care 493,344 498,939 (1.1%) SDU Croatia 844,252 764,849 10.4% SDU Serbia 1,083,149 1,145,258 (5.4%) SDU International markets 582,426 555,632 4.8% DU Slovenia 725,487 615,014 18.0% Other segments** 820,505 851,106 (3.6%) Reconciliation*** (2,961,173) (3,021,979) n/a Sales 5,118,373 4,998,936 2.4%

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SALES BY MARKETS AND SEGMENTS

* Macedonia, Montenegro, Kosovo; ** Germany, United Kingdom, Italy, Switzerland, Austria, Sweden, Spain

Principal brands 18.0% Sports and Functional Food 15.2% Pharma & Personal care 9.4% Coffee 20.1% Sweet and salted snacks 12.0% Savoury spreads 9.2% Beverages 12.5% Baby food 3.6%

2014

Principal brands 14.5% Sports and Functional Food 15.6% Pharma & Personal care 9.6% Coffee 21.8% Sweet and salted snacks 12.3% Savoury spreads 9.1% Beverages 12.9% Baby food 4.1%

2013

Croatia 25.1% Serbia 22.4% Slovenia 15.8% Bosnia and Herzegovina 7.0% Other regional markets* 6.1% Key European markets** 11.4% Russia and CIS 5.7% Other markets 6.5%

2014

Croatia 24.2% Serbia 24.3% Slovenia 13.8% Bosnia and Herzegovina 7.3% Other regional markets* 6.3% Key European markets** 11.8% Russia and CIS 5.9% Other markets 6.4%

2013

• 200.0

400.0 600.0 800.0 1,000.0 1,200.0 1,400.0 1,600.0 Croatia Serbia Slovenia Bosnia and Herzegovina Other regional markets*

1,285.1 1,145.2 809.1 357.3 312.7 1,209.2 1,215.2 689.3 364.2 317.1

(in HRKm) 2014 2013 16

SALES PROFILE BY MARKETS (I)

 Croatia: higher sales due to (i) the beginning of the Unilever product range distribution, (ii) an increase in sales of own brands - Barcaffe, Argeta, Kala and Smoki, (iii) an increase in sales of principals’ brands - Rauch, Johnson&Johnson and Duracell, and (iv) the effect of the previous year’s temporarily suspended distribution in March during negotiations related to the implementation of new commercial terms and conditions.  Serbia: drop due to depreciation of dinar, decrease in sales of coffee, carbonated soft drinks, vitamin instant drinks and flips segments and strong price competition.  Slovenia: growth as a result of the beginning of the Unilever product range distribution (growth without Unilever: 1.9%)  Bosna and Herzegovina: adverse macroeconomic conditions resulted in lower sales of the coffee, carbonated soft drinks, vitamin instant drinks and snacks segments.  Other regional markets* (Macedonia, Montenegro, Kosovo): growth of Donat Mg and Ferrero and Nescafe from principals brands. 6.3%

• 5.8%

17.4%

• 1.9%
• 1.4%

100 200 300 400 500 600 700 800 Key European markets* Russia and Commonwealth of Independent States Other markets

584.5 289.6 334.9 591.7 293.6 318.7

(in HRKm) 2014 2013 17

SALES PROFILE BY MARKETS (II)

 Key European markets* (Germany, the United Kingdom, Italy, Switzerland, Austria, Sweden, Spain): lower sales in UK, Switzerland and Sweden, which was largely compensated by growth in sales in Germany.  Russia and the Commonwealth of Independent States: drop in sales due to the strong depreciation of the ruble (HRK 30m) and political instability in Ukraine.  Other markets: growth in sales due to higher sales of sports and functional food segment.

• 1.2%
• 1.4%

5.1%

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SALES PROFILE BY CATEGORIES

Own brands :  Decline of 2.2% due to drop in sales: (i) Grand Kafa, (ii) Cockta and Cedevita, (iii) Smoki and (iv) Bebi.  Drop was partly compensated by the growth in sales of:  Donat Mg, Kala and Kalnička  Argeta  Multipower i Champ  Barcaffe Principal brands :  Strong growth of 27.5% that is primarily driven by the beginning of the Unilever product range distribution. Private labels :  Drop of 2.0% due to drop in sales in sports and functional food segment due to termination of cooperation with one customer. Farmacia:  Growth of 2.2%  On 31 December 2014 Farmacia consisted

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48 pharmacies and 25 specialized stores (7 new).

Own brands 67.0% Principal brands 18.0% Private label 8.8% Farmacia 6.2%

2014

Own brands 70.2% Principal brands 14.5% Private label 9.2% Farmacia 6.2%

2013

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PROFITABILITY DYNAMICS IN 2014

 7.2% higher net profit:  Improvement of business processes and active hedging of main raw materials  Despite net foreign exchange losses due to the strong depreciation of the Russian ruble and the Serbian dinar  Significant decrease in interest expense by 21% due to a successful refinancing of long-term borrowings completed at the end of 2012  Decrease in the effective tax rate to 15% from the previous year’s 21%.

100 200 300 400 500 600 EBITDA EBIT Net profit/(loss)

597.0 440.7 213.4 590.8 424.6 199.0

2014 2013

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OPERATING COSTS STRUCTURE IN 2014

 Cost of goods sold: change in the sales mix caused by the beginning of the Unilever product range distribution.  Production material expenses: lower by 5.6% despite a significant growth in prices of raw coffee in the global commodity markets. Negative effect of higher prices of raw coffee in the global commodity markets was avoided by the continuous hedging. The positive impact is also a result of lower prices of other raw materials (sugar, fat and oil) and lower packaging expenses, which compensated for higher prices of cocoa and powdered milk.  Costs of services: higher transportation and logistics costs following the beginning of the Unilever range distribution and higher rent expenses following the opening of new specialized stores in the pharmacy chain Farmacia and relocation of the office in Russia.  Staff costs: higher number of employees as a result of increased business volume (increase of employees for 229 to 4,457).  Marketing expenses: aggressive marketing activities (especially in the coffee segment).  Other operating expenses: reduced due to lower bad debt expenses following better receivables control. (in HRK millions) 2014 % of sales 2013 % of sales 2014/ 2013 Cost of goods sold 1,405.2 27.5% 1,212.6 24.3% 15.9% Change in inventory (30.0) (0.6%) (4.6) (0.1%) n/a Production materials 1,559.7 30.5% 1,652.2 33.1% (5.6%) Energy 61.2 1.2% 63.7 1.3% (3.8%) Services 359.2 7.0% 324.9 6.5% 10.6% Staff costs 704.4 13.8% 672.1 13.4% 4.8% Marketing and selling expenses 331.6 6.5% 310.4 6.2% 6.8% Other operating expenses 186.4 3.6% 210.4 4.2% (11.4%) Other gains/(losses), net (6.3) (0.1%) 7.5 0.2% n/a Depreciation, amortisation and impairment 156.3 3.1% 166.2 3.3% (5.9%) Total operating expenses 4,727.9 92.4% 4,615.3 92.3% 2.4%

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PRICE DYNAMICS OF RAW COFFEE IN 2014

 Average price of raw coffee (Arabica) in the global commodity markets was 22% higher in 2014 compared to 2013.  Growth is a result of a longer drought period in Brazil, resulting in significantly lower coffee yields than in previous years and a low level of raw coffee stocks transferred from 2013.

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OPERATING RESULT OF SBUs AND SDUs IN 2014

SBU Croatia: Higher staff and transport costs due to the beginning of the distribution of Unilever and new sales organization. SBU Serbia: The decrease in profitability is a consequence of the drop in sales and depreciation of the dinar. SBU International markets: Development of infrastructure, including new recruitments. DU Slovenia: The growth in profitability due to higher sales and lower marketing investments, despite higher staff and transportation costs resulting from the beginning of the Unilever range distribution.

Profitability by segments was restated in 2013 in order to be comparable with the new organisational structure and, accordingly, the new model of segment reporting in 2014. * Other segments include SDU HoReCa, SDU CIS, BU Baby Food, DU Macedonia and business activities not allocated to business and distribution units (headquarters and support functions in Serbia, Slovenia and Macedonia) which are excluded from the reportable operating segments.

SBU Beverages: Growth of Donat Mg, lower costs of production materials and lower staff costs. SBU Coffee: Decreased sales of coffee and increased marketing costs. SBU Snacks: The decrease in profitability is a consequence of launching chips, depreciation of the dinar and increased investments in price discounts. SBU Savoury spreads: Improved gross profit margin and marketing savings. SBU Sports and functional food: Launch of new factory and more intensive investments in the development of new products. SBU Pharma and personal care: Improvement in the gross profit margin, despite higher staff costs due to the

• pening of new specialized stores.

(in HRK millions) 2014 2013 2014/ 2013 SBU Beverages 128.1 118.4 8.1% SBU Coffee 231.1 237.9 (2.9%) SBU (Sweet and Salted) Snacks 98.1 110.4 (11.1%) SBU Savoury Spreads 113.1 102.4 10.4% SBU Sports and Functional Food 16.3 23.2 (29.9%) SBU Pharma and Personal Care 49.9 47.5 5.0% SDU Croatia 12.2 17.9 (31.6%) SDU Serbia 28.5 38.3 (25.7%) SDU International markets 14.8 15.8 (6.4%) DU Slovenia 36.5 35.8 2.0% Other segments* (131.7) (157.0) 16.2% Group EBITDA 597.0 590.8 1.1%

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FINANCIAL INDICATORS IN 2014

 Continuous focus on further deleveraging  The majority of capital expenditure relates to the construction of the energy bars production plant in Nova Gradiška.  Growing 6.1% compared to the previous year, cash flow from operating activities is growing faster than EBITDA, indicating stability of the business model.

Capital and reserves 33.3% Long term borrowings 31.5% Short term borrowings 10.9% Bond 2.2% Trade and other payables 16.7% Other liabilities 5.4%

Capital and liabilities structure as of 31.12.2014 (in HRK millions) 2014 2013 Net debt 1,927.7 2,059.3 Total assets 5,274.3 5,082.8 Total Equity 1,755.1 1,674.5 Current ratio 1.5 1.8 Gearing ratio 52.3% 55.2% Net debt/EBITDA 3.2 3.5 Interest coverage ratio 4.7 3.7 Capital expenditure 190.1 100.0 Cash flow from operating activities 445.7 420.2

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CONTENT

KEY DEVELOPMENTS IN 2014 PERFORMANCE ON CAPITAL MARKET IN 2014 FINANCIAL RESULTS IN 2014 GUIDANCE FOR 2015 APPENDIX

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STRATEGIC GUIDANCE FOR 2015

Strategic management guidance

 Focus on organic business growth through active brand management with a special emphasis on (i) strengthening the position of regional brands (Cockta, Cedevita, Smoki, Grand Kafa, Barcaffe, Bananica, Štark) and (ii) brands with international potential (Multipower, Argeta, Donat Mg, Bebi, Cedevita GO!) as well as active development of the regional HoReCa segment.  In 2015, Atlantic Grupa's management expects increased pressures on the price of raw coffee in the global commodity markets (with an additional unfavourable impact of the EURUSD exchange rate) driven by fundamental factors, including: (i) downward trend in global supply due to draughts in Brazil, (ii) upward trend in global demand for coffee, and (iii) low levels of global stocks. Additional business pressures are a consequence of the volatility of the Serbian dinar and the Russian ruble  Management plans to largely compensate the listed pressures by active hedging, continuous cost management and optimisation of business processes.  The effects of higher coffee prices and unfavourable exchange rates between the Russian ruble and the US dollar will be stronger in the first two quarters of 2015.  In 2015, we expect capital expenditure in the amount of around HRK 150 million.  The expected effective tax rate in 2015 should be at the level of the statutory tax rate for Croatia.

(in HRK millions) 2015 Guidance 2014 2015/2014 Sales 5,300 5,118 3.5% EBITDA 565 597 (5.4%) EBIT 405 441 (8.1%) Interest expense 125 126 (0.7%)

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CONTENT

KEY DEVELOPMENTS IN 2014 PERFORMANCE ON CAPITAL MARKET IN 2014 FINANCIAL RESULTS IN 2014 GUIDANCE FOR 2015 APPENDIX

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CONSOLIDATED INCOME STATEMENT FOR 2014

(in HRK thousands) 2014 % of sales 2013 % of sales 2014/2013 Turnover 5,168,639 101.0% 5,039,871 100.8% 2.6% Sales revenues 5,118,373 100.0% 4,998,936 100.0% 2.4% Other revenues 50,266 1.0% 40,935 0.8% 22.8% Operating expenses 4,571,607 89.3% 4,449,094 89.0% 2.8% Cost of merchandise sold 1,405,210 27.5% 1,212,561 24.3% 15.9% Change in inventories (29,964) (0.6%) (4,636) (0.1%) 546.3% Production material and energy 1,620,958 31.7% 1,715,825 34.3% (5.5%) Services 359,211 7.0% 324,872 6.5% 10.6% Staff costs 704,437 13.8% 672,118 13.4% 4.8% Marketing and selling expenses 331,605 6.5% 310,393 6.2% 6.8% Other operating expenses 186,434 3.6% 210,423 4.2% (11.4%) Other - net (6,284) (0.1%) 7,538 0.2% n/a EBITDA 597,032 11.7% 590,777 11.8% 1.1% Amortization and depreciation 156,330 3.1% 166,158 3.3% (5.9%) EBIT 440,702 8.6% 424,619 8.5% 3.8% Financial expenses (125,861) (2.5%) (159,265) (3.2%) (21.0%) Net FX differences (62,151) (1.2%) (12,201) (0.2%) 409.4% EBT 252,690 4.9% 253,153 5.1% (0.2%) Current tax 39,289 0.8% 54,159 1.1% (27.5%) Net income 213,401 4.2% 198,994 4.0% 7.2% Minority interest 13,389 0.3% 4,122 0.1% 224.8% Net income II 200,012 3.9% 194,872 3.9% 2.6%

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CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2014

(in HRK thousands) 31 December 2014 % of total assets 31 December 2013 % of total assets Property, plant and equipment 1,099,289 20.8% 1,060,847 20.9% Investment property 1,363 0.0% 1,672 0.0% Intangible assets 1,804,518 34.2% 1,851,023 36.4% Available-for-sale financial assets 942 0.0% 1,072 0.0% Trade and other receivables 22,657 0.4% 9,054 0.2% Deferred tax assets 41,224 0.8% 47,912 0.9% Non-current assets 2,969,993 56.3% 2,971,580 58.5% Inventories 582,247 11.0% 537,232 10.6% Trade and other receivables 1,169,343 22.2% 1,126,410 22.2% Non-current assets held for sale 99,874 1.9% 99,133 2.0% Prepaid income tax 12,249 0.2% 22,820 0.4% Deposits given 275 0.0% 251 0.0% Derivative financial instruments 22,687 0.4%

• Cash and cash equivalents

417,588 7.9% 325,334 6.4% Current assets 2,304,263 43.7% 2,111,180 41.5% Total assets 5,274,256 100.0% 5,082,760 100.0% 0.0% 0.0% Capital and reserves attributable to owners of the Company 1,752,732 33.2% 1,623,203 31.9% Non-controlling interest 2,332 0.0% 51,292 1.0% Borrowings 1,776,406 33.7% 1,968,950 38.7% Deffered tax liabilities 181,155 3.4% 181,378 3.6% Derivative financial instruments 8,698 0.2% 9,733 0.2% Other non-current liabilities 25 0.0% 143 0.0% Provisions 51,936 1.0% 59,723 1.2% Non-current liabilities 2,018,220 38.3% 2,219,927 43.7% Trade and other payables 881,451 16.7% 736,172 14.5% Borrowings 578,482 11.0% 387,288 7.6% Current income tax liabilities 7,675 0.1% 16,213 0.3% Derivative financial instruments 4,713 0.1% 18,950 0.4% Provisions 28,651 0.5% 29,715 0.6% Current liabilities 1,500,972 28.5% 1,188,338 23.4% Total liabilities 3,519,192 66.7% 3,408,265 67.1% Total equity and liabilities 5,274,256 100.0% 5,082,760 100.0%

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CONSOLIDATED CASH FLOW STATEMENT FOR 2014

(in HRK thousands) Jan - Dec 2014 Jan - Dec 2013 Cash flows from operating activities Net cash flow from operating activities before interest and income tax paid 622,107 598,471 Interest paid (123,509) (146,761) Income tax paid (52,879) (31,417) Net cash flow from operating activities 445,719 420,245 Cash flow from investing activities Purchase of tangible and intangible assets (190,100) (99,994) Proceeds from sale of property, plant and equipment 6,481 21,360 Advance for acquisition of subsidiary (5,332) (6,775) Acquisition of available-for-sale financial assets (58,005) Proceeds from sale of assets available for sale 58,048 Loans and deposits given - net (4,486) 18,833 Interest received 4,511 8,189 Net cash flow used in investing activities (188,926) (58,344) Cash flow from financing activities Purchase of treasury shares (502) (9,063) Proceeds from borrowings, net of fees paid 293,101 85,111 Repayment of borrowings (322,782) (334,591) Acquisition of non-controlling interest (93,349) Dividend paid to Company shareholders (35,010) (30,008) Net cash flow used in financing activities (158,542) (288,551) Net increase in cash and cash equivalents 98,251 73,350 Exchange gains/(losses) on cash and cash equivalents (5,997) 1,119 Cash and cash equivalents at beginning of period 325,334 250,865 Cash and cash equivalents at end of period 417,588 325,334

Q & A

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