Cakovecki mlinovi d d : Group Čakovečki mlinovi - Q1 2024

ČAKOVEČKI MLINOVI D.D.

QUARTERLY CONSOLIDATED FINANCIAL REPORT

FOR Q1 2024

CONTENTS
1. BUSINESS RESULTS IN Q1 2024	4
ABOUT THE GROUP ČAKOVEČKI MLINOVI	4
BUSINESS SEGMENTS AND OPERATIONS	4
KEY FINANCIAL INDICATORS OF THE GROUP	6
SUMMARY OF GROUP RESULTS	7
QUARTERLY PERFORMANCE OVERVIEW OF THE GROUP	7
SALES REVENUE	8
OPERATING COSTS	9
EBITDA	9
NET PROFIT	10
NET DEBT	10
CASH FLOWS	11
VALUATION OF THE ČAKOVEČKI MLINOVI GROUP	11
2. EXPECTED BUSINESS DEVELOPMENT IN 2024	12
CONSOLIDATED FINANCIAL STATEMENTS FOR Q1 2024	15

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ČAKOVEČKI MLINOVI D.D.

CONSOLIDATED INTERIM MANAGEMENT REPORT

FOR Q1 2024

1. BUSINESS RESULTS IN Q1 2024

ABOUT THE GROUP ČAKOVEČKI MLINOVI

Čakovečki mlinovi Inc. (further: "Čakovec mlinovi Inc." or "Company"), founded in 1893 in Čakovec, are one of the oldest Croatian food and trading companies. The company manages a vertically integrated business model that includes the production of high-quality mill, bakery and oil products on the one hand and the retail of mixed goods on the other. Although food production is the tradition and heritage of the Company, through a series of successful acquisitions and integrations of retail chains, the Company has grown into a business system that today derives most of its income from retail activities.

Čakovečki mlinovi Inc. have three subsidiaries: Trgovina Krk d.d. Malinska, Trgocentar d.d. Virovitica and

Radnik Opatija d.d. Lovran (hereinafter collectively: "Čakovečki mlinovi Group" or "Group") and one

affiliated company: Narodni Trgovački Lanac d.o.o. Soblinec. Čakovečki mlinovi d.d. in addition to the non- consolidated reports of the Companies, they also prepare the consolidated reports of the Group separately.

In the first quarter of 2024, the Čakovečki mlinovi Group achieved 43,0 million euros in consolidated total revenues based on consolidated total assets in the amount of 113,5 million euros and employed 2,056 employees on average based on working hours. According to the Accounting Act, the Čakovec Mlinovi Group belongs to a large group of entrepreneurs.

Shares of Čakovečki mlinovi d.d. are listed on the Official Market of the Zagreb Stock Exchange under the symbol CKML. As at March 31, 2024, the Company had issued and listed 10,290,000 shares with a market capitalization of EUR 107 million.

BUSINESS SEGMENTS AND OPERATIONS

Čakovečki mlinovi Group is organized into two strategic business segments:

• Trade which includes retail and wholesale trade of food and non-food assortment, and
• Food which includes the production of flour, bakery products and oils.

Čakovečki mlinovi Inc. manages these segments from a strategic level and acts as the Group's corporate center. The Trade segment is operatingly managed by Trgovina Krk Inc. The food segment is operatingly managed by Čakovečki mlinovi Inc. and Radnik Opatija Inc.

Below presented are the Group's business segments and their key operating indicators.

Trade

KEY OPERATING INDICATORS

Number of trade stores

Store sales area (in m2 net)

Average area per store (in m2 net)

Area of distribution warehouses (in m2 gross)

Average number of employees

31.3.2024.

31.3.2023.

1. 434
   54,875 54,273

1. 125
   11,343 11,343
   1,783 1,995

Trade is the largest segment of the Čakovečki mlinovi Group, which generated 86% of the Group's sales revenue in Q1 2024.

The Trade segment is organized in two business areas:

• retail - trade of mainly food and to a lesser extent non-food assortment, and
• wholesale - trade of food, non-food and construction assortment.

Retail sales account for 98% of the sales revenue of the Trade segment.

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As at March 31, 2024, Trade managed 425 retail stores located in northwestern Croatia, Kvarner and the island of Krk. The total net sales area was 54,875 m2, of which about 64% is owned by the Group. The main factors of the offer of the Stores segment are the proximity of the stores and the local assortment, which is why the Group's retail stores are mostly located in smaller settlements or residential districts and have an average net sales area of up to 400 m2. This type of store format in Croatia is defined as a market or convenience store, and internationally it is better known as a proximity format due to its characteristic proximity to customers.

Trgovina Krk Inc. holds 25% of the ownership share in the company Narodni trgovački lanac Ltd. (hereinafter: "NTL"), the largest procurement association for food products in Croatia, through which it realizes about 80% of the procurement of goods. In addition to providing commercial services to its members, developing the NTL brand, and purchasing and distributing fruit and vegetables, NTL manages its own retail network of 253 stores and 6 wholesale logistics and distribution centers. In Q1 2024 Narodni trgovački lanac Ltd. generated 0.5 million euros in net profit (Q1 2023: 0.2 million euros). Trgovina Krk Inc. also holds a 10% ownership share in the company Grandal grupa Ltd., the largest purchasing association for construction materials in Croatia.

Food
KEY OPERATING INDICATORS	31.3.2024.	31.3.2023.
Grain processed (in tons)	14.190	12.173
Production of bakery products (in tons)	1.844	1.713
Oil production (in tons)	2	1
Average number of employees	273	272

The Food segment covers food production and is organized into three business areas:

• milling - production of flour and other milling products and to a lesser extent porridge and feed flour,
• bakery - production of mainly bread, pastries and cakes and to a lesser extent dough, and
• oil production - own production of pumpkin and service production of olive oil.

As at 31 March 2024, the food segment managed two mills (Čakovec, Donji Kraljevec) with a total production capacity of 80,000 tons per year, four bakeries (Čakovec, Oroslavje, Lovran, Malinska) with a total production capacity of 11,533 tons per year and two oil mills (Čakovec, Punat).

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KEY FINANCIAL INDICATORS OF THE GROUP
			1.-3. 2024./
INCOME STATEMENT (millions of euros)	1.-3. 2024.	1.-3. 2023.	1.-3. 2023.
Sales revenue	41,6	36,9	12.7%
Operating costs, net1	41,6	36,4	14.3%
EBITDA2	0,0	0,5	-
Normalized EBITDA3	0,1	0,5	(80.0%)
Depreciation	1,8	2	(10%)
EBIT4	(1,8)	(1,4)	28.6%
Net financial result5	0,3	0,0	-
Net profit (loss)	(1,5)	(1,5)	-
Profit margins6
EBITDA margin	0.0%	1.4%	(1.4 pb)
Normalized EBITDA margin	0.2%	1.4%	(1.2 pb)
EBIT margin	(4.3%)	(3.8%)	(0.5 pb)
Net profit margin	(3.6%)	(4.1%)	0.5 pb
			31.3.2024./
Balance sheet (millions of euros)	31.3.2024.	31.12.2023.	31.12.2023.
Net debt (cash)7	(17,5)	(15,7)	11.5%
Equity	80,1	81,7	(2.0%)
Net working capital8	19,0	23,0	(17.4%)
			1.-3. 2024./
CASH FLOWS (millions of euros)	1.-3. 2024.	1.-3. 2023.	1.-3. 2023.
Net operating cash flows	3,9	3,2	21.9%
Capital expenditures (CapEx)9	2,0	1,4	42.9%
Dividends paid	-	-	-

1 Operating costs, net include business expenses less depreciation, other business income and income based on the use of own products, goods and services; a detailed calculation is presented under Operating costs in this part of the report.

2 EBITDA (eng. earnings before interest, taxes, depreciation and amortization) represents operating profit before amortization; calculated as business income - business expenses + depreciation.

3 Normalization implies adjustment for one-time items; the detailed calculation is presented under Normalization of EBITDA in this part of the report.

4 EBIT (eng. earnings before interest and taxes) represents operating profit; calculated as business income - business expenses.

5 The net financial result is calculated as financial income + share in the profit of the associated company (NTL) - financial expenses.

6 Profit margins are calculated on the basis of sales revenue.

7 Net debt (money) includes long-term and short-term financial liabilities less money in the bank and treasury and deposits with banks. Deposits with banks are included in net debt regardless of the maturity date because they are available on call.

8 Net working capital includes inventories plus short-term trade receivables and less short-term trade payables and advances.

9 CapEx (eng. capital expenditures) represents monetary expenditures for the purchase of long-term tangible and intangible assets. Note: Amounts in this section as in the rest of the report are rounded to one decimal place.

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SUMMARY OF GROUP RESULTS

In Q1 2024, the Čakovečki mlinovi Group achieved 41.6 million euros in sales revenue, 0.1 million euros of normalized EBITDA and (1.5) million euros in loss.

The Group's operations were marked by an increase in sales revenue of 12.7% or 4.7 million euros compared to the same period of the previous year. Revenues from the sale of Retail, as the Group's largest business area, grew by 17.2% or 5.1 million euros, or by 15.8% or 4.6 million euros on a comparative (hereinafter: "LFL") basis. The mentioned increase in income is primarily the result of an increase in sales prices due to an increase in the cost of goods sold.

The Trade business segment, as the largest segment of the Group, achieved EUR 35.7 million or 85.8% of the Group's sales revenue and EUR (0.4) million of normalized EBITDA.

The Group's net operating expenses increased by 14.3% or 5.2 million euros, mostly as a result of the increase in the cost of goods sold (by 4.6 million euros).

In the first quarter of 2024, the Group's normalized EBITDA decreased by EUR (0.4) million, and net results remained the same compared to 1Q 2023. The group achieved a drop in normalized EBITDA margin to (0.2%) (Q1 2023: 1.4%), net profit margin is (3.6%) (Q1 2023: (4.1%)).

QUARTERLY PERFORMANCE OVERVIEW OF THE GROUP

Group sales revenue						Group EBITDA
(in mil. euros)									(in mil. euros)
80,0												10,0
							58,6 62,5	56,1					7,9
60,0	41,6	47,550,5				8,0					7,6
			43,2
	37,0								6,0
40,0	35,8													4,34,2					3,1
												4,0
																				2,3
20,0
											2,0	0,5
0,0												0,0	-0,4
											Q1 0,0		Q2		Q3	Q4
Q1	Q2			Q3		Q4	-2,0
						2022.			2023.		2024.					2022.		2023.			2024.

Note: Data for the fourth quarter were calculated on the basis of audited annual financial statements and unaudited quarterly financial statements for the first, second and third quarters.

Considering the impact of the tourist season on the Group's operations in the Trade segment, the first quarter is usually financially weaker than the remaining quarters of the year.

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SALES REVENUE

SALES REVENUE BY SEGMENT

(in millions of euros) Trade

Food

Consolidated Sales revenue

Note: Data are presented on a consolidated basis.

1.-3.

2024.

35,7

5,9

41,6

• of sales revenue before elim. 85.8% 14.2%
  100.0%

1.-3.

2023.

30,4

6,5

36,9

• of sales revenue before elim. 82.5% 17.5%
  100.0%

1.-3. 2024./

1.-3. 2023.

17.4%

(9.2%)

12.7%

LFL1 RETAIL GROWTH

			1.-3. 2024./
(in millions of euros)	1.-3. 2024.	1.-3. 2023.	1.-3. 2023.
Revenue from the sale of goods - Trade	35,5	30,3	17.2%
Revenue from the sale of goods - Retail	34,7	29,6	17.2%
Revenue from the sale of goods - Retail - LFL1	33,7	29,1	15.8%

1 Revenue on a comparative basis (eng. like-for-like, LFL) refer to stores that operated throughout both comparative periods. Note: Data refers to pre-elimination sales revenue.

In Q1 2024, the Group achieved sales revenues in the amount of EUR 41.6 million, which is 12.7% or EUR

4.7 million more compared to the same period of the previous year, as a result of the increase in sales of the Trade segment from 17.4%, while revenues from sales of the Food segment decreased by 9.2%.

Sales revenue of the Trade segment amounted to EUR 35.7 million or 85.8% of the Group's sales revenue and increased by 17.4% or EUR 5.3 million compared to the same period of the previous year. The mentioned growth is a consequence of the positive effects of the active price policy. Revenues from the sale of goods in Retail increased by 17.2% or 5.1 million euros, or by 15.8% or 4.6 million euros on an LFL basis.

Revenues from sales of the Food segment amounted to 5.9 million euros or 14.2% of sales revenue and are lower by 9.2% or 0.6 million euros compared to the same period of the previous year.

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OPERATING COSTS
					1.-3.
		% of			2024./
		sales		% of sales	1.-3.
(in millions of euros)	1.-3. 2024.	revenue	1.-3. 2023.	revenue	2023.
Cost of raw materials and changes in
value of stock	5,8	13.9%	6,6	17.9%	(12.1%)
Cost of goods sold, net1	24,7	59.4%	20,1	54.4%	22.9%
Other external expenses	1,6	3.8%	1,3	3.5%	23.1%
Personnel costs2	8,9	21.4%	7,7	20.9%	15.6%
Other expenses	0,4	1.0%	0,5	1.3%	(20.0%)
Other business expenses (revenue)3	0,2	0.5%	0,2	0.5%	-
Operating expenses, net	41,6	100%	36,4	98.6%	14.3%

1 Costs of goods sold minus revenue from subsequently approved rebates and marketing services.

2 Staff costs include net wages, taxes and wage contributions, contributions to wages and non-taxable employee remuneration paid.

3 Other operating expenses less: non-taxable employee remuneration paid, other business income excluding income from subsequently approved rebates and marketing services, and revenue based on the use of their own products, goods and services

In Q1 2024, the Group recorded an increase in net operating costs by 14.3% or 5.2 million euros compared to the same period of the previous year. The costs of raw materials and materials decreased due to the purchase of raw materials at lower prices in the Food segment, while the net costs of goods sold grew faster than the growth of income from the sale of goods.

Personnel costs together with paid non-taxable receipts amounted to EUR 8.9 million and increased by 15.6% or EUR 1.2 million. Personnel costs grew under the influence of the increase in the minimum wage and the spillover of this impact on the rest of wages. On March 31, 2024, the Group employed 2,282 employees (Q1 2023: 2,303), that is, in Q1 2024, an average of 2,056 employees based on working hours (Q1 2023: 2,085).

EBITDA
EBITDA BY SEGMENTS		1.-3. 2024.			1.-3. 2023.
(in millions of euros)	GROUP	TRADE	FOOD	GROUP	TRADE	FOOD
Consolidated Sales revenue	41,6	35,7	5,9	36,9	30,5	6,4
EBITDA	0,0	(0,4)	0,4	0,5	(0,3)	0,8
EBITDA margin	0,0%	(1,1%)	6,8%	1,4%	(1,0%)	12,5%
Normalized EBITDA1	0,1	(0,4)	0,5	0,5	(0,3)	0,8
Normalized EBITDA margin	0,2%	(1,1%)	8,5%	1,4%	(1,0%)	12,5%

1 Normalization implies an adjustment for material one-time items; the detailed calculation is presented under Normalization of EBITDA in this part of the report.

Note: Data are presented on a consolidated basis.

In Q1 2024, the Group achieved normalized EBITDA in the amount of EUR 0.1 million, which is EUR 0.4 million less than in the same period of the previous year. Reported EBITDA was EUR 0.0 million (Q1 2023: EUR 0.5 million).

Normalized EBITDA of the Trade segment amounted to EUR (0.4) million and decreased by EUR 0.1 million compared to the same period of the previous year. The normalized EBITDA margin of the Trade segment was (1.1%) (Q1 2023: (1.0%)).

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Normalized EBITDA

NORMALIZED EBITDA (in millions of euros)

EBITDA

Costs of intellectual services Other one-offexpenses (revenue),net

Normalized EBITDA

GROUP

0,0

0,0

0,1

0,0

1.-3. 2024.
TRADE	FOOD	GROUP
(0,4)	0,4	0,5
0,0	0,0	0,0
(0,4)	0,5	0,5
(0,4)	0,4	0,5

1.-3. 2023.

TRADE

(0,3)

0,0

(0,3)

(0,3)

FOOD

0,8

0,0

0,8

0,8

Note: The label 'net' implies that an individual item of income is netted by a comparable item of expenditure.

In addition to reporting on alternative (non-IFRS) business performance measures such as EBITDA, the Group discloses the impact of non-recurring items in order to achieve a higher level of transparency of its normal business activities. One-off items are those items that do not appear regularly and have a significant impact on the result. In Q1 of 2024, the Group recorded EUR 0.1 million net of other one-off expenses, and in Q1 2023, there were no one-off items for normalization.

NET PROFIT

In Q1 2024, the Group realized a net loss in the amount of EUR 1.5 million and the net loss is the same compared to 1Q 2023.

NET DEBT
			31.3.2023./
(in millions of euros)	31.3.2023.	31.12.2022.	31.12.2022.
Lease liabilities - long-term	3,1	3,0	3,3%
Short-term liabilities forcredits and loans received	4,2	4,2	-
Lease liabilities - short-term	1,1	1,4	(21,4%)
Given deposits and the similar	0,0	(0,6)	-
Cash and cash equivalents	(25,9)	(23,7)	9,3%
Net debt (cash)	(17,5)	(15,7)	11,5%

On March 31, 2024, the Group recorded a net cash item in the amount of EUR 17.5 million (December 31, 2023: EUR 15.7 million), of which EUR 4.2 million related to loan and credit liabilities (31.12.2023: EUR

4.2 million), on lease liabilities EUR 4.2 million (31.12.2023: EUR 4.4 million), and cash and cash equivalents and given deposits EUR 25,9 million (31.12.2023 .: 24.3 million euros). Loan and credit liabilities refer to the related company Trgocentar d.d. in which the Group holds 52.03% of the voting rights, but consolidates it in its entirety.

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