Kri Kri Milk Industry S A : Annual Financial Report 12 month period 2023

K R I - K R I M I L K I N D U S T R Y S . A .

General Commercial Registry No.: 113772252000

ANNUAL FINANCIAL REPORT

FOR THE PERIOD

1.1.2023 - 31.12.2023

(TRANSLATION FROM THE GREEK ORIGINAL)

2

This Annual Financial Report was created according to art. 4 of Law N. 3556/2007 and was approved by the Board of Directors of KRI-KRI SA. on 15th of April, 2024. It is posted online on the Company's official website: https://www.krikri.gr/oikonomikes-katastaseis

CONTENTS	Page
Declarations of the members of the Board of Directors	3
Report of the Board of Directors	4
Independent Auditor's report	39
Statement of comprehensive income	46
Statement of financial position	47
Statement of change in shareholders' equity	48
Cash flow statement	49
General information	50
Significant accounting policies	50
Notes on Annual Financial Statements	62

3

DECLARATIONS OF THE MEMBERS OF THE BOARD OF DIRECTORS

(in accordance with article 4 (2) of Law 3556/2007)

Hereby we declare, that to the best of our knowledge:

The Financial Statements for the period ended 31 December 2023, were prepared in accordance with IFRS, accurately present the assets, liabilities, shareholder's equity and the financial results of "KRI-KRI Milk Industry S.A." and the Report of the Board of Directors accurately presents the performance and position of "KRI-KRI Milk Industry S.A." including the description of basic risks and uncertainties that it faces.

	Serres, 15 April 2024
	Confirmed by
Chairman	Vice-Chairman	Member of the B.o.D.
& CEO

PANAGIOTIS TSINAVOS	GEORGIOS KOTSAMBASIS	ANASTASIOS MOUDIOS
ID ΑΕ373539	ID ΑΕ376847	ID ΑK276897

4

KRI KRI MILK INDUSTRY S.A.

REPORT OF THE BOARD OF DIRECTORS

FOR THE PERIOD OF 1 JANUARY 2023 UNTIL 31 DECEMBER 2023

Dear shareholders,

The present Annual Report of the Board of Directors (here- inafter referred to as the "Report"), concerning the period 01.01.2023 until 31.12.2023, drafted in accordance with the articles 150, 151 and 152, of Law 4548/2018, article 4 of law 3556/2007 and decision 8/754/14.4.2016 of the Hellenic Capital Market Commission. The Report includes all the necessary information in an objective and adequate manner and in the light of providing substantial and not typical information with regards to the issues included in such. In particular, the Report summarizes the financial information for the financial year 2023, the major events that took place during that period, the impact of those events on the financial statements, the main risks and uncertainties that the company may face in the near future and finally the most important transactions between the company and its related parties. The Report also contains non-financial information, such as the statement of the Corporate Governance, as well as additional information which are required by the relevant legislation.

In addition to the 2023 financial statements the Report includes the required by the law data and statements in the Annual Financial Report, which concern the financial year ended 31 December 2023. The financial statements, the independent auditor's report and the current report are posted on the Company's official website: https://www.krikri.gr/oikonomikes-katastaseis.The sections of the Report and the content are as follows:

GENERAL INFORMATION

KRI-KRI MILK INDUSTRY S.A. (hereinafter referred to as the "Company"),operates in the dairy industry. Our main business activities are the production of ice-cream, yogurt and fresh milk. Our extensive distribution network comprises of super market chains and small points of sale all across Greece. We export our products to more than 40 countries abroad. The headquarters and the production facilities are located in Serres, northern Greece. Addition- ally, the Company owns and operates a logistics centre

located in Aspropyrgos, region of Attica, Greece. Its main purpose is the distribution of our products to southern Greece.

• PERFORMANCE AND FINANCIAL
  POSITION

SALES

Company's turnover amounted to €216.329k compared to €171.883k in 2022 (increased by +25,9%).

Ice cream sales increased by 13,7% in value amounting to €40.723k compared to €35.828k in 2022. Accordingly, ice cream sales volume increased by +2,3%.

Yogurt sales increased by +28,6% in value amounting to €173.564k compared to €135.014k in 2022. Accordingly, yogurt sales volume increased by +15,3%.

Finally, exports were 48,9% of total sales presenting an increase of +29,9%.

PROFITABILITY

Company's gross profit margin was 33,5% compared to 18,3% in 2022 and specifically a) ice cream segment 46,0% compared to 37,7% in 2022 and b) yogurt segment 30,7% compared to 13,8% in 2022.

The net profit before tax amounted to €40.301k compared to €3.832k in 2022 (+951,5% increase). Moreover, net profit after tax amounted to €32.269k compared to €3.175k in 2022 (+916,4% increase). Finally, EBITDA amounted to €45.124k compared to €8.863k in 2022 (+409,1% increase).

LOANS

Company's senior management seeks to maintain a limited exposure to debt. On 31/12/2023, the balance of the Com- pany's loans amounted to €11.904k. Net debt is zero.

5

ALTERNATIVE PERFORMANCE MEASURES of the European Securities and Marketing Authority (ESMA/2015/1415el)

The European Securities and Markets Authority (ESMA / 2015 / 1415el) has published the final guidelines on "Al- ternative Performance Measures" (hereinafter "APM") which apply from July 3, 2016 to companies with securities traded on regulated stock exchanges. APM are disclosed by publishers when publishing regulated information and aim to enhance transparency and promote utility, as well as the correct and complete information of the investing community.

APM are a customized economic measurement of historical or future financial performance, financial position or cash flows, other than the economic measurement defined in the applicable financial reporting framework. That is, APMs on the one hand do not rely solely on the standards of the financial statements, on the other hand they provide substantial additional information, excluding items that may differ from the operating result or cash flows.

Transactions with non-operating or non-cash valuation with a significant effect on the Statement of Comprehensive Income are considered as elements that affect the adjustment of APM. These non-recurring, in most cases, funds could arise from, among other things:

• impairment of assets
• restructuring measures
• remediation measures
• sales of assets or divestitures
• changes in legislation, claims for damages or le- gal claims

APM should always be considered in conjunction with the financial results prepared under IFRSs and in no case should they be considered as substitutes. The Company uses APM in order to better reflect the financial and operational performance related to the Company's actual activity in the reporting year, as well as the corresponding comparable period last year. The definition, analysis and calculation basis of APM, used by the Company, is set out below. It is noted that, for the calculation of APM, it was not considered necessary to make an adjustment to the items of the financial statements.

1. EBITDA Margin

This ratio is widespread in the investment community and is part of the general unit of profitability ratios, having the advantage that it isolates the effects of financial investment results, income tax and the main category of non- cash expenses which are depreciation.

The Statement of Comprehensive Income includes " Earnings before interest, taxes, depreciation and amortization (EBITDA)", to which no adjustment is made.

The "EBITDA Margin" Ratio is obtained by dividing "EBITDA" by Sales. Expresses the percentage that EBITDA has on Sales. The Management of the Company uses this ratio in the context of the wider evaluation of the operational performance of the Company.

2. EBIT Margin

This Ratio, like the previous one, is widespread in the investment community and is part of the general unit of profitability ratios, having the advantage of isolating the effects of financial investment results and income taxation.

The Statement of Comprehensive Income includes " Earnings before interest and taxes (EBIT)", to which no adjustment is made.

The "EBIT Margin" Ratio is obtained by dividing "EBIT" by Sales. Expresses the percentage that EBIT has on Sales. The Management of the Company uses this ratio in the context of the wider evaluation of the operational performance of the Company.

3. Free Cash Flows to the Firm

This index is part of the general unit of efficiency indices, as it shows the amount of cash available for distribution to shareholders and lenders of the company and at the same time is one of the key indicators of financial soundness.

The index is calculated by adding total inflows / (outflows) from Operating Activities to the total inflows / (outflows) from Investment Activities, of the Cash Flow Statement.

4. Capital Structure ratios

These ratios show the degree of financing of the company with foreign capital. The Ratios used by the company are the Capital Leverage Ratio and the Debt Ratio.

The Capital Leverage Ratio is calculated if divided Total Debt by the sum of total Equity and Total Debt.

The Debt Ratio is calculated by dividing Total Debt by the amount of Total Equity.

5. Efficiency ratios

In general, the return on Equity shows the profit that corresponds to the investment of a company's shareholders. It belongs to the group of profitability indicators and is also generally used for the purpose of comparing similar companies and evaluating the management of a company.

The Return on Equity Ratio is calculated by dividing the net income, ie "Profit after Tax", by the amount of Total Equity.

6

The Efficiency ratio is calculated by dividing the net in- come, ie "Profit after Tax", by the total Assets.

BASIC FINANCIAL RATIOS

			31/12/2023	31/12/2022
	EBITDA
1. EBITDA Margin	20,9%	5,2%
	Sales
2. EBIT Margin	EBIT	18,6%	2,3%
	Sales
3. Free cash flow	Operating activities + Investment activities	31.930.356	(4.258.519)
4a. Debt to capital	Total Debt	10,2%	15,7%
Total Debt & Total Equity
4b. Debt to Equity	Total Debt	11,4%	18,6%
Total Equity
5a. ROA	Profit after Tax	20,1%	2,5%
Total Assets
5b. ROΕ	Profit after Tax	30,8%	4,0%

Total Equity

• IMPORTANT EVENTS OF CURRENT FINANCIAL YEAR

OUR POSITION IN THE MARKET

In the ice cream segment, in the domestic market, our sales show a strong double-digit increase (+20,4%). Our ice cream market share increased by 0.4 percentage points in volume (12.7%) and decreased by 0.4 percentage point in value (13.8%) [NIELSEN data, Jan.-Dec. 2023]. Within the current highly inflationary business en- vironment, that facilitates private label products' growth, KRIKRI was the only company that managed to increase its branded ice cream market share in volume.

In the domestic yogurt market, our sales show strong growth. More specifically, our sales increased by +21,8%

in value, exceeding €76m. The current inflationary environment has led the overall market to limited consumption growth in volume (+3,4%), while consumption in value shows a double-digit increase by +10,1% [Circana data ( ex. IRI), Jan.-Dec. 2023]. At the same time, there is a strong shift of consumers to private label products, because of their preference to value for money products. Those market developments have strengthened private label market share in volume, which increased by +2,7 percentage points (+7,7 percentage points compared to 2021), applying strong downward pressure on branded yogurts. That constant pressure has led KRIKRI branded yogurt to a slight decrease in the market share (-0,7% in value) [Circana data ( ex. IRI), Jan.-Dec. 2023]. In gen- eral, KRIKRI seems to benefit from those market develop- ments, since it is the largest producer of private label yogurts in the domestic market.

In terms of profitability, the gross profit margin reached 29,9%, approaching 2021 level (2021: 30,1%). Economies

7

of scale in yogurt segment led to strong double-digit EBIT margin (2023: 15,5%).

Overseas, yogurt sales continued their strong growth ( +34,4% in value.) This boost in sales is contributed by the major markets of Italy, the UK, as well as other countries such as Sweden, Austria and Belgium. As far as KRIKRI's profitability figures are concerned, they have returned back to their normal levels. The EBIT margin has significantly improved. That is mainly a result of the economies of scale and the dilution of sales and admin costs, which are, for the most part, fixed.

INVESTMENTS

We have developed and we are implementing investment projects to increase production capacity, as well as technological upgrading, of both yoghurt and ice cream facto- ries. In financial year 2023, total CAPEX reached €13m.

For the fiscal year 2024, CAPEX is expected to be between €21m to €25m.

• MAJOR RISKS & UNCERTAINTIES

Due to the nature of its operations, the Company is exposed to various financial risks such as, market risk (fluc- tuations of exchange rates, interest rates and of production costs), credit risk and liquidity risk. The Company's overall risk management program focuses on financial market unpredictability and aims to minimize the potential negative impact on the Company's financial performance.

Risk management is carried out by the Company's main financial department, which operates under certain rules approved by the Board. The Board of Directors provides instructions and guidelines on general risk management and special instructions on managing specific risks such as currency risk, interest rate risk and credit risk.

MARKET RISK

Risk of fluctuation of raw material prices

The Company is exposed to risk of loss of income in case of sudden changes in prices of raw materials. This is a result of the inability to roll these costs to sale prices in a timely manner.

Foreign exchange risk

Company's operations are mainly conducted within the Euro zone. Company exposure to exchange rate (FX) risk derives from existing or expected cash flows in foreign cur- rency, and it is considered very limited.

Interest rate fluctuation risk

The Company's assets do not include significant items that are interest-bearing, thus operating income and inflows are essentially independent of changes in market interest rates.

The loans of the Company are related to either variable rates or fixed rates. The company does not use financial derivatives. The interest rate fluctuation risk relates primarily to long-term loans. Loans with variable interest rates expose the Company to cash flow risk. Loans issued at fixed rates expose the Company to risk of changes in fair value.

A policy of retaining loans with variable interest rate is beneficial in cases of declining interest rates. On the other hand a liquidity risk appears when the interest rates rise.

From the total loans of the Company on 31.12.2023, the amount of € 6.300.000 is linked to a fixed interest rate and the amount of € 5.604.236 is linked to a floating rate.

The financing solutions that banks offer are systematically reviewed, in order to minimize financing cost.

CREDIT RISK

The Company has established and applies credit control procedures in order to minimize credit risk. Generally, sales are distributed to a large number of customers, resulting in an efficient dispersion of the commercial risk, except some large super market chains in Greece and a foreign customer, their individual sales of which exceed 10% of total sales. Their sales concern both major segments (Yoghurt and Ice-cream).

Wholesale sales are made to customers with appropriate credit history. The credit control department defines credit limit per customer that is continuously monitored and re- viewed. Also, in some cases our receivables are secured with collaterals. For example from the company domestic customers-distributors, the Company receives personal guarantees amounting the double of two months turnover, hence consistently applying its credit policy. Finally, receivables of specific supermarket chains are credit insured with a contract covering credit losses, occurring from in- solvency, up to 90%.

Receivables from foreign customers, are credit insured with a contract covering credit losses, occurring from in- solvency, up to 95%. Credit limits per customer are established by the insurance company. Therefore, the credit risk exposure is limited to 5% of the insured credit limit, plus any excess.

The Company's senior management emphasizes on reducing working capital needs. It promotes the reduction of

8

credit limits and of the credit period to its customers, to increase operating cash flows.

LIQUIDITY RISK

The Company manages liquidity risk by maintaining adequate cash reserves and credit lines from banks. At pre- sent, available overdraft can adequately cover any immediate cash requirement.

OPERATING RISKS

Suppliers - stock

The Company has no significant dependence on certain suppliers. However, in 2023 there is one instance of a supplier of raw materials, purchases of whom exceeded 10% of total company purchases.

The company's management promotes overall stock man- agement, in a way that allows meeting the demand, without excessive liquidity reservation.

Staff

The company's management is based on a team of experienced and qualified personnel, who have full knowledge of their subject and industry market conditions. This contributes significantly to the proper functioning of the com- pany's processes and the further development of its activ- ities.

Company executives are working harmoniously with each other and with the company's management. Potential disruption of this relationship may affect, temporarily, its proper functioning. However, the existing staffing infrastructure company enabling the direct replenishment ex- ecutives, with no significant impact on the progress of its work.

Product contamination

Risk of product contamination may result in product recall and, consequently, negative publicity that damages brand reputation. Product recall, depending on the size, can have a significant negative economic impact. The same can happen from the negative publicity that usually results from such an event, whether it is due to the fault of the Company or not.

The Company's Management estimates that the quality assurance and quality control system it applies drastically reduces this risk.

Changes in the nutritional behavior of consumers

Possible changes in the nutritional behavior of consumers can lead to the replacement of the consumption of the company's products with substitutes or competing prod- ucts. The above can lead to a decrease in sales and a burden on the Company's results.

The Company tries to closely monitor market trends, in order to adapt as quickly as possible to the new conditions.

Extraordinary events

The possibility of an event occurring, which, to a large ex- tent, is beyond the control of the Company, could potentially affect the normal conduct of its business activities. Indicatively, the following cases can be mentioned:

• Natural Disaster,
• Accidents at work, which may be related to employees of the Company, suppliers, or even third parties.
• Problems / Insufficiency in the operation of information systems,
• Significant mechanical damage, which may result in de- lay or even cessation of production,
• Fraud,
• Termination of contracts with customers / suppliers.

In such a case, any disruption in the conduct of the Com- pany's business activities could have a negative effect on sales, costs and, in general, on its financial results.

The Management tries to take all the necessary actions, in order to limit, both the chances of the occurrence of the specific risk, and, in case it happens, its effects on the smooth conduct of its business activities.

ΙV. Macroeconomic risks

Macroeconomic risks for 2024 are mainly related to: a) the negative effects of inflation on the real disposable income of households, b) the high cost of borrowing, c) any geopolitical risks associated with the ongoing conflicts in Ukraine and the Middle East, d) the slowdown of the Eu- ropean economy, which is Greece's main trading partner.

V. Strategies - Future Performance Estimations

STRATEGIES

In the ice cream sector, our strategy is preserve high operating results. At the same time, we aim to increase the number of the distribution points, mainly focusing on the tourist areas. Particular emphasis will be placed on boosting exports, as there are great opportunities to grow our sales overseas. In this effort, the tip of our spear is the Greek Frozen Yogurt ice cream series that we have developed and combines the pleasure offered by ice cream with the values of healthy nutrition offered by yogurt.

In the yogurt sector, we utilize our modern production fa- cilities, with high production capacity and competitive processing costs, aiming to increase sales. In this regard, we

9

make sure to actively communicate the competitive advantages of our products (such as the use of 100% daily milk for the production of yogurt). At the same time, we are strengthening our export orientation, responding to the increased demand for Greek yogurt in foreign markets.

DIVIDEND POLICY

The KRI-KRI Dividend Policy promotes the distribution of an increased dividend each year, as long as the profitability figures allow.

For the financial year 2022, the Annual General Meeting of shareholders decided the distribution of gross dividend of €0,20 per share.

For the financial year 2023, the Board of Directors decided to propose to the Annual General Meeting of shareholders the distribution of an increased gross dividend of €0,35 per share. The distribution is subject to the approval of the Annual General Meeting of shareholders.

FUTURE PERFORMANCE ESTIMATES

KriKri's Management is optimistic about the Company's financial results in 2024, despite the current demanding economic and business environment. For the financial year 2024, the Company's sales are expected to continue their upward trend. Based on the Management's estimate, sales

Related party transactions are analyzed a follows:

are expected to grow by 8% - 11% compared to 2023, exceeding €233m. For 2024 a pressure to profit margins is expected, so that EBIT margin to be around 15%.

VI. Related party transactions

The significant transactions between the Company and its related parties, as defined in IAS 24, are described below.

Transactions with related legal parties

In 2018, the Hellenic Milk Institute (IEG), a non-for-profit organization, was established in Greece to support and promote cow farming. The Company is related to IEG, because two members of its BoD participate to the management of IEG. There is no connection of any other form.

During the current year, there were no transactions with IEG.

Transactions with related parties

The Company maintains an obligation to related parties (its major shareholders) arising from the coverage of a bond loan of €4.200.000. This loan was issued on 03.04.2023, it is unsecured and according to market terms. Its expiration is determined on 03.04.2026 and its balance on 31.12.2023 amounts to €4.200.000.

	31/12/2023	31/12/2022
Income from rents (IEG)	0	120
Payment of interest on a bond loan*	142.205	82.125

Outstanding receivables from and payables to related parties are analyzed a follows:

	31/12/2023	31/12/2022
Receivables from related parties (IEG)	360	383
Payables to related parties*	4.200.000	2.700.000

Directors' compensation and other transactions with key management personnel are analyzed a follows:

COMPENSATION OF DIRECTORS	31/12/2023
Remuneration of the members of the Board of Directors	511.429
Salaries of the members of the Board of Directors	27.782
Total	539.211

OTHER TRANSACTIONS WITH THE MEMBERS OF THE B.O.D. AND KEY MANAGEMENT PERSONNEL

31/12/2022

483.258

41.609

524.867

31/12/2023 31/12/2022

Transactions with the members of the B.O.D and key management personnel	136.800		76.042
Liabilities to the members of the B.O.D and key management personnel*	2.100.000	2.500.000

* Bond loan covered by major shareholders

10

VII. Branches

The Company operates a branch in Aspropyrgos, Attica. The branch operates as a logistics center to serve the market of southern Greece.

VIII. Research & Development

The Company has a separate department dealing with product research and development (new development and improvement / development of existing ones) and new production technologies. During the current financial year, R&D expenses amounted €455.026.

IX. Own shares

As at 31.12.2022, the Company held 90.148 own shares, with an acquisition value of € 541.306. During 2023, the Company acquired 20.240 treasury shares, with an acquisition value of € 161.058.

Pursuant to the 05.07.2022 Program of free distribution of shares (stock awards), between 27.03.2023 and 07.06.2023 41.187 common shares were distributed to 37 beneficiaries, in the context of the execution of the 1st cycle of the Program.

Therefore, as at 31.12.2023, the Company holds 69.201 own shares, with an acquisition value of € 455.051.

X. Post balance sheet events

Purchase of own shares

During 2024, the Company acquired 25.874 common shares with an acquisition value of €282.206. Thus, as at 15.04.2024 the Company holds 95.075 treasury shares, with an acquisition value of €737.257.

Also, pursuant to the stock awards program as of 05.07.2022, the Board of Directors approved on 31.01.2024 the distribution of 52.720 common shares to 58 beneficiaries, based on the annual performance review for 2023 . Upon the completion of this disposal, the number of treasury shares held by the Company will amount to 42.355.