Krka d d : Unaudited interim report of the Krka Group and the Krka, d. d., Novo mesto for the first half of 2023

2023 Unaudited Semi-Annual

Report of the Krka Group and

Krka, d. d., Novo mesto

Novo mesto, July 2023

CONTENTS
Introduction	3
2023 Semi-Annual Performance Highlights	3
Financial Highlights	4
ID Card	5
Krka Group at a Glance	5
Krka Group 2023 Business Plan	5
Business Report	6
Financial Risks	6
Investor and Share Information	6
Business Performance	9
Marketing and Sales	11
Research and Development	17
Investments	18
Employees	19
CONDENSED FINANCIAL STATEMENTS OF THE KRKA GROUP WITH NOTES	20
Consolidated Statement of Financial Position of the Krka Group	20
Consolidated Income Statement of the Krka Group	21
Consolidated Statement of Other Comprehensive Income of the Krka Group	21
Consolidated Statement of Changes in Equity of the Krka Group	22
Consolidated Statement of Cash Flows of the Krka Group	24
Segment Reporting of the Krka Group	25
Notes to Consolidated Financial Statements of the Krka Group	26
Condensed Financial Statements of Krka, d. d., Novo mesto with Notes	32
Statement of Financial Position of Krka, d. d., Novo mesto	32
Income Statement of Krka, d. d., Novo mesto	33
Statement of Other Comprehensive Income of Krka, d. d., Novo mesto	33
Statement of Changes in Equity of Krka, d. d., Novo mesto	34
Statement of Cash Flows of Krka, d. d., Novo mesto	36
Notes to Financial Statements of Krka, d. d., Novo mesto	37
Statement of Compliance	43

2	H1 2023 Unaudited Interim Report of the Krka Group and Krka, d. d., Novo mesto

INTRODUCTION

Condensed consolidated financial statements of the Krka Group and condensed financial statements of Krka, d. d., Novo mesto (hereinafter also Krka, the Company, or the controlling company) for the first half of 2023 and the first half of 2022 are unaudited, while financial statements for the full financial year 2022 are audited. Krka, d. d., Novo mesto has no authorised capital and has made no conditional share capital increase.

Krka promptly announces all significant data changes in its listing prospectus in the Ljubljana Stock Exchange electronic information dissemination system (SEOnet) and in the Polish Financial Supervision Authority electronic information dissemination system (ESPI). Operating reports for the Krka Group and Krka, d. d., Novo mesto are available on the Krka website www.krka.biz.

The Supervisory Board of Krka discussed the Krka Group and Krka, d. d., Novo mesto unaudited semi-annual report at its regular meeting on 19 July 2023.

2023 Semi-Annual Performance Highlights

• Sales of products and services of the Krka Group totalled €916.5 million, of which product sales accounted for almost 98%.
• Product and service sales increased 7% year on year.
• We generated 94% of product and service sales outside Slovenia. Exports accounted for 96% of product sales.
• The Group's largest sales region was Region East Europe, accounting for 32.8% of total sales, followed by Region Central Europe and Region West Europe.
• The Group operating profit (EBIT) totalled €236.2 million, up 70% year-over-year. The EBIT margin was 25.7%. EBITDA amounted to €288.6 million, a 50% increase year-on-year. The EBITDA margin was 31.4%.
• The Group's net financial result for the period is -€29.4 million, with net foreign exchange losses totalling €32.8 million.
• At the half-year, the Group's net financial result was down €167 million year-over-year, mainly the result of the significant strengthening of the rouble during the six months to June 2022.
• The Krka Group profit before tax was €206.9 million, down 25% year-over-year.
• The Krka Group net profit totalled €170.1 million, down 28% compared to the first half last year. The net profit margin (ROS) was 18.5%.
• The Krka share traded at €116.00 on the Ljubljana Stock Exchange as at 30 June 2023, up 26% on the year- end of 2022. Market capitalisation amounted to €3.8 billion. In the first six months of 2023, Krka had repurchased €4.4 million worth of treasury shares.
• Krka added four new prescription pharmaceuticals and one new animal health product to its product range in the first half-year 2023.
• Investments totalled €45.7 million, of which €36.5 million was placed by the controlling company.
• At the end of June 2023 the Krka Group had 11,653 full-time staff, up 55 on the year-end of 2022. Including agency workers, the total Krka Group headcount was 12,641.

H1 2023 Unaudited Interim Report of the Krka Group and Krka, d. d., Novo mesto

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Financial Highlights

	Krka Group			Company
€ thousand	Jan-Jun 2023	Jan-Jun 2022	Index	Jan-Jun 2023	Jan-Jun 2022	Index
Revenue	920,430	857,443	107	874,144	846,874	103
- Of that revenue from contracts with	916,471	853,440	107	742,121	706,544	105
customers (products and services)
Gross profit	543,732	433,687	125	476,441	509,658	93
Earnings before interest, tax,	288,559	192,373	150	238,922	282,730	85
depreciation and amortisation (EBITDA)
Operating profit (EBIT)1	236,233	139,250	170	198,971	241,777	82
Profit before tax (EBT)	206,856	277,059	75	197,384	377,692	52
Net profit	170,128	236,151	72	169,355	317,526	53
Effective tax rate	17.8%	14.8%		14.2%	15.9%
R&D expenses	85,654	81,020	106	83,513	81,472	103
Investments	45,663	49,479	92	36,512	34,986	104

€ thousand	30 Jun 2023	31 Dec 2022	Index	30 Jun 2023	31 Dec 2022	Index
Non-current assets	1,037,557	1,125,025	92	1,063,365	1,123,594	95
Current assets	1,729,394	1,562,475	111	1,578,385	1,392,950	113
- Inventories	556,885	553,332	101	479,173	492,978	97
- Trade receivables	434,816	402,730	108	419,877	357,889	117
- Cash and cash equivalents	139,431	518,934	27	98,234	470,297	21
Equity	2,266,198	2,138,509	106	2,233,131	2,060,792	108
Non-current liabilities	132,358	132,130	100	103,524	102,333	101
Current liabilities	368,395	416,861	88	305,095	353,419	86
- Trade payables	116,346	140,837	83	141,421	194,143	73

RATIOS	Jan-Jun 2023	Jan-Jun 2022	Jan-Jun 2023	Jan-Jun 2022
Gross profit margin	59.1%	50.6%	54.5%	60.2%
EBITDA margin	31.4%	22.4%	27.3%	33.4%
EBIT margin	25.7%	16.2%	22.8%	28.5%
EBT margin	22.5%	32.3%	22.6%	44.6%
Net profit margin (ROS)	18.5%	27.5%	19.4%	37.5%
Return on equity (ROE)2	15.4%	22.6%	15.8%	31.2%
Return on assets (ROA)3	12.5%	17.6%	13.1%	24.9%
Liabilities/Equity	0.221	0.251	0.183	0.223
R&D expenses/Revenue	9.3%	9.4%	9.6%	9.6%

NUMBER OF EMPLOYEES	30 Jun 2023	31 Dec 2022	Index		30 Jun 2023	31 Dec 2022	Index
Balance at	11,653	11,598	100		6,411	6,320	101
SHARE INFORMATION			Jan-Jun 2023	Jan-Jun 2022		Index
Total number of shares issued				32,793,448	32,793,448		100
Earnings per share (EPS) in €4				10.97		15.16		72
Closing price at end of period in €5				116.00		94.20		123
Price/Earnings ratio (P/E)				10.57		6.21		170
Book value in €6				69.11		68.81		100
Price/Book value (P/B)				1.68		1.37		123
Market capitalisation in € thousand (end of period)			3,804,040		3,089,143		123

1. The difference between operating income and expenses
2. Net profit, annualised/Average shareholders' equity in the period
3. Net profit, annualised/Average total asset balance in the period
4. Net profit attributable to majority equity holders of the controlling company, annualised/Average number of shares issued in the period, excluding treasury shares
5. Share price on the Ljubljana Stock Exchange
6. Equity at end of period/Total number of shares issued

The adjusted EBITDA totalled €270.1 million for the first half-year 2022, and the adjusted EBIT €217.0 million. 2023 half-year EBITDA was up 7% relative to the 2022 half-year adjusted EBITDA, and 2023 half-year EBIT climbed 9% relative to the 2022 half-year adjusted EBIT.

4	H1 2023 Unaudited Interim Report of the Krka Group and Krka, d. d., Novo mesto

ID Card

Registered office Šmarješka cesta 6, 8501 Novo mesto, Slovenia

Telephone [phone]

Fax [phone]

E-mail [e-mail]

Website www.krka.biz

Core business Manufacture of pharmaceutical preparations

Business classification code 21,200

Year established 1954

Registration entry 1/00097/00, District Court of Novo mesto, Slovenia

Tax number 82646716

VAT number SI82646716

Company ID number 5043611000

Share capital €54,732,264.71

Total number of shares issued 32,793,448 ordinary registered no-par value shares, KRKG stock symbol. Krka has been listed on the Ljubljana Stock Exchange under the KRKG stock symbol since 1997, and since April 2012 additionally on the Warsaw Stock Exchange under the KRK stock symbol.

Krka Group at a Glance

The Krka Group consists of the controlling company, Krka, d. d., Novo mesto, in addition to the Slovenia-based subsidiary Terme Krka, d. o. o., Novo mesto and 33 subsidiaries abroad. The controlling company holds a 100% stake in all subsidiaries except in Ningbo Krka Menovo Pharmaceutical Co. Ltd., where Krka holds a 60% stake and the Chinese partner, Ningbo Menovo Pharmaceutical Co. Ltd., a 40% stake.

The Krka Group develops, produces, markets, and sells human health products (prescription pharmaceuticals and non-prescription products), animal health products, and health resort and tourist services.

Production takes place at the controlling company in Slovenia and at Krka subsidiaries in the Russian Federation, Poland, Croatia, and Germany. In addition to production, these subsidiaries, apart from Krka-Rus in the Russian Federation, deal with marketing and sales. In China, production takes place in facilities subject to a long-term lease. Other subsidiaries outside Slovenia market and/or sell Krka products but do not have production capacities. The subsidiary Terme Krka specializes in health resorts and tourist services, and is the owner of Golf Grad Otočec.

Krka Group 2023 Business Plan

• Full-yearsales of products and services are expected to total €1,755 million.
• The proportion of sales in markets outside Slovenia is estimated at 94%.
• Prescription pharmaceuticals are expected to remain the most important product category, accounting for an 82% share of total sales.
• Profit is planned around €300 million.
• The total number of employees in Slovenia and abroad is expected to increase by 2%.
• We plan to allocate €130 million to investments, primarily expanding and modernising production facilities and infrastructure.

The 2023 business plan derives from the 2022-2026Krka Group Development Strategy, and is based on estimates, assessments, projections, and other available data. The Management Board believe the projections are reasonable. In the event of major changes in the Krka business environment, e.g. price erosion, rising prices of raw materials, changes in exchange rates for certain currencies important for Krka, and lower demand for pharmaceutical products, the actual operating results can deviate from the plan.

H1 2023 Unaudited Interim Report of the Krka Group and Krka, d. d., Novo mesto

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