PODRAVKA INC. ANNUAL REPORT FOR 2019 CONTENTS INTRODUCTORY WORDS OF THE PRESIDENT OF THE MANAGEMENT BOARD ......................................7 PODRAVKA PROFILE ........................................................................................................................................................... 9 NAME AND HEADQUATERS LOCATION ....................................................................................................................................................9 ORGANIZATIONAL STRUCTURE .......................................................................................................................................................................9 PODRAVKA BRANDS AND PRODUCTS ......................................................................................................................................................11 LOCATION OF BUSINESS ACTIVITIES ........................................................................................................................................................13 OWNERSHIP AND LEGAL FORM ...................................................................................................................................................................14 SUPPLY CHAIN ...............................................................................................................................................................................................................15 SIGNIFICANT CHANGES IN THE SUPPLY CHAIN OF PODRAVKA INC..........................................................................16 PRECAUTIONARY APPROACH .........................................................................................................................................................................16 EXTERNAL INITIATIVES OF PODRAVKA .................................................................................................................................................17 CORPORATE GOVERNANCE ..........................................................................................................................................18 GENERAL ASSEMBLY ...............................................................................................................................................................................................19 SUPERVISORY BOARD .........................................................................................................................................................................................20 BIOGRAPHIES OF THE MEMBERS OF THE SUPERVISORY BOARD .......................................................................... 23 MANAGEMENT BOARD ......................................................................................................................................................................................30 BIOGRAPHIES OF THE MEMBERS OF THE MANAGEMENT BOARD .............................................................................31 EXPECTED DEVELOPMENT ...........................................................................................................................................36 ACHEVING GROWTH ..............................................................................................................................................................................................37 GENERAL STRATEGIC GOALS .......................................................................................................................................................................37 KEY FACTORS OF SUCCESS ...........................................................................................................................................................................38 RISK FACTORS .............................................................................................................................................................................................................41 FINANCIAL RISKS........................................................................................................................................................................................................ 42 CURRENCY RISK ...................................................................................................................................................................................................... 42 INTEREST RISK ...........................................................................................................................................................................................................43 CREDIT RISK AND RISK OF DEBT COLLECTION .....................................................................................................................43 LIQUIDITY RISK ........................................................................................................................................................................................................44 PRICE RISK .....................................................................................................................................................................................................................44 BRAND MANAGEMENT .......................................................................................................................................................................................... 45 BUSINESS SEGMENT MANAGEMENT .................................................................................................................................................... 45 CLIENT RELATIONS MANAGEMENT .......................................................................................................................................................... 45 MANAGING MANAGEMENT AND EMPLOYEE RISKS ..................................................................................................................46 QUALITY ASSURANCE AND FOOD SAFETY MANAGEMENT SYSTEM .....................................................................46 NON-FINANCIAL REPORT ...............................................................................................................................................47 PODRAVKA RESEARCH AND DEVELOPMENT ......................................................................................................48 „GO WEST“ PROJECT .............................................................................................................................................................................................48 SUSTAINABLE PRODUCT DEVELOPMENT .......................................................................................................................................48 TEACHING BASE FOR STUDENTS ..............................................................................................................................................................48 DIGITAL TECHNOLOGICAL MAP OF PODRAVKA PROJECT ................................................................................................49 DIGITALIZATION OF LABORATORIES FOR SENSOR AND CULINARY TESTS ..................................................49 PODRAVKA’S NUTRITIONAL STRATEGY (2014-2020) ..............................................................................................................49 NEW GENERATION SALT – RECOGNITION OF PODRAVKA’S PATENT AND COOPERATION ..............50 COOPERATION WITH STATE AUTHORITIES IN BUILDING THE INNOVATION SYSTEM OF THE REPUBLIC OF CROATICA .........................................................................................51 COOPERATION WITH THE LOCAL COMMUNITY TO IMPROVE THE NUTRITION OF PRIMARY SCHOOL CHILDREN IN SCHOOL KITCHENS IN THE COUNTY ........51 LONG-TERM COOPERATION ON APPROXIMATION OF MILITARY MEALS WITH THE CROATIAN ARMY CONTINUED ............................................................................................51 CERTIFICATION ..................................................................................................................................................................52 NEW PRODUCTS .................................................................................................................................................................55 CULINARY BUSINESS UNIT ................................................................................................................................................................................ 55 BABY FOOD, SWEETS AND SNACK BUSINESS UNIT ..................................................................................................................57 PODRAVKA FOOD BUSINESS UNIT ...........................................................................................................................................................58 FISH BUSINESS UNIT .............................................................................................................................................................................................. 59 MEAT PRODUCTS, MEAT SOLUTIONS AND SAVOURY SPREADS BUSINESS UNIT .......................................60 EMPLOYEE RELATIONS ..................................................................................................................................................62 ACTIVITIES IN THE FIELD OF ENVIRONMENTAL PROTECTION ....................................................................63 WASTE MANAGEMENT ........................................................................................................................................................................................63