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News 05 Oct 17

Financial Report on Croatia's Agrokor Reveals Huge Losses

A revised financial report for Croatian giant Agrokor’s major subsidiaries showed that the former management’s financial accounts understated their losses by 250 million euros in 2015.

Sven Milekic
Agrokor's state extraordinary manager Ante Ramljak presenting the report on Thursday. Photo: Anadolu Agency/Stipe Majic

The revised financial report for the troubled Croatian retail, food and agriculture giant Agrokor, issued on Thursday, showed that the former management, led by company’s owner and founder Ivica Todoric, did not show the company’s full losses in its financial accounts.

State extraordinary manager Ante Ramljak – who has been running the company since April, when Todoric handed it over to state control – presented the revised financial report for 2015 and 2016 which had been put together by the PricewaterhouseCoopers audit agency.

The report only included Agrokor’s major subsidiaries in the retail, wholesale, agriculture and food industries - Konzum, Tisak, Belje, PiK Vinkovci, Vupik, Ledo, Jamnica, Zvijezda and PiK Vrbovec.

The full report, including mother company Agrokor d.d., will be issued next week.

The revised report for the subsidiaries in 2015 showed 250 million euros’ more losses than Todoric’s management showed in its financial records.

Todoric’s management had no opportunity to present financial records for 2016.

The state management’s figures showed that the subsidiary companies finished 2016 with 442 million euros in losses.

The former management also inflated the capital worth of the subsidiary companies in 2015 by some 1.2 billion euros.

According to Thursday's report, the subsidiary companies are worth 1.8 billion euros less than they were before 2015.

“I will not say that any [legal] irregularities [in the previous management’s financial records] occurred. I won’t speak about this until we have the figures for Agrokor [d.d.]. Accounting irregularities occurred,” Ramljak answered when asked if there was criminal wrongdoing involved.

“DORH [Croatian state attorney office] investigators are familiar with all these numbers,” he added.

While the public was awaiting the results of the revised financial report, chief state attorney Dinko Cvitan said on Wednesday that the report will be important for DORH’s work.

Agrokor’s downfall led to the extraordinary management taking over in April and conducting an in-depth analysis of its companies’ financial records over the years.

The company's role in the economy of Croatia is massive, with revenues of 6.5 billion euros in 2015 – almost 16 per cent of Croatia's total GDP – and around 40,000 employees.

Agrokor employs another 20,000 people in neighbouring Bosnia and Serbia, while it is believed that suppliers and companies for the Slovenian retailer Mercator – which Agrokor bought in 2014 – employ around 70,000 people in Slovenia as well.

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