Kofola Group – consolidated financial results for 9 months of 2012.

In the first three quarters of 2012 Kofola Group has increased revenues by PLN 58.7 million (ie. 6%). The increase relates mainly to the most profitable Czech and Slovak market, despite the drop of the Czech market and small increase of the Slovak market. The Group has realized significant increase on the Russian market which was effect of listing products in federal retail chains and low basis in 2011 (in the third quarter of 2011 Megapack was in the process of renewing license for production and sale of low-alcohol drinks and had limited possibilities of selling those products). Third quarter of 2012 was very successful for the Group – consolidated revenues have increased by 21% compared to the same quarter of 2011. This was the result of good summer and above already mentioned increased revenues in Russia, in Czech Republic and in Slovakia. The most visible increase of revenues was realized in the low-alcohol drinks segment, syrups segment (innovations, syndrom of economic crisis) and carbonated beverages segment (mainly cola beverages).

Significant part of the revenue increase relates to innovations introduced in 2012, that include e.g. drinks in 0.25l cans (Hoop Cola, Kofola, Pickwick Ice Tea, Vinea, Semtex), new tastes of Rajec water, Jupik Aqua Sport with vitamines, Rajec water for infants, new line of super dense Jupi syrups and new tastes of Kofola. Introduced innovations, most of them available in the impulse format, have helped, except for the increased prices, to protect gross margin to drop more significantly.

Increase of revenues combined with the cost discipline have resulted in the increase of EBIT by PLN 15.4 million (i.e. 29%) and increase of net profit by PLN 9,6 million (i.e. 35%).

Due to maintained very high prices of raw materials and impossibility of full transfer of commodity prices on the final customer the gross margin decreased by 1.2 p.p.

Thanks to improved EBIT and good working capital management operating cash flow increased by PLN 21.8 million (i.e. 23%). Capital expenditure amounted to PLN 28.4 million that is half of the capital expenditure incurred in nine months of 2011. Due to above mentioned factors the indebtedness of the Group dropped by PLN 63.3 million to 1.6 multiple of annualized EBITDA.

We continue simplyfying of the Group structure. In September 2012 management boards of Kofola ČeskoSlovensko a.s. and Kofola Sp. z o.o. have confirmed project of merging these two companies. The merger will be performed on 29 December 2012 when Kofola Sp. z o.o. will be incorporated into Kofola ČeskoSlovensko a.s.

In the last quarter of 2012 we are going to introduce new brand of drinks on the Czech and Slovak market in a completely new market segment. Except for that we have many other new products and limited edditions of our drinks with special christmass tastes ready for Christmass market. Further we will have to compete with the high sugar prices as a result of the market reforms in the EU. Surely it cannot be done without further price increases, although the scale should be lower than in 2012 - said Jannis Samaras CEO of Kofola S.A.