Podravka Group.
Podravka a Leading Central European Food (and Pharma) Business The largest food company and the second largest pharmaceutical company in Croatia One of the largest branded food businesses in CEE with leading brands Vegeta (universal seasoning) and Podravka (dried soups, ready-made meals etc.) Headquarters of Podravka and Belupo International subsidiaries and representative offices Home market: Croatia (2001 Sales: HRK1,414 mm) Core international markets (2001 sales: HRK920 mm) Other emerging European markets (2001 Sales: HRK86 mm) Other Western markets (2001 Sales: HRK 116 mm) Moscow Sales 2001: 343 million EURO Riga Leading Croatian corporate listed on the Zagreb stock exchange since 1998. Prague Warsaw Kiev Strong distribution network with facilities and sales staff covering key emerging European markets Geretsried Ljubljana Koprivnica Bratislava Budapest Belgrade Skopje Modern production facilities in Croatia, Poland, Slovenia and Hungary Note: Podravka also have representative office in Australia 2
Podravka Worldwide Podravka s presence on the market Presence in more than 40 countries. 25 companies in 15 countries. Strategic market CEE. Short Term priority: full coverage of markets in CEE & SEE. Entered Yugoslavia, Ukraine and Baltic in the 2001. Turkey, Italy, Greece, Bulgaria end year 2002. Export emphasis on selected products. Vegeta strongest brand. 3
Podravka Operates in a Fast Growing Market Central and Eastern European GDP expected to continue growing at levels above Western Europe due to convergence with EU driven by high FDI inflow and improving productivity levels GDP growth in selected CEE countries 2001 % 5,0% 4,8% 3,9% 3,9% 4,1% 3,4% 3,0% 3,1% 1,2% As a number of CEE countries prepare for entry into EU between 2003 and 2005, inflation rates are falling Russia Romania Bulgaria Hungary Croatia Czech Slovenia Slovakia Poland Large population pool of approximately 80 mm in Central Europe Inflation in selected CEE countries 2001 % 34,5% Podravka currently generates 44,3% of sales outside Croatia predominantly in other CEE countries 21,6% 8,4% 7,4% 7,4% 7,1% 5,3% 4,9% 4,7% Relative nascence of CEE markets ideal to roll out new products Romania Russia Slovenia Slovakia Bulgaria Hungary Poland Croatia Czech 4
With an Improving Macro-economic Outlook GDP growth (real) Croatia represents Podravka s home market (55,7% of sales) Following a period of recovery, Croatia has entered into a period of robust growth Inflation has stabilised around a level of 5.0% Croatian Kuna exchange rate increasingly follows Euro % 6 3,7% 4,1% 4 2 2,7% 0 (0,4%) (2) 1999 2000 2001 2002F Inflation % 8 6,2% 6 4,9% 4 2 4,2% 4,8% 0 1999 2000 2001 2002F Croatian Kuna exchange rates (spot rate-average) HRK 9 8 7 6 Dollar Euro Jan-99 Jun-99 Nov-99 Apr-00 Sep-00 Mar-01 Aug-01 Jan-02 5
Podravka s Business Structure Podravka food Belupo pharma Non-core Structure Prodravka dd (food trading and production) Podravka s domestic and international food trading subsidiaries Belupo doo International Belupo trading subsidiaries 100% 100% Non-Core assets Koprivnica Tiskarnica Hotel Podravina Podravka Inzenjering Products Vegeta Cardiovascular Meat delicatessen Osteomuscular Hotel and restaurants in Koprivnica Podravka dishes CNS Printing facilities Dolcella Dermatology Engineering facilities Fruit and vegetables Beverages Children s food Total food sales 2001: HRK1,911 mm 1 Total pharma sales 2001: HRK544 mm 1 Total non-core sales 2001: HRK82 mm 6
Podravka Organisation Structure Supervisory Board Management Board Board Member;Domestic & SEE Markets Board Member; CFO President of the Board; CEO Deputy President of the Board Board Member; Foreign Markets Corporate Finance Corporate Communication Strategic Marketing Human Resources R&D Business Development Belupo President Finance Director Vegeta Podravka dishes Lino, dolcela and snack Fruit and vegetable Beverages Danica d.o.o. Mill and bakery Croatian market South-East Europe market Middle Europe market East Europe market West Europe market and overseas 7
History/Recent Developments Apr-2002 5-yr contract between Podravka d.d. and Nestl Corp. Sales, Logistics and Distribution Agreement regarding Nestl s cetrain products to be sold in Croatia & SEEurope Oct-2000 Opening of Vegeta plant in tax free zone in Poland May-2000 Opening of new Vegeta plant in Croatia Mar-2000 Appointment of new management team Sept-1999 Opening of Belupo pharmaceutical complex Nov-1998 Initial Public Offering on Zagreb Stock Exchange 8
Current Podravka Shareholder Structure 7 institutional shareholders control appr. 50% of equity Shareholders stake Over 20,000 individual shareholders comprise 34,24% of equity Other legal entities 12,9% HFP 12.97% Shareholders as per 10-May-2002 Shareholders No. of shares % stake HFP (Government controlled) 783,953 12.97% Kapitalni Fond (Government 732,990 12.13% controlled) EBRD 636,000 10.53% Dom Fond 264,675 4,38% PBZ 255,084 4,22% Franck 229,630 3,80% Treasury shares 161,903 2.68% Hypo Alpe Adria 129,639 2.15% Individual shareholders 2,068,754 34,24% Other legal entities 780,068 12,90% Total 6,042,696 100% Individual Shareholders 34,24% Kapitalni Fond 12,13% EBRD 10,53% Dom Fond 4,38% PBZ 4,22% Franck 3,80% Hypo Alpe Adria bank 2,15% Treasury shares 2.68% Total = 100% 9
Podravka Share Price Performance Podravka share price performance for period Jan 2001- Apr 2002 Most liquid stock on Croatian stock exchange Turnover data 1 : Average daily turnover of HRK 0.70 m ( 94,680) 16 month turnover of Podravka shares: 15.1% of total stock turnover 16 month high/low HRK: 246/139,99 average price HRK: 162,58 % in total zse Mkt Cap: 3,2% Croatian stock exchange regulated by Croatian SEC with listing rules modelled on the UK rules ¹ calculated for period Jan 2001 - Apr 2002 2 Exchange rate on 12.04..2001: HRK/ Ã7.3958 HRK 260,00 240,00 220,00 200,00 180,00 160,00 140,00 120,00 100,00 2.1.2001 2.2.2001 2.3.2001 Mkt Capt: HRK ( m) 2 as at 30-04-2002 CROBEX Podravka Low: HRK 139,99 2.4.2001 2.5.2001 2.6.2001 2.7.2001 2.8.2001 2.9.2001 2.10.2001 2.11.2001 2.12.2001 High: HRK 246 Avg: HRK 162,58 2.1.2002 2.2.2002 2.3.2002 2.4.2002 1.400,00 1.300,00 1.200,00 1.100,00 1.000,00 900,00 800,00 700,00 600,00 10
Listing Requirements 1 st Quotation ZSE Free transferability Whole class of securities to be listed Prospectus required Independent audited financials statements Three years of operation Min. Expected MarketCap: 10 Million Euros 25% of Securities in Public 11
Privatistion Process Approximately 2/3 of the Croatian Economy has been privatised. Impact of improving Corporate Governance Transparency 12
EU Accession Croatia joined Stabilisation & Association Agreement in 2001. Subject to ratification by Parliaments of EU member countries Formal application for joining EU 2003. 13
Laws Regulating CROSEC Activities Law on Issuance and Sale of Securities ( 95) Law of the Amendments and Changes to the Law on the Issuance and Sale of Securities ( 98) Law for the Takeover of Joint Stock Companies ( 97) Law on Investment Funds ( 95, 96) Law on Privatization Investment Funds ( 95) 14
Rules of Discolosure ZSE (1) Annual reports independently audited, within four months from the end of the financial year Semiannual reports within three months from the end of the semiannual period Changes and new developments of the main business activities Shareholder & Supervisory Board meetings (date, agenda, proposed decisions) Changes in Management and Supervisory Board 15
Rules of Discolosure ZSE (2) Major changes in the ownership structure New issues of securities Mergers & Acquisitions procedures Trading in own (treasury) shares Trading by members of the Management and Supervisory Board Transactions with related parties 16
The Importance of Disclosure Shareholders rights & their equitable treatment Attracting & retaining financial resources Improvement of the investment climate Following first rate international standards of Corporate Governance & Transparency 17
Role of the Management Board External international auditor engaged 5 years ago (E&Y, Vienna; PWC, Zagreb) Accounting organised according to the IAS Investors relation department established in 2000. Roadshows for existing & potential investors 18
Role of the Auditor (1) Appointed by GSM An independent opinion on the truth and fairness of the financial statements as a whole Assesment of risk of material misstatement and effectiveness of controls But, cannot substitute Management s responsibility 19
Role of the Auditor (2) Auditing semmi-annual & annual reports Making financial reports for: Mother company Consolidated financial reports for the Group Financial reports of subsidiaries in Croatia & abroad Presenting financial reports to the Management Board & Supervisory Board Management Letter prepared solely for the use of Management Board in order to improve weaknesses due to their potential effect on the future performance 20
Podravka s Key Initiatives Sales & marketing Extend and consolidate position in new markets (Baltics, Balkans) Improve existing distribution network (ECR) Extend brand to additional product lines Strategic/ financial Improve focus on core activities Consider new acquisitions on a selected basis Manage future capex needs Support systems SAP ISO 9001:2000 (awarded to all Vegeta brands) HACCP 21
Podravka s Objectives (1) More International Penetrate new markets and strengthen position in existing markets by better following consumer trends International inside (changing culture and habits) Management of the Group Multilocal; more influence of international staff on corporate strategy; Headquarters coordinates activities and sets goals Satisfying Customers Needs Beyond Their Expectations Local taste philosophy as main orientation Convenience food (easy to use) Consequence: Multilocal R&D 22
Podravka s Objectives (2) Increasing Shareholders Value Sustainable growth and development Double digit growth of revenues Continuous improvement of profitability Focus on core growth product areas 23
Contact Nevenka Cerovsky, B. Sc. (Econ.) Member of the Board, CFO PODRAVKA d.d. Tel: 385 48 651 102; 385 1 4877 812 Fax: 385 48 621 793; 385 1 4877 813 E-mail: nevenka.cerovsky@podravka.hr 24
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